TOKUYAMAREPORT

2O21

F is c al ye ar en de d M ar ch 31, 2021

Tokuyama’s New Vision

MissionTo create a bright future in harmony
with the environment,in collaboration with its customers,
based on chemistry

VisionBe a value-creative company that places
ﬁrst priority on R&D and marketing●

Be a company that never stops challenging new domains
while reﬁning and exploiting its unique strengths●

Be a company with healthy employees
who have healthy families and take pridein their work at their company●

Be a company that fosters bonds
with people in communities andsocieties worldwide

ValuesUpdated Vision
Tokuyama has recently updated its Mission and Vision● Commitment to customer

satisfaction as a proﬁt sourcein light of its rapidly-changing operating environment,● A broader, loftier perspective

based on a reassessment of the essential value it can● Employees who consistently

provide to stakeholders.
In accord with its New Vision, which encompasses its
Values in addition to its Mission and Vision, Tokuyama
will create new value in harmony with theenvironment by supplying products that address
societal problems while minimizing the environmental
burden imposed by its business activities.

surpass their predecessors● Integrity, perseverance, aplayful spirit and boldnessTOKUYAMAREPORT

2O21
Contents

Tokuyamaʼs New Vision …………………………

1

Tokuyama: Making a Contribution ……………

2

Tokuyama at a Glance………………………………

4

Tokuyama Value Creation ………………………

6

Commitment from the Top……………………… 10
Financial and Nonﬁnancial Highlights ……… 16
Growth Strategy …………………………………… 20
Growth Strategy Evolution ……………………… 21
Medium-Term Management Plan 2025 ……… 22
Strategy 1: Transform Business Portfolio …… 24
Strategy by Business ……………………………… 27
Strategy 2: Contribute to Mitigation of
Global Warming …………………………………… 32
Strategy 3: Promote Socially Responsible
Management ………………………………………… 36
Roundtable Discussion:
Sustainable Growth and Our Mission ………… 40
Corporate Governance …………………………… 44
Management Team ………………………………… 49
Business Sites and Group Companies ………… 50
Stock Information ………………………………… 52
Corporate Data & Editorial Policy ……………… 53
About This Report

Cautionary Note on Forward-Looking Statements

This report contains forward-looking statements on the Companyʼs plans, strategies, operating performance and other matters.These forward-looking
statements are the Companyʼs judgments based on information available at the time of this reportʼs preparation. They are subject to various risks anduncertainties. The Companyʼs actual activities and/or operating performance may differ materially from these forward-looking statements as a result ofvarious factors, including but not limited to changes in economic conditions, the operating environment, demand trends or exchange rates.

Disclaimer

This report is intended to be informational. It is not intended as a solicitation. The Company assumes no liability for any losses due to investment
decisions made entirely in reliance on forward-looking statements, numerical targets or other information contained herein.

TOKUYAMA REPORT 2021

This report is published as an integrated report that combines the annual report and CSR report that were published until FY2020.

1

Tokuyama: Making a Contribution
Tokuyama is distinguished by the breadth of its
contributions to society through products that run
the gamut from basic raw materials to end products
and support industry and daily life.
By supplying such products, it creates economic andsocietal value and contributes to the attainment of
the Sustainable Development Goals (SDGs).

ECONOMYSOCIETY

BIOSPHERE

2

ECONOMY
Contributions to Economic Growth

Aluminum nitride

Tokuyama helps to improve electronic hardware

properties conducive to development ofsmaller, higher-performance ICT hardware

performance and energy efﬁciency by supplying a wide

Possesses superior heat dissipation

range of high-quality products, including advanced

High-purity chemicals forelectronics manufacturing

materials and high-purity chemicals. With its sights set on

Conducive to miniaturization ofa bright future for humanity, Tokuyama contributes toeconomic growth by facilitating technologicalinnovation in a digital society.

semiconductor devices

Semiconductor-grade polycrystalline
siliconContributes to higher performance as primary
raw material in semiconductor wafers

Waste gypsum board recycling
Recycling waste gypsum board

SOCIETY
Contributions to Societal Infrastructure
Japan faces a host of societal challenges, including a lowbirth rate, an aging population, and aging public
infrastructure. To address such pressing challenges,
Tokuyama offers diverse products that support bothpeopleʼs health and public infrastructure maintenance.

Plastic lens-related materials
Photochromic dye materials with
UV-blocking properties reduce glare andlight transmissivity

Dental materials and equipment
Dental materials/equipment such as
cosmetic restoration materials contributeto advancement of dentistry

Medical diagnostic systems
Diagnostic reagents and lab test systems
that contribute to peopleʼs health bysupporting healthcare

CementContributes to mass recycling of waste;
used to build infrastructure that supports
daily life

Sodium hypochlorite
Used as household bleaching agent andwater supply disinfectant for its strong
biocidal action

PVC resin

Contributions to the Natural Environment
Placing priority on mitigating climate change and otherwise
preserving the environment, Tokuyama is developing waste
recycling processes that utilize ion exchange membranes

Ion exchange membranes
Used to produce table salt from seawater,
recover speciﬁc valuable substances from
efﬂuent, and reduce volume of industrial
wastewater

Plastic window sashes

and proprietary technologies. Tokuyama strikes a healthy

Contribute to supply of energy-efﬁcienthousing through better insulation andairtightnessbalance between commercial viability on the one hand, andCaustic soda

its contributions to a sustainable society and preservationof a biodiverse natural environment on the other.

Contributes to safe water supplies andprotects atmosphere and hydrologicalcycle through wastewater treatment andneutralization

Industrial waste recycling
Contributes to formation of a closed-loop
society through recycling of waste as cement
feedstock

TOKUYAMA REPORT 2021

BIOSPHERE

Widely used in everything from lifeline
infrastructure like water and sewage
systems and power grids to staple goods
and medical materials/equipment3Tokuyama at a Glance
Business Portfolio and Major Products (FY2020)

1

SiliconOverseas sales companies, etc.

2

SilicaThermal Management Materials

3

4

Other

Electronic Materials

19%
Recycling

IC Chemicals

18 %Fine Chemicals

515

Microporous Film

6

FY2020Dental Materials
and Equipment

8

Diagnosis

Life Science

Consolidated net sales¥302.4 billion

9%

Eco Business

3%

CementCement 14

7

Environment

910

Ion Exchange Membranes

11

Plastic Window Sashes

27%

12

Soda Ash and Calcium Chloride

Chemicals

Other regions24%¥11.9 billion

Asia

Chlor-Alkali and13
Vinyl Chloride¥51.7 billionJapan¥238.7 billion

Net sales by region* Net sales are based on customer location andcategorized by country or region.

Tokuyama from the perspective of 6 capital categories (FY2020 and as of March 31, 2021)
Internal Capital

Manufacturing CapitalIntellectual Capital¥26.4 billion¥10.8 billion

0.49

1,289 Number of patents held

Capital expenditures
Accident frequency rate(non-consolidated)(total of non-consolidated & some groupcompanies)

5,476

Number of employees (consolidated)

10.3 hours

Overtime hours worked(monthly average, non-consolidated)

Key performance indicators

Key performance elements

Key performance indicators• Number of accidents• Number of lost time injuries• Unit energy consumption index• Number of manufacturing sites• Production capacity for high• Value of unique technologies• Value of manufacturing processes• Value of patents• New products, technologies, and• Employee satisfaction• Annual paid leave rate
• Childcare leave rate / paid leave rate
• Ratio of female managers• Retention rate of new graduatesmarket share products

4

R&D expenses

Human Capital

services• Products under development

after three years of employment

Product share in semiconductor manufacturing process
Post-process

Semiconductor

Packaging

Chips

Cleaning

CMP

SilicaEtching

Semiconductor-grade polycrystalline silicon
2Pre-process

Lithography

SiliconSilicon wafers

1

Polycrystalline
siliconElectronic Materials

Wafer manufacturing processes

Fumed silica

3

Thermal Management Materials
Aluminum nitride

4

IC Chemicals

High-purity chemicals for electronics
manufacturing

Semiconductor-grade
polycrystalline
Silicon

30% of global share

Photoresist developer
TMAH

High-purity chemicals
for electronics
manufacturing

Silica for CMP

Ranked #1 in Asia

Ranked #1
worldwide

Aluminum nitride forthermal management

Ranked #1
worldwide

Ranked #1 in Asia

Photoresist developer TMAH

Life Science
Fine Chemicals

Photochromic dye materials foreyeglass lenses
Pharmaceutical ingredients & intermediates
6

Microporous Film

7

Dental Materials and Equipment

8

Diagnosis

Chemicals
Photochromic dyematerials
for eyeglasses

13

5

EnvironmentNon-kiln resource recycling (world's ﬁrst 100%
complete recycling of waste gypsum board)
10

Ion Exchange Membranes
Plastic Window Sashes

Plastic window sashes and related products

Caustic soda

Ranked #3
in Japan

13

12

Cement14

Gypsum recycledfrom waste
gypsum board

CementCementCement, cement-type stabilizer

100% recycling

Ion exchange membranes and electrodialyzers
for desalination and concentration
11

Soda ash

Sole manufacturer
in Japan

Chlor-Alkali and Vinyl Chloride
Caustic soda, PVC resin,vinyl chloride monomer,
propylene oxide (PO),sodium hypochlorite

Eco Business
9

Soda Ash and Calcium Chloride
Soda ash, calcium chloride,sodium bicarbonate

Ranked #2 worldwide

Composite resin

Laboratory information system
diagnostic reagents

12

9

15

Ranked #4
in Japan

Recycling

Waste processing (Waste plastic
recycled as alternative fuel,trash incinerator ash recycled asalternative raw material
for cement)

Waste processing

1.73 million tons

15

14

External Capital

Financial Capital¥302.4 billion

Consolidated net sales¥30.9 billion

Consolidated operating profit

Social Capital

Natural Capital

Number of countries and regionswith sales

Investment in environmental
conservation (non-consolidated)

46 countries and regions
Approx. ¥1.1 billion• Net sales• Operating profit• Growth business net sales
growth rate

• ROE
• Credit rating¥6.5 billion

Subsidized by Tokuyama Science Foundation

Total environmental conservation costs

Key performance elements• Relationship of trust withcustomers and business partners• Open innovation by industry,
government, and academia• Dialogue with stakeholders• Regulatory compliance• Connections with communities

Key performance indicators(cumulative total from FY1988 to FY2020)

Key performance indicators¥800 million(non-consolidated)• Total CO2 emissions• Effective utilization rate for waste• Zero waste emission rate
• Emissions of substances withenvironmental impact• Number of environmental accidents

TOKUYAMA REPORT 2021

55Tokuyama Value Creation
Strengths cultivated over a history of more than a century
Supplied basic materials and chemical derivatives, supporting postwar reconstruction and rapid economic growth
1918

1930

1940

1950

1960

1970

1918 Soda ash: Nihon Soda Kogyo Co., Ltd. (now Tokuyama Corporation) established to produce soda ash domestically1938 Cement: Began to produce cement using wet process, from byproducts of soda ash
1940 Calcium chloride: Began to produce calcium chloride using distillery efﬂuent
1952 Caustic soda: Changed manufacturing
1966

Tokuyama Factory at time ofestablishment

1

1967

Cement wet process kiln (archival photo)Technologies Leading to Growth Businesses
Since its establishment in 1918, Tokuyama has worked to accumulate technologies and create new products by cultivating ourinorganic chemicals business and, since the 1970s, by promoting the development of fine chemicals and specialty businesses,
mainly in organic and polymer chemistry. Over the course of more than a century, we have established technologies that havebecome the cornerstone of our growth. We will continue to evolve our business as we strive to create value that meets the needs of today.

1

Separation technology using ion exchange membranes

In the 1960s, we became the first company in Japan to commercialize ion exchange membranes. Today, we offer
separation technologies for a variety of applications, through the use of selectively permeable membranes that
only allow the passage of target materials and membranes that have chemical resistance. These technologies areused in a wide range of industries, including the production of salt from seawater, the recovery of specific valuable
substances, the production and refining of food products such as wine and soy sauce, and the production of acids
and alkalis from neutral salt effluent.

2

Ion exchange membranes

Molecular design and organic synthesis technology

The Company has advanced technological capabilities in molecular design, which involves designing and controllingthe chemical structure of photochromic dye materials according to their intended purpose, such as color tone andcolor development and fading. In addition, we have advanced organic synthesis technology to manufacture
products according to design, and we have a track record of delivering numerous products in the field of plastic
lens-related materials. In the future, we will continue to expand these two technologies to a wider range of areas.

3

High-purity and high-sensitivity analysis technology

Our semiconductor-grade polycrystalline silicon, which is used as a raw material for silicon wafers, is of the highest
level of purity in the world. In addition, the Company’s isopropyl alcohol, a chemical used to clean electronic
components, is characterized by its low level of impurities due to a unique process for the direct hydration of
propylene. Our high-purity and high-sensitivity analysis technology, which detects even the smallest amount of
impurities, facilitates the development and manufacture of these products.

4

Aluminum nitride

Waste processing technology

Tokuyama has been effectively utilizing and recycling waste through the cement manufacturing process since thecompany’s inception. We are now accepting a substantial amount of waste, including waste plastic, from outside
the company. Because our kilns burn at an extremely high temperature of 1,000 to 1,800°C, the combustible
components are completely burned away and the non-combustible components are used as raw materials in
cement. This processing technology produces no residue.
6High-purity chemicals forelectronics manufacturing

Direct nitridation and nitride reduction technology

Tokuyama holds the largest share of the global market for aluminum nitride and related products. Our aluminum
nitride, which has excellent sintering properties due to our proprietary nitride reduction process, is used insemiconductor heat spreading substrates and the manufacturing of equipment materials due to its thermal
conductivity, thermal expansion properties, and other characteristics that are far superior to those of our competitors.

5

Plastic lens-relatedmaterials

Resource recycling

Branched into healthcare space and electronic materials
that support information society
1980

1990

Launched recycling business in response to growing
environmental consciousness
2000

2010

2020

businessfrom soda ash production
process of caustic soda to electrolytic process
PVC resin: Established subsidiary to manufacture PVC resin using chlorine produced by electrolysis
Ion exchange membranes: Commenced production of ion exchange membranes, for use in salt production, from concentrated seawater(ﬁrst ever commercialization of ion exchange membranes in Japan)

1972 Isopropyl alcohol (IPA): Commenced production of isopropyl alcohol using our proprietary direct hydration method
Dental materials and equipment: Entered ﬁeld of dental materials and equipment by applying polymer

1978 technology and powder control technology

1981 Plastic window sashes: Established subsidiary to manufacture plastic window sashes made from vinyl chloride
Plastic lens-related materials: Synthesized allyl diglycol carbonate using sodium carbonate method21982 and entered plastic lens ﬁeld

Pharmaceutical ingredients & intermediates: Entered pharmaceutical ingredients &1982 intermediates business utilizing organic synthetic technology

High-purity chemicals for electronics manufacturing: Commenced production of IPA-SE,

3

1983 a high-purity form of isopropyl alcohol

Medical diagnostic systems: Commenced sales of enzyme kits for polyamine tests,

1983 resulting in Companyʼs entry into diagnostic reagents and systems business

Semiconductor-grade polycrystalline silicon: Commenced production of high-purity polycrystalline

3

1984 silicon by utilizing byproducts chlorine and hydrogen

Polycrystalline
silicon plant

Aluminum nitride: Commenced production of aluminum nitride powder using our proprietary1985 nitride reduction process

5

Resource recycling: Newly established Recycling and2000 Environment Business group at Tokuyama Factory

Liquid hydrogen: Commenced production of liqueﬁed hydrogen at
Yamaguchi Liquid Hydrogen Corporation, a joint venture with Iwatani Corporation

2013

Gypsum recycled from waste gypsum board: Established Tokuyama Chiyoda Gypsum Co., Ltd.
as joint venture to recycle waste gypsum board

2013

Manufacturing Technology

Customer Network

From the soda industry, where we got our start, to cement

In the chemicals and cement businesses we utilize ourmanufacturing utilizing byproducts, aluminum nitride andnetwork of domestic customers, which we have cultivatedother industries, Tokuyama has a history of expanding intoover a long history of continuous business. As a result, these

new businesses that meet the needs of the times by scaling

areas are strong sources of revenue.

up our proprietary manufacturing technologies. We

In our growth businesses, we are receiving an increasing

successfully industrialized high-purity silicon nitride powdernumber of consultations regarding new challenges andby developing a manufacturing process that saves energy

product applications from domestic and overseas clients,

and reduces environmental impact. At the Center forbased on our extensive track record. For example, ourCommercialization of Advanced Technology, which opened

Company leverages its proprietary technologies in ourin April 2021, we also developed an energy-efficient andproposals for solutions to various challenges arising in thecompetitive manufacturing process for ceramics using thismanufacturing processes involved in the miniaturization of

powder, and are currently building a plant for its mass

semiconductors. Our strength in providing value has always

production.

been the driving force behind our business expansion.

Tokuyama FactoryCenter for Commercialization ofAdvanced Technology

Tokuyama Electronic Chemicals(Singapore)

Tokuyama Asia Pacific(Singapore)TOKUYAMA REPORT 2021

4

7

Target Business Model
Today, Tokuyama has reached a major milestone in our transition away from energy-intensive businesses. With this awareness,
we have selected electronics, healthcare, and the environment as three new growth markets in which we can leverage ourstrengths. With the combination of our proprietary technologies and marketing, we will develop a solution-oriented businessthat provides unparalleled value to these three markets.
Through this new business model, we aim to achieve the goals of our material topics that contribute to the realization ofSDGs, while reducing our own CO2 emissions. Moreover, we will continue to be a company that never stops challenging new
domains while refining and exploiting its unique strengths, as we have set out in our Vision.

Investment Areas
Proprietary andmanufacturing
technologies
cultivated over a
history of more than acentury

Focus Areas
Development and Application of
Unique Technologies

Main social issues• Super Smart Society(Society 5.0)
• Changes in industrial
structure

High-purity& high-sensitivity
analysistechnology
Direct nitridation &nitride reduction
technology• Digitalization /Networking

Electronics

Customer network
across various
industries

Main social issues• Population shrinkage,societal aging• Healthspan extension

Revenue generated bychemicals and cementbusinesses

Molecular design& organic synthesis
technology• Healthcare spending
cuts

Healthcare

Human resources
with shared values

Main social issues• Global warming /Climate change• Decarbonization• Closed-loop society• Changing values• Environmental
regulatory tightening

Separation
technology
using ion exchange
membranes
Manufacturingbase rooted in local
community

8

Waste processing
technology

EnvironmentAspirations

Main solutions• Performance maintenance instate-of-the-art electronic devices
and energy efficiency• Miniaturization ofsemiconductors• Improvement of semiconductor
performance

MissionTo create a bright future in harmony with theenvironment, in collaboration with its customers,
based on chemistry

VisionBe a value-creative company
that places first priority on
R&D and marketing

Main solutions• Pursuit of cutting-edge
information and technology• Improvements to quality of life
by optimizing performance ofeyeglass lenses• Expansion of external networks• Support for clinical laboratories
to enable rapid, accurate
diagnosis and treatment

Main solutions• Establishment of closed-loop
society through waste recycling• Contribution to mass waste
processing• Protection of water environment
by desalination of effluent, etc.

• Contribution to evolution of
the times

Be a company that
fosters bonds withpeople in communities
and societies
worldwide• Accelerated
international
expansion• Contribution todevelopment oflocal economies andcommunities

Be a company thatnever stops
challenging new
domains while refining
and exploiting its
unique strengths• Differentiation oftechnology• Innovation in
manufacturing
processes

Be a company with healthy
employees who have healthyfamilies and take pride in theirwork at their company• Promotion of physical & mental
health• Respect for individuality• Open corporate culture• Expansion of customer
networkTOKUYAMA REPORT 2021

• Improvements in dental care

9Commitment from the Top

Representative Director,
President and Executive Officer

Hiroshi Yokota
10We aim to help usher in a sustainable society
as a company that creates value in harmony
with the environment.

Fortitude to continue challenging,undeterred by hardships

businesses can best grow by surmounting trials andWe formulated our Medium-Term Management Plan

years ago.

2025 for FY2021-25 with a new Mission, having decided

tribulations with a challenging spirit. The cornerstone ofour business today is the fruits of R&D conducted 40
We appeared for a while to have perhaps successfully

to update it in response to rapid changes in ourengineered a paradigm shift through restructuring. For

operating environment.

example, we temporarily became the world’s top

We have long derived much of our competitivenessmanufacturer of plastic lens-related materials. However,from the Tokuyama Factory’s coal-fired power plant and

we failed to achieve a complete transformation for twoenergy-intensive businesses dependent on it. However,reasons. First, our new businesses were more akin to B2Cchanges in the industrial structure, prospective shrinkage

businesses than to our existing B2B business model. We

in domestic demand due to population decline, and afailed to adequately formulate medium/long-term

growing environmental consciousness have convinced us

strategies, inclusive of marketing, for the new businesses.

that perpetuation of the status quo is no longer a viable

Second, we should have sought to exit energy-intensive

strategy. We must rebuild and grow our businesses inbusinesses but instead we ended up reverting to energy

new directions.

dependence by focusing on the semiconductor-grade

Tokuyama has a history of creating and growing newpolycrystalline silicon business. Even now, energy-intensive

businesses by embracing challenges head on. Founderbusinesses account for some 70% of our consolidated net

Katsujiro Iwai was a trader who imported soda ash fromsales. Given the increasingly urgent imperative of mitigating

England during the early 1900s. When imports wereglobal warming, our captive coal-fired power generation

disrupted by World War I, he built his own factory andhas become a major management issue.

overcame numerous difficulties to launch his business on

We believe the conditions currently facing Tokuyamaa path to success. Tokuyama subsequently built a cement

are, however, similar in impact to multiple earlier crises

business that reused waste from soda ash production. In

during our 100+ year history. Our Mission is to learn fromthe 1960s, it diversified into petrochemicals, including

previous crises and transform into a truly value-creative

PVC resin made from chloride byproducts of soda ash

solution provider. Taking our founder’s words to heart

production. Thus, by creating new businesses that madeanew, we will embrace the challenge of restructuring now

use of the waste and byproducts of existing operations,more than ever.

Tokuyama grew into a diversified chemical maker.
petrochemical business into a structural recession andspawned fuel cost inflation that eroded our competitive

Toward transformation into a valuecreative company

advantage conferred by captive power generation. Faced

We strive to utilize chemistry to create new value thatwith such an adverse environment, our predecessors

makes peoples’ lives healthier, more convenient, andrestructured Tokuyama, pivoting away from energy-

more comfortable. I believe there is no limit to what we

intensive businesses like caustic soda and cement toward

can do. No company can survive for long unless it

technologically differentiated, high-value-added new

operates in harmony with the environment. Based on

businesses like electronic materials and fine chemicals.

that belief, we have updated our Mission and Vision toThis episode truly embodies our founder’s adage,“Inachieve transformation into a value-creative company.

business, it is easy to fail, but triumphs only come after

Our Mission is to truly evolve from our existing, purely

great travail.”Tokuyama’s history is a testament that

B2B business model and mindset into more of a hybrid

TOKUYAMA REPORT 2021

The 1979 oil shock, however, plunged the11between B2B and B2C. We revised our Vision to enable

as our growth businesses. We aim to increase their share

all Group personnel to concretely envision what weof consolidated net sales to at least 50%. We intend toaspire to become. Through initiatives aimed at realization

make our chemicals and cement businesses even moreof our Vision, we plan to pursue sustained growth as aefficient as sustained cash cows.

company that keeps providing value deemed essential
even amid drastic societal change.

We recognize that laying a solid foundation for our
growth businesses while our chemicals and cement

Under our Medium-Term Management Plan 2025,

businesses are still able to maintain their competitivenesslaunched in FY2021, we are committed to (1)is crucial to achieving business portfolio transformation.

transforming our business portfolio, (2) contributing to

To do so, it is important to fundamentally differentiate

mitigation of global warming, and (3) practicing sociallyour products and services in alignment with customers’

responsible management as priorities.

wishes. Therefore, we will set up suitable marketing-based

To transform our business portfolio, we haveresearch programs and promote their commercialization.

designated electronics, healthcare and the environment

To contribute to the mitigation of global warming, weTokuyama's New Vision
To create a bright future in harmony with theenvironment, in collaboration with its customers,
based on chemistry

Mission● Be a value-creative company that places ﬁrst priority on R&D

and marketing● Be a company that never stops challenging new domains

while reﬁning and exploiting its unique strengths

Vision● Be a company with healthy employees who have healthyfamilies and take pride in their work at their company● Be a company that fosters bonds with people in communities

and societies worldwide

Values● Commitment to customer satisfaction as a proﬁt source● A broader, loftier perspective● Employees who consistently surpass their predecessors● Integrity, perseverance, a playful spirit and boldness* Please refer to the“Growth Strategy”section on page 20 for details on the Medium-Term Management Plan.

12aim to further accelerate development of next-generation

continue to focus on expanding markets for high-purity

energy technologies and commercialize them. In responsematerials essential for miniaturization of semiconductors.

to the societal imperative of decarbonization, we have

Thermal management of power semiconductors used inraised our CO2 reduction target. We now plan to reduce

control circuitry has become a major issue in the wake ofour total CO2 emissions to 30% below their FY2019

advancements in electro-mobility. In the thermal

baseline by FY2030. Additionally, we aim to achieve

management materials field, aluminum nitride and siliconcarbon neutrality by FY2050 through development of

nitride are in demand. We plan to accelerate overseas

green products.

expansion to capture the top share in this market as well.

Lastly, socially responsible management will play a

As for the life science business, we clarified its direction

critically important role in both transforming our businessin the dental and optical materials markets under our

portfolio and contributing to mitigation of global warming.

previous medium-term management plan. In both

Based on our Vision, we will clarify our businesses’

markets, the Tokuyama Group’s technologies are globallyrespective contributions and value to society, and pursue

top-notch. In the optical market in particular, we plan to add

material topics (CSR priorities) through concrete action plans.

more value by expanding our business model to include

While proactively investing in expanding growthlens development too. Meanwhile, the COVID-19 pandemic

businesses and shrinking our environmental footprint, we

has reaffirmed the critical importance of preventive andwill focus on earning short-term profits and paying

diagnostic reagents for human longevity. In light of this, we

stable dividends. We will return a fair share of our profits

will pursue new alliances, expand the range of lab tests forto shareholders, targeting a consolidated dividend payout

which we supply reagents and accelerate development

ratio of 20-30%. During our five-year plan’s term, weof diagnostic reagents. For the life science business as aintend to swiftly re-embark on a growth trajectory to live

whole, our plan is to robustly expand globally in markets

up to our stakeholders’ expectations.

where we can differentiate our products with unique
technologies, and to capture the top share in niche markets.
In the eco business, we aim to build the operationalfoundations for a new core business that will play a key

As mentioned above, we have designated electronics,

role in Tokuyama’s future. With demand for water treatment

healthcare and the environment as growth businesses

membranes growing in response to environmental

and reorganized to expedite their progress. From FY2021,

regulatory tightening, we plan to expand our ion

we will further accelerate our business strategy by aligningexchange membranes production capacity and branchthese growth business domains with our segments.

out into both Asia and Europe. We will continue to focus

The electronic materials business is currently performing

on waste recycling not dependent on incineration in awell, capitalizing on the superior quality of products such as

cement kiln, while also aiming to develop andhigh-purity chemicals for electronics manufacturing. It willcommercialize photovoltaic module recycling technologies.

TOKUYAMA REPORT 2021

Direction of growth businesses

13“For the People of Tomorrow”
We will redefine our own Mission and create valuethat brings people a better future.

Deeper engagement with customers, morein-depth marketing

more deeply with customers to ascertain their true needs

I believe innovation and marketing are the mosthealthcare and the environment, we recognize that we

important keys to successfully increasing our growthneed to gather more intelligence on customer satisfaction.

businesses’ share of consolidated net sales to at least
50% over the five years through FY2025.
With product lines that support growth across a wide

as well as the latest trends in their businesses. In our
growth markets, the aforementioned electronics,

One obvious way to glean insight into customers’leading-edge needs is to make inferences about
competitors’ development programs from patent filings

range of industries, Tokuyama has been refining its

and other available information. A more effective

unique technologies, including production technologies,

approach is to formulate hypotheses about the future

in response to changes in its product markets. For

and proactively provide customers with samples of new

example, our isopropyl alcohol is currently used in many

materials to evaluate. In short, the key to technicalstate-of-the-art semiconductors. We are already the global

marketing is ongoing, close communication withmarket share leader in this field. Despite having products

customers. The most important element involved in thiswith such competitive advantages, it seems that we haveis employees. I believe it is crucial to develop optimal

failed to devote sufficient attention over the past few

solutions 10 years ahead of their time by continuallydecades to the vital, fundamental task of identifying ourcollaborating with customers to build relationships

technologies' real strengths. If we are too preoccupied

through which they recognize Tokuyama’s promise.

with immediate tasks, we will invariably experience
technological attrition. We must therefore make steadymedium/long-term progress in R&D based on an accurate
assessment of the strengths of our technologies andmaterials, along with clear foresight vis-à-vis market trends.

The words“in harmony with the environment”in our

We will accelerate R&D in the right direction, including

new Mission are a declaration of our commitment tothrough open-innovation collaborations with universities

change society and the environment for the betterand research institutes.

through our products and services and to dynamicallyTokuyama has operated various businesses during its long
history, but they have relied too heavily on a product-oriented

14

Creating value in harmony with theenvironment

address the worldwide issue of global warming.
In accord with our Medium-Term Management Planapproach over the years. For example, we have been2025 priority of contributing to the mitigation of global

supplying large volumes of caustic soda and cement products

warming, we have announced a target of achieving carbon

of standardized quality at reasonable prices for decades. In theneutrality by FY2050. It is admittedly an ambitious target,markets we are targeting going forward, however, productbut we believe that having a strong resolve to shape thespecifications are determined by what type of utility or

future is important. Since forming our CO2 Projectfunctionality the end consumer is seeking. These markets

Department two years ago, we have been continuously

require us to work completely differently than we have inworking on how to specifically decarbonize. To accelerate

the past. In the case of miniaturizing semiconductor

our decarbonization program, in April 2021 we reorganizeddevices, for example, it is difficult to meet customers’

the CO2 Project Department into a Carbon Neutral

needs unless we approach them with a clear picture ofStrategy Division reporting directly to the president.

the end product in which the device will be used and an

Additionally, under the Carbon Neutral Strategy Division, we

accurate assessment of the technical challenges involved.

established a new Carbon Neutral Planning Department

It is therefore important for our marketing staff to engage

to formulate strategy, and a Biomass Development

Department to source and commercialize biomass fuels

initiatives to address our material topics (CSR priorities) isfor power plants. We see carbon neutrality as an urgent

accordingly a way to bring us closer to realizing ourpriority facing corporate management globally. We

Vision, namely, to build a foundation for growth. For

believe our Mission as a chemical company is toexample, Responsible Care activities in domains such as

demonstrate how to surmount this challenge.

accident prevention, occupational health and safety, andAs a chemical company we are also strongly committed

environmental preservation are essential to support

to pursuing solutions to various other problems throughTokuyama’s foundations. Ensuring safety in particular istechnology. In April 2021, we established a GREEN

fundamental to all of our business activities. We diligently

Project Department within our Research & Development

carry out safety activities as a first step toward maintaining

Division to develop technologies to, for example, use CO2

good relations with local communities. Additionally, as a

as a feedstock, leveraging our corporate DNA ofcompany that places utmost importance on humanrepurposed use of byproducts and waste. We plan toresources, we believe diversity of ideas will accelerate ourseek out business opportunities while publicly sharing

transformation into a value-creative company. In managing

new research findings on reducing CO2 emissions.

our operations, we will place priority on diversity as an
essential element of our growth strategies going forward.
Just as our predecessors set the stage for the Tokuyama
of today by laying the groundwork for our growth businesses,

We recognize that CSR is a core component of our

we must follow suit by becoming the cornerstone of thestrategies and efforts to steadily fulfill our Mission.

future Tokuyama. How earnestly we tackle this challenge

The foremost key to corporate longevity is earning thewill directly determine our future growth path. In othertrust of communities, local residents, countries andwords, whether we can create the bright future we envisionpeople worldwide. In 2019, Tokuyama joined the ranks ofhinges on every single employee’s individual efforts.

UN Global Compact signatories as an inward and outward

Reforming our organizational culture was a key priority in

expression of our firm commitment to realize sustainable

our previous medium-term management plan. We will

growth while helping to resolve societal problems at a highcontinue to focus on reforming our organizational culture tolevel as an upstanding member of society. To properly

better harness our workforce’s energy, because ultimately

meet societal needs, dialogue with stakeholders is ofpeople are Tokuyama’s driving force. We plan to swiftly carryutmost importance. We must earnestly listen to feedbackout structural reforms for the sake of both the generationon our shortcomings and continuously work to improve.

that will create Tokuyama’s future and future society as a

We mainly operate our businesses from the Tokuyama
Factory in Shunan, Yamaguchi Prefecture, where our company
is based. I feel that Tokuyama must strive to be a beloved
local company at which our children aspire to work. Such
relationships of trust with society can be built only througha long track record of day-to-day CSR activities. Stepping up

whole. Keep expecting big things from Tokuyama.
TOKUYAMA REPORT 2021

Taking action for the people of tomorrow

15

Financial and Non-Financial Highlights
Financial Highlights (Consolidated)
Net Sales / Operating Profit / Operating Margin
In FY2020, net sales and profits decreased from the previous year mainly due to the exclusion of a subsidiary fromconsolidation and the impact of COVID-19. In FY2021, although we expect a recovery in the sales volume of chemicals andother products and sales price revisions due to higher raw material and fuel prices, we expect a decrease in profits due to anincrease in R&D expenses and depreciation expenses for growth. The decrease in net sales for FY2021 due to application ofthe“Accounting Standard for Revenue Recognition“ is expected to be approximately ¥42.8 billion.
* The forecast for FY2021 is prepared based on the application of the“Accounting Standard for Revenue Recognition”and other standards.

(Billions of yen)

350

307.1

299.1

308.0

Net sales (left)

Operating proﬁt (left)

324.6

316.0

Operating margin (right)

18.0

302.4

300

16.0

271.0

13.4

12.9

14.0

売上高・営業利益

250

10.9

（％）

10.8

200

12.0

10.2

9.6

10.0
8.0

150

7.1

6.0

100

4.0
50

38.5

41.2

21.9

35.2

34.2

30.9

26.0

2.0

0

0
2015

2016

2017

2018

2020

2019

2021
(Forecast)(FY)

Profit attributable to owners of parent / ROE
Profit attributable to owners of parent was a loss of ¥100.5 billion in FY2015 due to the recording of losses from unprofitablebusinesses, but returned to profitability in FY2016 due to withdrawal from those businesses. The target for ROE to beachieved in the final year of Medium-Term Management Plan 2025 is 10% or more. While ensuring a stable financial base, wewill promote shareholders’equity efficiency gains and proactively invest in growth to increase corporate value.

(Billions of yen)
60

Proﬁt attributable to owners of parent (left)

58.5

40

34.2
24.6

19.6

20

24.5

19.9

15.6

20

13.4

12.4

（100.5）

22.0

0

(60)

（60）

(80)

（80）

(100)

（94.0）
2015

16

（%）

60

52.1

40

0

ROE (right)

（100）

2016

2017

2018

2019

2020

2021
(FY)
(Forecast)Capital Expenditures / Depreciation andAmortization / R&D Expenses
All are expected to increase in FY2021. To
achieve the goals of Medium-Term Management(Billions of yen)

Capex

Depreciation and amortization

R&D expenses

50

44.8

40

Plan 2025, we will accelerate capital investment
mainly in electronics, healthcare, and theenvironment, which we have defined as
growth businesses. In R&D, we will focus on
corporate development along with growthbusinesses, and create medium- to long-term
development themes with marketing as the core.

30

20

17.3
14.2

13.9
10

0

26.4

23.7

20.0

8.5

2016

21.3

2017

17.0

16.1

2018

14.2

10.8

9.1

8.0

7.9

7.5

2015

18.5
15.0

15.9
13.9

2020

2019

2021 (FY)(Forecast)* Depreciation and amortization includes amortization of longterm prepaid expenses.

Cash Flows
Regarding cash flow from investing activities

80

61.8

60

in FY2021, we expect an increase in capital

40

expenditures to further enhance corporate

20

value.

Cash ﬂows fromoperating activities(Billions of yen)

30.0
13.4

Cash ﬂows frominvesting activities

52.3

38.5

Cash ﬂows fromﬁnancing activities

43.3

20.0

0
（20）
（40）
（60）

（10.0）（11.9）（12.6）（16.1）（21.1）（20.5） （19.2）（18.3） （22.5）（37.6）

（80）
（100）
（120）

（101.2）
2015

2016

2017

2018

2020

2019

2021 (FY)(Forecast)

Total Assets / Shareholders’ Equity Ratio
With improvement of financial position as apriority issue in our Medium-Term Management

450
400

Plan: Cornerstone of the Group’s Revitalization,

350

which began in FY2016, we promoted the300

recovery of shareholders’ equity by building

250

retained earnings, and implemented measures200

to quickly strengthen our financial foundation,

150

including the issuance and redemption of100

preferred stock. As a result, the shareholders’50

equity ratio in FY2020 was 51.3%, up 38.5

Total assets (left)(Billions of yen)0

Shareholders equity ratio (right)

424.4

401.3

（％）
60

361.9

386.7

383.4

379.6

51.3

50

44.0

40

40.2
34.7

30

29.9

20

12.8

2015

10

2016

2017

2018

2020

2019

(FY)

0

percentage points from FY2015.

Regarding the distribution of profits, Tokuyama’s
basic policy is to ensure the continuous andstable payment of dividends to its shareholders.
In carrying out this policy, the Company takes
into consideration performance trends and theroadmap established under its medium/long-term business plan. For FY2021, theCompany plans to pay an interim dividend of¥35 and a year-end dividend of ¥35, for a total
annual dividend of ¥70.

（Yen）

Payout ratio (right) （％）

Cash dividends per share (left)

80

70.00

70

70.00

24.4

22.9

60

50.00

50
40

11.5

20

0

20

19.9

30.00

30

10

30

70.00

10.1

10

0.00
0.00
0.0
0.0
2015

2016

2017

2018

2019

2020

2021
(Forecast)

(FY)

0

* The Company consolidated its common shares at a ratio of one share for each five shares effective as of October 1, 2017. The cash dividend per share for FY2017 is given on theassumption that said share consolidation was conducted at the beginning of the fiscal year.
* The year-end dividend per share for FY2017 included a commemorative dividend of ¥10 to celebrate the Company’s 100th anniversary.

TOKUYAMA REPORT 2021

Cash Dividends Per Share / Payout Ratio

17Non-Financial Highlights
Total CO2 Emissions
We recognize that the mitigation of
global warming is one of the mostimportant issues and are working hard
to reduce CO2 emissions. CO2 isgenerated mainly by the combustion offossil fuels in captive power plants, aswell as by the decarbonation oflimestone (raw material) in the cement
manufacturing process. CO2 emissions
in FY2020 were 6,490 thousand tons
due to the promotion of alternative
fuels to coal and decreased operating

8,000

We are promoting energy conservation
as a measure to mitigate global

6,770

7,000

6,140

6,458

6,700

6,760

2018

2019

6,490

6,000
5,000
4,000
3,000
2,000
1,000
0

rates.

Unit Energy Consumption Index

Total CO2 emissions (consolidated)（Thousand tons）

2015

2016

2017

Per-unit energy
consumption
（%）
100

2020

(FY)

Unit Energy Consumption Index (non-consolidated)

100

warming. In FY2020, there were fears
that the energy consumption rate would
worsen significantly due to a decline infacility operation caused by COVID-19.
However, we were able to maintain thesame level as the previous year by

94.6

95

93.6

steadily implementing energy-saving
measures and promoting the use ofalternative energy sources to coal. As a

91.2
90.5

result, we achieved our target of a 3%
improvement in the energy consumption
rate based on FY2005 standards.

90

2005

Effective Utilization Rate for Waste /Zero Waste Emission Rate
The effective utilization rate for waste

the volume of waste and

2017

2018

91.1

2019

2020

(FY)

Zero waste emission rate

（%）
100

99.9

99.9

99.9

99.9

99.8

94.3

94.2

93.8

93.1

93.9

2015

2016

2017

2018

2019

99.7

95

comprehensive recycling efforts. As aresult of actively promoting the2016

Effective utilization rate for waste

and the zero emission rate remained
high in FY2020 due to efforts to reduce

2015

91.0

94.7

90

recycling of waste generated bothinternally and externally, with a focus on85

the reuse of waste as feedstock andfuel for cement at the Tokuyama
Factory, the effective utilization rate forwaste was 94.7% and the zero waste
emission rate was 99.7%.
18

0

2020

(FY)

Number of Employees / Percentage of
Women among All Employees / Percentageof Women among All Managers
Tokuyama promotes diversity by utilizing
the diverse values and perspectives of each(left)(right)Number of employees(consolidated)（People）
6,000

Number of employees(non-consolidated)

5,759

Percentage of womenamong all employees(non-consolidated)14.0（％）

5,679

5,471

5,406

5,476

4,889

5,000

the Act on Promotion of Women’s

9.1

9.0

8.9

9.0

1,888

1,869

1,920

1,924

8.0

3,000

Participation and Advancement in the
Workplace, and updated it in FY2020. We

2,000

2,063

1,000

women as presidents at Group
companies both in Japan and overseas

6.0

2,256

4.0

are steadily expanding the scope of ouractivities, with the appointment of

10.0

10.4

4,000

accordance with the implementation of

12.0

12.1

employee in its corporate activities. In
FY2016, we formulated an action plan inPercentage of womenamong all managers(non-consolidated)

1.2

1.3

1.5

1.5

2015

2016

2017

2018

1.8

2.0

2019

2020

2.0
0

0

in FY2018, and the appointment of(FY)

women as general managers in FY2021.

Accident Frequency Rates*
One of our safety management goals is

（％）
2.0

to achieve zero accidents and lost time

1.8

injuries, and we are working to identify
and eliminate risk factors, as well as tounderstand and recognize the behavioral
unsafe behavior. However, there were1.0

two cases of employees with lost time

0.8

injuries in FY2020, and the frequency

0.6

to achieve zero lost time injuries.
* Accident frequency rates indicate the frequency ofoccupational injuries, and are expressed as the numberof employees absent from work due to occupational
injuries per 1 million total working hours.

1.83
1.61

1.63

Chemical industry in Japan

1.80

1.95

1.66

1.4
1.2

than usual. We will continue our efforts

All industries in Japan

1.6

characteristics of each individual to eliminate

rate of accidents was slightly higher

Tokuyama

0.4

0.81

0.88

0.81

0.94

0.90

0.93

0.85
0.49

0.29

0.29
0.28

0.2

0.00

0

2015

2016

2017

2018

2019

2020

(FY)

Annual Paid Leave Rate
In order to improve our employees’

（％）
100

work-life balance, we encourage the90

average rate of use has been over 70%.
The revised Labor Standards Act of April

80

60

least five days of annual leave, and we50

are supporting this appropriately. Our

40

Action Plan to Promote Opportunities

30

sets a target of 75% or greater utilizationof annual paid leave.

73.6

73.2

2016

2017

75.6

72.4

75.2

70

2019 requires employees to take atfor Women, set forth in April 2020, also

76.6

20
10
0

2015

2018

2019

2020

(FY)

TOKUYAMA REPORT 2021

planned use of annual leave, and theAnnual paid leave rate (non-consolidated)

19

Growth Strategy
Growth Strategy Evolution ……………………… 21
Medium-Term Management Plan 2025……… 22
Strategy 1: Transform Business Portfolio …… 24
Strategy by Business ……………………………… 27
Strategy 2: Contribute to Mitigation of
Global Warming …………………………………… 32
Strategy 3: Promote Socially Responsible
Management ………………………………………… 36
Roundtable Discussion:
Sustainable Growth and Our Mission ………… 40

20Growth Strategy Evolution
Previous Medium-Term Management Plan in Review
Tokuyama’s previous medium-term management plan

FY2015 results

FY2020 targets

FY2020 results

Net sales¥307.1bn¥335.0bn¥302.4bn

Operating profit¥23.0bn¥36.0bn¥30.9bn

ROA*1

5.7％

10％

8.0％

Operatingmargin

7.5％

10％

10.2％

Total asset
turnover0.77 times

1.0 times

0.79 times

CCC*2

69 days

55 days

65 daysDebt/
equity ratio

4.7x

1x

0.5x

“Cornerstone of the Group’s Revitalization,” launched
in FY2016 to serve as a“new foundation,” placed
priority on improving the Company’s financial
position. Despite falling short of the plan’squantitative targets as a result of the COVID-19
pandemic’s impact and costs incurred to lay thegroundwork for our next medium-term plan, we
believe we are well on track to regain earnings
power. During our previous plan’s five-year term, we
also structurally strengthened our operations, partly
by exiting unprofitable businesses, with the aim of
becoming the world’s top supplier of advanced

Financial
indicatorsmaterials and the domestic market share leader in
our legacy businesses by FY2025. That said, efforts
to reform our organizational culture remain a work inprogress. We will continue these reforms underMedium-Term Management Plan 2025.

JPY/USD

120

110

106

Domestic naphtha price (¥/kl)

42,80058,00031,200*1 ROA: operating proﬁt/total assets
年度*2
Cash conversion cycle: days sales outstanding + days inventory outstanding‒ days payables outstanding

Consolidated Operating Profit (Planned)
MTMP:

(¥bn)

50

Cornerstone of the Groupʼs
Revitalization FY2016-2020

40

Life & Amenity：11％30

Specialty Products：23%
Cement：16%

20
10
0

Chemicals：50%
TMSB＊TMSB: Tokuyama Malaysia

(10)
2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

FY2025 (Target)

Progress on Priorities
FY2016FY2018FY2019

Revision of personnel evaluation system● Managers● Senior personnel

FY2020● Regular personnel● Stepped up hiring/promotion of externally recruited personnel

Rebuildbusiness strategy● Transferred Tokuyama Malaysia to OCI (Korea)● Revised new business assessment process (exit criteria)● Opened Taiwan Research Laboratory
Decided to establish Center for Commercialization of Advanced Technology (silicon nitride) ●Liquidated Tianjin Tokuyama Plastics (microporous ﬁlm) ●Established Taiwanese JV to sell high-purity IPA to electronics industry ●Strengthengroup management● Partially divested equity stake in Figaro Engineering (gas sensors)
Excel Shanon (plastic window sashes) formed capital tie-up with Panasonic ●Partially divested equity stake in Sun-Tox (polyoleﬁn ﬁlm) ●Agreed to acquire afﬁliate A&T (medical diagnostic systems) as wholly-owned subsidiary ●Improvefinancial position● Issued preferred stock to strengthen ﬁnancial base
● Redeemed preferred stock● Reﬁnanced subordinated loan
● Regained single-A credit rating

TOKUYAMA REPORT 2021

Reformorganizational
cultureFY201721

Medium-Term Management Plan 2025
Background of Strategy
Tokuyama’s sources of competitiveness under its legacy
business model have been operational integration andin information and communication technology.
To craft a growth strategy that capitalizes on suchcheap electric power generated by the Tokuyama Factory’schanging trends, we must boldly transform our individual

captive coal-fired power plant. In other words, Tokuyama hasbusinesses and their collective revenue mix based on new

generated most of its profits from energy-intensive businesses

ideas that go beyond mere extrapolation of the status quo.

and has been heavily dependent on domestic demand,

In particular, we must increase energy-efficient businesses’

deriving some 80% of its net sales from the domestic market.

share of revenue. At the same time, we must seek to create

However, our operating environment changed drasticallysolutions that can contribute to attainment of theduring our previous medium-term management plan’s five-

Sustainable Development Goals (SDGs) in domains where

year term. First, effective measures to reduce CO2 emissions

we can leverage Tokuyama’s unique technologies.

have globally become a priority among governments and

In February 2021, we redefined our Mission to strike acompanies in the wake of the 2016 Paris Agreement’s

healthy balance between achieving sustained growth andeffectuation. Second, in Japan, Tokuyama’s main market, thecontributing to SDGs’ attainment. We also unveiled a new

sluggish trend in chemical demand has worsened markedly,

Vision to fulfill our Mission. Tokuyama is committed tolargely in response to societal aging. Third, consumers aretransforming into a value-creative company by providing

becoming increasingly health-conscious and interested in

products and services that help solve societal problems indigitally enhanced lifestyles against a backdrop of advancements

accord with its new Mission and Vision.

Mission: To create a bright future in harmony
Management challenges

Society

Accelerated change inindustrial structure
Rapid digital revolution

Tokuyama’s Aims

Achieve SDGs
Target societal challenges within Tokuyama’s
circle of competence as core business domains

Electronics
Healthcare

Japan

Domestic demand
shrinkage

Environment

Growing healthconsciousness
Reduce CO2 emissions
Planet Earth

Growing environmental
consciousness,environmental regulatory
tightening
22

Achieve carbon neutrality by FY2050
Reduce dependence on energy-intensive
businesses (chemicals, cement) while scaling
up energy-efficient businesses (electronics,
healthcare, environment)

Overview of Strategy
In response to prevailing societal changes and management

parallel with our decarbonization program, we will

challenges, we recently formulated Medium-Termaccelerate development and commercialization of next-

Management Plan 2025 for FY2021-25. The new plan’s first

generation energy technologies.

priority is business portfolio transformation. First, we have

Our plan’s third priority is socially responsible

designated our energy-intensive chemicals and cement

management. We plan to focus on addressing material

businesses as cash cows, and will work to maintain their

topics (CSR priorities) that will become a springboard for

position as market leaders. Next, we have defined

growth toward realization of our Vision. To do so, we will

electronics, healthcare and the environment as new growthsteadily execute on our plan’s three priorities with the aim

businesses in light of their prospects for market growth.

of achieving net sales of ¥320 billion*3 and operating profit

Through proactive R&D investment, we will developof ¥40 billion in FY2025.

competitively advantaged products and services in theseIt goes without saying that solutions to the individual

three domains. Meanwhile, we will conduct marketing-basedmaterial topics identified by Tokuyama will come from our

R&D oriented at end users to transform from a materials

employees. We plan to achieve Group-wide growth

supplier to a supplier of intermediate goods and solutions.

through continued progress in better developing humanresources and reforming our organizational culture.

Our new plan’s second priority is contributing to themitigation of global warming. We aim to steadily achieve*3 FY2025 net sales target factors in application of the ASBJ’s "AccountingStandard for Revenue Recognition" and other new standards.

our long-term goal of carbon neutrality by FY2050. In

    with the environment, in collaboration with its customers, based on chemistryTransform businessportfolio
Increase growth businesses’
share of consolidated net sales toover 50%

Contribute to mitigationof global warming
Expedite development &commercialization of next-gen
energy technologies
Reduce total CO2 emissions 30%* 4
by FY2030

Practice socially
responsible management
Step up high-priority material
topics (CSR initiatives) to lay thegroundwork for further growth
and realize Vision*4 Relative to FY2019

FY2025 Targets

KPI

FY2020 results

Net sales¥259.2 bn *OperatingprofitGrowthbusinesses’
net-sales
growth rate

ROE

¥30.9 bn―

13.4 %

5

FY2025 targets

Keys toachieving target¥320.0 bn

Maintain
growth whiletransforming
portfolio¥40.0 bn

Strengthen
and expand
highlyproﬁtablebusinesses

CAGR ≥ 10%

Strengthen
R&D, accelerateinternational
expansion≥ 10 %

Balanceshareholdersʼ
equity efﬁciency
and ﬁnancialbase*Assumptions: JPY/USD rate of ¥105, domestic naphtha price of ¥32,500/kl*5 FY2020 net sales are approximate amounts based on application of“Accounting Standard for
Revenue Recognition,”etc., and are listed as reference values.

TOKUYAMA REPORT 2021

Medium-Term Management Plan 2025

23

Strategy 1: Transform Business Portfolio
Policies and Priority Issues for FY2025
Increase growth businessesʼ share of consolidated net sales to over 50%
FY2021-25 Plans● Redeﬁne/reorganize growth businesses around the three themes ofelectronics, healthcare, and the environment, and proceed to move ahead
with expanding them

● Chemicals and cement businesses to promote increased efﬁciency
while generating sustainable cash ﬂows
Priorities and initiatives
Technology:

Pursue added value and promote technological differentiationby collaborating more with external partners

Efﬁciency gains:

Pursue company-wide operational efﬁciency, mainly through DX

International expansion: Expand operations in growing overseas markets

Target Business Portfolio
To achieve sustainable growth, Tokuyama will powerfully
pursue the transformation of its business portfolio over

Breakdown of Consolidated Net Sales by Business
FY2030Targeting at least

the next five years. We will position the chemicals andcement businesses as strong sources of revenue, and focus
our management resources on growth businesses. In theelectronic materials business, we will focus on the development

30 ％of advanced technologies for semiconductors and high-purity
chemicals. In the life science business, we will use ourproprietary technologies to capture a top niche position in areas
where we can differentiate ourselves. In the eco Business,

3%

60％

34%

FY2020Growth Businesses

18%
9%

18%

Electronic Materials
Business

10%

Life Science Business

24%

17%

27%

Eco Business
Chemicals Business
Cement Businessbusiness into a new pillar for the future. We will set our target

19%

12%
9%

for consolidated net sales ratio for these growth businesses at

FY2020

FY2030 (Planned)

we will establish an earnings model in order to turn the

Other

50% or more by FY2025, while aiming for even higher levels.

Financial Management Policy and Capital Expenditures Plan
Under Medium-Term Management Plan 2025, in order tosupport the transformation of our business portfolio from afinancial perspective as well, we will work to generate cash

● Earnings growth● Cash ﬂow fromnew products

flow through profit growth and improve capital efficiency,
while ensuring that group governance functions effectively.
Building on our strong financial base, we plan for capital

Operating Cash Flow

Cumulative¥250 billion
over 5 years● Screen
prospective
investments● Reduce
inventory

expenditures totaling ¥200 billion over the next five years.
About two-thirds of our total investment will be allocated to
growth businesses, energy conservation and CO2 measures,and R&D. Through these proactive investments, we will
increase our top line and provide stable shareholder returns,
while reducing CO2 emissions.
24

Capex

¥200 billion

Strategic
Investment

Shareholder Returns

Up to ￥30 billion

Consider acquisitionof own shares(M&A, new businessdevelopment)

20-30% payout ratio

R&D Policy
To put the three areas of electronics, healthcare, and theto long-term development themes centered on marketing,environment on a growth trajectory, it is essential for us toas corporate development activities have declined and there iscultivate Tokuyama's proprietary technologies and develop

a lack of development themes to be addressed over theuncharted technological fields through proactive R&D investment.

medium-to long-term. We will also accelerate innovation that

Looking back at our R&D activities over the past fiveintegrates different fields and the development of technologies

years, we were able to make solid progress on short- andin the environmental field, in which progress has been

medium-term development themes, take stock of ourlagging, in order to transform ourselves into a value-creative

elemental technologies, and reexamine our unique strengths

and solution-providing company. The customer-driven

by concentrating our management resources on development

research and development that we have practiced thus far

in our business divisions. Under Medium-Term Management

will remain unchanged, and we will continue to expand thePlan 2025, we will concentrate management resources onvariety of our customer proposals in conjunction withcorporate development and focus on the creation of medium-achievements resulting from our corporate development.

Case 1: Thermal Management Materials Demand and R&D
Tokuyama’s aluminum nitride, as a high heat dissipation and high insulation material, has gained a significant market share, mainly inindustrial applications such as power semiconductors. Under Medium-Term Management Plan 2025, we will continue to promote andcultivate existing products in the global market, while accelerating R&D and commercialization based at the Center forCommercialization of Advanced Technology, which opened in April 2021. By launching new materials for EVs, HEVs, and various
power devices, we will expand our product lineup, while at the same time working to solve more familiar heat dissipation problems.

Metallized Substrate Market for Power Semiconductors
Already Adopted

Ongoing Customer Evaluation of Developed Products

Silicon nitride

Boron nitride(thin ceramic plate)
ConsumerElectronics

Mobile devices

2.5B$
Aluminum nitride(thick ceramic plate)

1.3B$

Industrial motors
High brightnessLEDs(headlamps)

Charging facilities anddistributed power supplies
Electric power grid equipment/
electric railways

Professional-use
SocialInfrastructure(shift from alumina)

Thermalmanagement
materials for
EV/PHV/HEV
batteries

EV/PHV/HEV
inverters
Wind & solar
power
generation

Aluminum nitride

Heat dissipation
plates for LiDAR(radar devices)

Data centers

Aluminum nitride(thin ceramic plate)(shift from alumina)

High heat dissipation
ceramic substrate

Semiconductor
manufacturing equipment,
for memory and logic use

Mobilebase stations

EV
PHV
HEV

1.2B$
Heat
dissipation filler

Ceramics

Heat dissipation filler

Low speed and low frequency

High speed and high frequency

High voltage and high current

Low voltage and low current* Based on Tokuyama April 2021 estimates

Case 2: Recycling Technology for Solar Cell Modules
In the environmental field, Tokuyama is taking a different approach from othercompanies to the development of new technologies. One of these is thetechnology to recycle solar cell modules. Currently, we are aiming to establish
clean glass, cells, and ribbons* 2 at an experimental facility built in Nanporo
Industrial Park in Hokkaido. We are also launching a new business that canachieve high resource recovery rates at low costs through recycling technology
using catalysts that chemical manufacturers are uniquely equipped to provide.

Before recycling*1 Selected by the New Energy and Industrial Technology Development Organization (NEDO) for its project related to the“Development of Elemental Technologies for Photovoltaic Material Recycling.”*2 Copper wire connecting cells

Recovered cells

TOKUYAMA REPORT 2021

Recoveredglass

continuous operation technology*1 for a recycling demonstration plant to collect25

Pursuit of Operational Efficiency through DX
To transform our business portfolio, we need to establish

operations of corporate and sales departments, and wehighly efficient business operations company-wide throughexpect that it will also serve to innovate the transfer of field

digital transformation (DX) using AI and other technologies.

knowledge and production processes, as well as improve

Specifically, we will use DX to increase R&D speed, improvethe efficiency of back-office operations. We will realize ourmanufacturing processes and energy conservation, andfour Visions with continuous innovation through the use of

optimize inventory. DX can also bring innovation to thedigital technology.

Promoting Digital Transformation (DX)
Phase

1

Steps to ensurecorporate
survival

Generate human resource
reserves by improving efficiency/ Innovate manufacturing process
management / Use CRM tools

Phase

2

Preparingfoundations forreforms

Phase

3

Improve supply chain managementlevels / Expand digital education /Use AI

Promotingreforms

Improve development speed
through MI* / Create customeroriented business models*MI: Materials Informatics

Accelerated International Expansion
We will accelerate international expansion to increase our

local partners to build a supply system that can meet theconsolidated overseas net sales ratio, which remained atneeds of customers in cutting-edge fields, mainly in Asia

approximately 20% in FY2020, to over 50% by FY2030.

and North America. In the life science business, we will

Behind this policy is the future decline in demand in the

expand our product line in areas where we candomestic market and the steady expansion of overseas

differentiate ourselves, such as fine chemicals and dental

markets. At present, our company is not in a position to bematerials and equipment, in light of the increase in averageable to capture the strong overseas demand. Facing thislife expectancy in each country and region. In the eco

reality, we plan to expand our business globally bybusiness, we will expand sales of ion exchange

leveraging Tokuyama‘s advantages.

membranes and other products to Asian and European

In the electronic materials business, we will work withcountries.

Future International Expansion of Main ProductsElectronic Materials

High-Purity Isopropyl Alcohol (IPA) forElectronics Manufacturing

OMNICHROMA

Plastic Lens-Related Materials

Since its launch in 2019, OMNICHROMA has

To achieve a 25% share of the global

We have supply bases in Taiwan andbeen highly acclaimed for its innovative

market for photochromic dye materials, weSingapore, and have established a joint

concept and creative technology. We aim towill promote value-added improvements

venture IPA manufacturing and sales

promote composite resin sales and achievethroughout the supply chain, including

subsidiary in Taiwan to further strengthenbrand penetration of the Tokuyama Dental

support for next-generation products ofour supply system in the Asian market,

Corporation on a global level. We will

customers, and aim to both expand sales

with plans to start supplying IPA in January

expand sales and increase our market

and develop new businesses in the2022. We are also aiming to establish ashare in the U.S. and European markets,

European, U.S. and Asian markets.

supply system in China to expand ourand accelerate the launch and marketing ofmarket share in Asia and cement our

products in emerging markets.

position as the No. 1 supplier in the region.
26

Life ScienceStrategy by BusinessElectronic Materials
Push forward with globalization, and capture
top share in the high-purity and thermal
management materials fields supporting theminiaturization and stacking of semiconductors

Hiroshi Nomura

Representative Director, Senior Managing Executive Officer
General Manager, Electronic Materials Business
Division and General Manager, Tokuyama Factory

Business Overview

manufacturers, and global competition is intensifying. In

The segment manufactures and sells high-value-added

such an environment, marketing is an important

products across four businesses, namely Silicon, centeredcomponent in ensuring competitive advantage. We are also

on semiconductor-grade polycrystalline silicon andendeavoring to construct a system for accurately assessing,chlorosilanes; Silica, used primarily as a semiconductor

and quickly reflecting in product development, customer

polishing agent (CMP) and in silicone; Thermal Management

requirements arising from advances in miniaturization,

Materials, including aluminum nitride, in which we havestacking and increased performance.

global top share, as well as boron nitride and silicon nitride;

Here, briefly, are our strategies by product area. In Silicon,

and IC Chemicals, centered on high-purity chemicals for

we will continue to improve on our world-class quality,

electronics manufacturing. The segment name wasalong with reviewing processes, advancing automation andchanged from Specialty Products to Electronic Materials

taking other steps to significantly reduce costs. In Silica, wewith the April 2021 reorganization. Under Medium-Termwill advance the transformation of our business portfolio by

Management Plan 2025 this is a core business domain, anduncovering and developing new applications, expanding

is positioned as the division that will play a leading role insales to Asia and N. America, and further, introducing

shifting the Company’s business portfolio.

high-value-added products. In Thermal Management

To respond to the demands of semiconductor andMaterials, we will expand our product lineup with theelectronic materials manufacturers both in and outside

addition of silicon nitride and boron nitride, accelerating

Japan, we are now working to develop the Company’sbusiness development. At the same time, we will utilize

unique technologies in high purification and high-joint ventures and M&As to expand applications and movesensitivity analysis, among others. We also intend to work

ahead with entry into downstream fields. In IC Chemicals,

to build a solid business model in anticipation of long-term

our work will focus on further increasing levels of

growth, including increasing the weight of product areas

purification in high-purity chemicals for electronics

categorized as energy-saving.

manufacturing, while also executing aggressive expansion

Strategic Points

overseas. We will also promote product development andcommercialization in anticipation of near-future markets.

The key to the segment’s strategy will be to build a system

Globalization is a common strategic point across all offor the timely market launch of products that meet thethese fields. Our goal is to rapidly increase our share ofpace of growth and technical innovation in theoverseas net sales by reorganizing business sites and making

semiconductor industry. The electronic materials market isaggressive investments not only in markets in Asia, but also

currently witnessing the successive entry of new overseas

with an eye to the US and European markets as well.

Quantitative Targets (Billions of yen)

Priority Measures▶ Pursue aggressive expansion in overseas markets

FY2020results*2

FY2025targets

Net
sales

61.7

102.0

Operatingprofit7.1

20.0▶ Develop new applications, expand product portfolio▶ Produce high-quality products, pursue analysis technology
International Expansion
IC Chemicals
ThermalManagement
Materials
SiliconSilicaExpand Taiwan JV facilities, expand new global
facilities
Launch silicon nitride, boron nitride products and expand
overseas sales
Develop new applications and enter downstream ﬁelds
Strengthen marketing of semiconductor-grade polycrystalline silicon
Extend silane product line and expand in Asia
Expansion of CASE*1 and personal care applications
Entry into the organic silicone ﬁeld

*1 CASE: Coatings, adhesives, sealants, and elastomers

Asia, N. America
Asia, N. America,
Europe*2

FY2020 net sales are approximate amounts
based on application of Accounting

Asia

Standard for Revenue Recognition, etc., andare listed as reference values.

Asia, N. America

TOKUYAMA REPORT 2021

Business
Goal

27

Life Science
BusinessGoal

Use unique technology to capture top
niche share in areas where differentiationis possible (vision, dental, diagnostics)

Naoki Tamura
Executive Officer
General Manager, Life Science Business Division

Business Overview

such as desiccants. In dental materials and equipment, ourThe segment name was changed from the previous Life &efforts will focus on continuing to demonstrate initiative inAmenity to Life Science with the April 2021 reorganization,

global markets, centered around the OMNICHROMA

consolidating product areas having to do with human health.

composite resin product series. In the field of medical

Since its entry into the dental care materials field in the

diagnostics, through alliances with other companies we aim

latter half of the 1970s, the segment has developed andto become the No. 1 OEM supplier of automated bioanalytic

supplied a succession of products leveraging Tokuyama’s

testing systems in Europe and Asia.

unique technologies, including pharmaceutical ingredients,

For the segment as a whole, we will be shifting the focus

pharmaceutical intermediates, and photochromic dyeof our business to new fields and overseas markets wherematerials for eyeglass lenses. The Company operates state-high growth can be expected. To accomplish that, we willof-the-art manufacturing equipment that conforms tostrengthen our marketing capabilities, in part by actively

manufacturing and quality control standards forhiring personnel who are intimately familiar with overseas

pharmaceuticals and quasi-drugs under a strict control

markets. Further, by expanding the business through M&As

system. We contribute to enhancing peoples’ quality of lifeand collaboration with other companies, we aim to develop(QOL) through solutions that combine a lineup of high-new products and offer new added value. In particular, A&T

value-added products created with this system, andCorporation, which we acquired and made a wholly-owned

Tokuyama’s technical expertise, including its patents.

subsidiary in February 2021, will become our core operating

Strategic Points

company in the medical diagnostics field, and beginning
this fiscal year, will be expanding into blood testing devices,

Our goal is to gain top niche share in fields that allow for

as well as support systems for introducing IT andeasy differentiation, such as eyeglasses, dental care, andautomation in testing labs and other areas. With thediagnosis, based on unique technologies developed by

support of Tokuyama’s chemical technologies, we aim to

Tokuyama. In addition to expanding our share in plastic

move forward with R&D in domains integratinglens-related materials, we are also working to utilize organic

biochemistry and chemistry, including functional peptides

synthesis technology we have developed to enter theand others, with the goal of creating new products in thesemiconductor and electronic device fields. Going forward,

field of clinical testing reagents. We also intend to grow our

we will prioritize the allocation of management resources

main portfolio of products in dental materials andfor the use of microporous film not only in the medical

equipment into a global brand for aesthetic repair materials.

disposables market, but also for non-medical applications

Priority Measures

Quantitative Targets (Billions of yen)

▶ Expand product portfolio including biotin and other products for health/pharmaceutical applications▶ Develop new applications for unique biaxially-oriented microporous film;
expand Shanghai site
▶ Accelerate overseas expansion of cosmetics materials, supplements andother healthcare products, develop new product areas▶ Accelerate the development of diagnostic reagents through chemical
integration, establish new alliances, and expand testing areas
International Expansion

FY2025targets

Net
sales

28.5

46.0

Operatingprofit3.4

7.5

Aim for 25% global share in photochromic dye materials

N. America,
Europe, Asia

Accelerate overseas expansion for cosmetics materials,
supplements, veterinary products, etc.

Europe, S.E. Asia

based on application of Accounting Standard

Dental Materials
and Equipment

Penetration of brands, acceleration of overseas sales of
OMNICHROMA series

N. America, Europe,
Russia and CIS,
emerging countries

reference values.

MedicalDiagnostic Systems

Through alliances, aim to become the No. 1 OEM supplierfor open, automated bioanalytic testing systems

China, Korea

Fine Chemicals

28

FY2020results** FY2020 net sales are approximate amounts
for Revenue Recognition, etc., and are listed asEco BusinessBusiness
Goal

Serve as a new business pillar
for the future

Ryo Sugiyama
Managing Executive Officer
General Manager, Eco Business Division

Business Overview

addition to ion exchange membranes used in salt production

This segment is a new division started in April 2021 to bringand in the production of food and drinking water. To

together environment-related businesses and development

address this growing demand, we have already begun

operations previously dispersed among the Group companies.

working to put in place and strengthen supply systems.

Against the backdrop of the Japanese government’s fall

In 2020, Excel Shanon Corporation, which manufactures

2020 declaration to achieve carbon neutrality by 2050, andplastic window sashes, entered into a partnership withother factors, corporate activity is expected to face even

Panasonic Corporation, and the companies have begun

greater environmental regulatory tightening going forward.

working together to develop the housing market, among

Given this trend, the eco business is developing a resource

other goals. We plan to engage the high-performance

recycling business based on the Company’s long-establishedhousing market, boosted by the tailwinds of tightening

and rigorous use of waste products and byproducts. This

energy-saving standards in housing and an expanding

includes reclamation of gypsum from waste gypsum board,

trend toward energy saving.

and recovery of useful substances from factory effluent. In

Tokuyama Chiyoda Gypsum Co., Ltd. has its own

addition, we are also working to develop and supply products

proprietary technology for collecting waste gypsum boardthat can have a direct effect on reducing CO2, as part of ourand enabling it to be completely recycled as raw material

effort to contribute to achieving a sustainable society throughfor new gypsum board. Looking ahead over the five years

the commercialization of green technologies. Over the fiveof the medium-term management plan, we expect theyears of Medium-Term Management Plan 2025, our goal is tovalue of the business will increase on both the upstream

establish the foundations of the eco business as a new

and downstream sides. Today, we plan to strengthen waste

business that will help take us into the future.

board collection routes and establish new plants in areas

Strategic Points

not covered by our existing plants.
In addition to the above, we are also moving forward in theGroup company ASTOM Corporation is involved in thesolar panel recycling business, as solar panels will generate amanufacture and sale of ion exchange membranes, demandmassive amount of waste in the near future. There is also

for which is expected to grow with the tightening of

the issue of photovoltaic modules, where recycling is madeenvironmental regulations mentioned earlier. We will

difficult by the need to separate glass components, batteries,

contribute to global environmental preservation andprecious metal wiring and other materials. Focusing on thisdecarbonization by addressing new demand for waste liquid

issue, in FY2019 the Company began working with NEDO* on

recycling, recovery of valuable substances, and other processes

joint research into separation and material recycling technology.

centered on specialized membranes with unique features, in*New Energy and Industrial Technology Development Organization

Priority Measures

Quantitative Targets (Billions of yen)

▶ Respond to increasing demand for water treatment membranes due tostrengthened environmental regulations

FY2020results*

FY2025targets

Net
sales

8.8

18.0

Operatingprofit(0.3)

1.5▶ Expand resource recycling business in waste gypsum board, photovoltaic
modules and others▶ Commercialize developed next-generation energy technologies

Investment Policy

Incorporate environmental demand, enter countries in Asia
and Europe

based on application of Accounting Standard
for Revenue Recognition, etc., and are listed as
reference values.

International Expansion
Ion Exchange
Membranes* FY2020 net sales are approximate amounts

China, Korea,
Asia, Europe

TOKUYAMA REPORT 2021

▶ Ion exchange membranes: Boost production capacity▶ Waste gypsum board recycling: Expand business sites▶ Photovoltaic module recycling: Establish and commercialize recycling
technology

29

Chemicals
Business
Goal

Ensure stable earnings
in the existing business

Hirotaka Nishihara
Executive Officer
General Manager, Chemicals Business Division

Business Overview

plants, consume large amounts of energy, resulting in a

As a business that has continued since Tokuyama’s

business structure with high CO2 emissions. Consequently, we

founding, the chemicals business manufactures and sells

are working to shift to greater energy savings by enhancing

basic materials such as inorganic chemicals and chlorine

the performance of our electrolyzer units, and promoting

derivatives that are essential to industry and daily life. We

improvements to, and efficiency gains in, the production

have world-class brine electrolyzer unit technology, and areprocess to ensure business continuity. In addition, we havethe one and only manufacturer in Japan of soda ash,also begun working to develop utilization technology for

calcium chloride and sodium silicate cullet. These are thehydrogen, CO2 and other segment byproducts by applying

source of the unique technologies Tokuyama has created,

technology from soda ash manufacturing. Tokuyama has

and today, Tokuyama is supported by a cumulative century

set out a goal of reducing total CO2 emissions by 30% by

of manufacturing technology and a strong customer base.

FY2030, and we are moving forward with efforts to establish

In line with its basic policy of“fully produce and fully
sell,”the segment always strives to optimize the balance ofa business model that is acutely conscious of the SDGs.
Let me also mention something about our strategies for

supply and demand. As we anticipate a gradual shrinking ofeach of our main product areas. In soda ash and calcium

domestic markets, we are focusing on capturing overseas

chloride, we will ensure stable earnings in existingusers, where growth can be expected. One result of thatbusinesses through improvements and efficiency gains ineffort in recent years has been an increase in the proportion

the manufacturing process and supply chains, via

of exports of mainstay products such as caustic soda.

promoting digital transformation (DX). Simultaneously, we

The technologies and expertise the segment hasdeveloped are particularly distinctive for including many

will accelerate development of the carbon capture andutilization (CCU) technology mentioned earlier, and establish athat can contribute to a closed-loop society through effective

process for recovering CO2 emitted in the manufacturing

use of byproducts generated by the manufacturing process,process. We also plan to test its introduction in the soda ashor through appropriate wastewater treatment, as well as

and sodium bicarbonate manufacturing process to

those that contribute to maintaining peoples’ health.

determine its effectiveness. In chlor-alkali and vinyl chloride,

Strategic Points
While the chemicals business has advantages in terms ofcontributing to resource circulation and healthcare, its
production sites, including electrolytic plants and soda ash

we are strengthening efforts to address existing issues,
including optimization of domestic supply and demand andlogistics reforms, while also working to create new
demand, by leveraging our strengths in vinyl chloride, andexpand business in growth markets.

Priority Measures

Quantitative Targets (Billions of yen)

▶ Engage in innovative, sustainable and environmentally-friendly

FY2020results*

FY2025targets

Net
sales

79.6

85.0

Operatingprofit13.5

13.5

manufacturing processes▶ Improve electrolyzer unit energy efficiency to world-class levels,

reduce CO2 emissions through energy saving▶ Improve manufacturing processes and supply chains throughpromoting DX
Investment Policy* FY2020 net sales are approximate amounts▶ Maintain and update facilities needed for stable business

continuity▶ Energy saving and rationalization to address environmental issues

30

based on application of Accounting Standard
for Revenue Recognition, etc., and are listed as
reference values.

Cement
Business
Goal

Become the domestic industry leader
in energy efficiency

Takahide Taniguchi
Managing Executive Officer
General Manager, Cement Business Division

Business Overview
The Company’s cement business was begun in 1938 to
make effective use of the waste products generated in the
production of soda ash. By providing a stable supply of
cement and other high-quality basic construction materials,
we contribute to building a strong, prosperous country.
Further, by safely processing difficult-to-treat waste
products utilizing Tokuyama’s chemical technologies, we
also contribute to reducing environmental impact andachieving a sustainable society. The importance of thissegment is also increasing in preparing for natural disasters,
which are growing more frequent, and causing evengreater damage, with each passing year.
Manufacturing cement requires enormous amounts ofenergy to burn limestone and other raw materials, whichmeans a business structure with high CO2 emissions. Given
this issue, we have decided on the business goal of
becoming the domestic industry leader in energy
efficiency. Presently, we are working to achieve that goal by
reducing effective energy losses to zero, through rigorous
energy savings and by making productive use of waste
heat. The Company was also the first in the cement
industry to establish a non-polluting technology for treating
plastic waste by burning it in a kiln, as an alternative tothermal energy obtained from coal. We are focused on
reducing environmental impact by operating production
systems using these kinds of technologies.

Strategic Points
In accordance with Tokuyama’s company-wide CO2
emissions reduction plan, energy-saving equipment is also
being deployed at our cement plants as we focus onlowering electricity and coal consumption rates. We intend
to maintain our competitive strength as a cement
manufacturer that leads in energy efficiency. To further
curb the volume of coal we use, we are working with ourdirect sales companies and dealers to strengthen
acceptance of combustible waste products.
As a measure to address the domestic market, which is
expected to shrink going forward, we are working tofurther strengthen our relationships with generalcontractors and subcontractors and expand our sales
network. At the same time, we aim to maximize profits byworking to expand the value chain.
One important social issue that has been the subject ofincreased focus in recent years is the aging of public
infrastructure such as roads, tunnels and bridges. Led by
Tokuyama Mtech Corporation, the segment provides
concrete materials essential to the repair and reinforcementof such infrastructure, and we are also developing abuilding materials business to carry out that construction
work. We will work to establish this business as our next
earnings pillar while we focus even more on developing
and expanding sales of new products.

Priority Measures

Quantitative Targets (Billions of yen)

▶ Introduce energy-saving equipment to reduce CO2 emissions

FY2020results*

FY2025targets

Net
sales

50.8

56.0

Operatingprofit4.3

3.5▶ Reduce use of coal by increasing combustion amount of waste

plastic▶ Maintain and update facilities needed for stable business

continuity▶ Energy saving and rationalization to address environmental

issues▶ Expand waste treatment that contributes to a closed-loop society* FY2020 net sales are approximate amounts
based on application of Accounting Standard
for Revenue Recognition, etc., and are listed as
reference values.

TOKUYAMA REPORT 2021

Investment Policy

31

Strategy 2: Contribute to Mitigation of Global Warming
Goals for FY2030
Expedite development/commercialization of next-gen energy technologies
Reduce total CO2 emissions 30% (2 million tons) by FY2030**Reduction target: Base year FY2019 total CO2 emissions of approximately 6.76 million tons

Initiatives Toward Carbon Neutrality in FY2050
As the impact of climate change becomes more apparent,

In FY2021, our newly-established Carbon Neutral Strategy

reducing CO2 emissions is an urgent issue for Tokuyama,

Division will take the lead in formulating a concrete action

because thus far we have been operating captive coal-fired

plan and will focus on biomass combustion power generation.

power plants. In February 2021, we declared that we

We have also started a biomass demonstration project inwould achieve carbon neutrality in FY2050 by promoting

cooperation with Shunan City in Yamaguchi Prefecture, andthe decarbonization of raw materials and fuels and by

to address the problem of bamboo overgrowth in thedeveloping green products. At the same time, we endeavor

prefecture are using bamboo resources as fuel for power

to accelerate the speed of structural reforms, including thegeneration. Tokuyama aims to accelerate the development

transformation of our business portfolio, with our highestof next-generation energy and carbon capture andintermediate target thus far of reducing total CO2 emissions

utilization (CCU) technologies, as well as to create new

30% by FY2030.

value through the commercialization of these technologies.

Emissions fromenergy consumption

Captive power plants

Emissions fromraw materials(limestone)

Zero CO2 emissions (target of 50% reduction in FY2030)

CementSeek to reduce limestone consumption

Chemicals

Explore the possibility of offsetting emissions with CCU technologies, green
products, etc. (already underway)

FY2050 CO2 Emission Reduction Target

CO2 from energy[Power Plant]

Use biomass/hydrogen (ammonia) as mono-fuelor in combination with other fuels, use local energy[Cement]

Increase combustible waste usage[Whole plants] Increase energy efﬁciency, improve processes,
upgrade equipment

CO 2 Emissions
Approx.

❶（70）％

6.76 million tons

CO2 from raw materials[Cement]

Increase SCMs, develop calcium recycling technologies[Chemicals] Improve processes

Green products,
technological innovations[R&D] Develop CCU technologies

Additionally, for❶ through ❸❷Transform business portfolio
Collaborate with other companies in Shunan
petrochemical complex, productively use waste heat

FY2019 (Baseline)

32

and green products（10）％

Goals for FY2050

❸

（20）
％

Carbon-Neutrality Action Plan
Technological development

Reduction of CO 2 emissions from energy / raw materials

Adopt green hydrogen
Effectively utilize CO2 (develop CCU technologies)
Develop green products

Develop green products

Develop green products

Collaborate with other companies in Shunan petrochemical complex
Use local energy (bamboo and other fast-growing trees)
Use biomass/hydrogen (ammonia) as mono-fuel or in combination with other fuels
Use renewable energy
Improve Tokuyama
Factoryʼs energy
efﬁciency and processes
Transformbusiness portfolio

FY2021

Action Plan

Transform business portfolio

FY2030FY2050

Policy for Future Initiatives• Reform organizational culture based on optimal management resource allocation andnew philosophy; in doing so, transform from business structure dependent onenergy-intensive businesses to value-creative company driven by growth businesses ofelectronics, healthcare, and environment• Increase use of combustible waste, such as waste plastics, to reduce coal consumption

Use biomass/hydrogen (ammonia)
as mono-fuel or in combination
with other fuels

Use local energy (bamboo andother fast-growing trees)

Collaborate with othercompanies in Shunan
petrochemical complex• Continue promoting energy conservation, improving manufacturing processes, andconsidering upgrades to latest equipment with high environmental efﬁciency• Improve calcination efﬁciency of clinker (cement feedstock), increase amount of SCMs
to reduce amount of clinker used, and promote development of calcium recycling
technologies such as using waste concrete materials• Establish new organization specializing in stable procurement of biomass fuels, such as
palm kernel shell (PKS), to create a sustainable supply chain• Consider facility modiﬁcation to expand biomass combustion• Conﬁrm technology trends in hydrogen and ammonia fuels• Promote development of technology and construction of supply chain to convert
bamboo and fast-growing trees, which are unused resources in Tokuyama Factory area,
into biomass fuel as alternative to coal
• Strengthen cooperation among multiple companies to improve energy efﬁciency ofentire industrial complex through energy sharing, and study establishment of carbon
cycle through circulation of raw materials• Research waste heat recovery technology and catalyst technology for manufacturing
using low reaction heat, through collaboration with Shunan petrochemical complex
and Society of Chemical Engineers, Japan• Promote development of green products in living environment

TOPIC

Develop green products• Create new green products through introduction of technologies that enable greeningof manufacturing processes and products

Effectively utilize CO2(develop CCU technologies)• Develop CCU for capture and effective use of CO2 and survey technological trends

Adopt green hydrogen• Study water electrolysis technology development and commercialization• Promote open innovation in next-generation carbon recycling technology

TOKUYAMA REPORT 2021

Improve Tokuyama Factory’s
energy efficiency and processes

33

TOPIC

Contributing to Energy Efficiency in Japan with High-Performance Plastic Window Sashes(Excel Shanon Corporation)
Shanon Wind, Japan's first high-performance plastic window

environmentally advanced countries such as Germany. For

sash, was launched in 1976 and is mainly designed for homes

Japan, with its low energy self-sufficiency rate, energy savingin cold climates, providing, with its excellent heat insulationin heating and cooling is an important issue, as it accounts forand airtightness, a cool indoor environment in summer and aabout 30% of energy consumption in the household sector.

warm indoor environment in winter. The adoption rate of

We will continue to advance the development of super-

plastic window sashes in new housing in Hokkaido increased

insulation and contribute to energy saving in Japan throughto 99% in FY2020. However, nationwide the adoption rate of

the promotion of our plastic window sashes.

plastic window sashes in Japan is only 22%, lower than that ofComparison of Plastic Sash Adoption Rates in Major Countries
Japan

U.S.A.
Plastic
22.5 ％

Aluminum/plastic
67.5 ％

MIX

Wood
21％

Aluminum
10 ％SourceJapan:“Survey on the Use of Building Materials for Housing, March 2021,”
Japan Sash Manufacturers Association
EU: Saint-Gobain Exprover marketing document: 2016 EU Residential
Windows by Frame Type, Saint-Gobain
U.S.A.: 2010/2011 U.S. National Statistical Review and Forecast* EU: data provided by Saint-Gobain
U.S.A.: data excerpted from PVC Windows Industries Association

MIX

Aluminum
7％

Plastic
67％

MIX

U.K.
Shanon Wind,
high-performance plastic window sash

Germany

5％
Aluminum7％

Aluminum
29 ％Plastic
58 ％

Wood
17％

MIX

France2％

18 ％Plastic
50 ％3％

Aluminum
26 ％

Wood
19 ％

Plastic
57％

Wood
14 ％

Risks and Opportunities Behind the Medium-Term Management Plan

Tokuyama

Government: Environmental regulatory tightening in various countries● Countries strengthening environmental regulations in accordancewith international frameworks such as the Paris Agreement【Risks】

Negative impact onenergy-intensive businesses
dependent on coal-fired
power generation● Emerging countries demand higher levels of environmental

protection policies from developed countries● Introduction of carbon pricing such as carbon tax and emissions

trading, gradual increase of tax rates, etc.

Customers / End Consumers: Growing environmental consciousness• Increased costs due to carbon pricing● Increase in the number of companies implementing green procurement• Impact due to changes in customersʼ
procurement policies● More companies requiring suppliers to switch to renewable energy•Impact on ﬁnancing due to changes
in policies of ﬁnancial andinvestment companies● Increasing demand from environmental industries【Opportunities】

Opportunities for thecreation of new business in
Eco Businesswith capital expenditures• Expansion of waste treatment and resource utilization industries• Expansion of industries against global warming, etc.

Fund Procurement: Acceleration of environmental finance and ESG investment● Increase in preferential interest rates offered by ﬁnancial institutions toenvironmentally-friendly companies● Suspension of new loans / reﬁnancing of existing loans to fossil

fuel-related businesses by ﬁnancial institutions● Increase in ESG investment ratio34

Framework for Promoting Carbon Neutrality
The CO2 Project Division, which has been responsible for

Meanwhile, the Biomass Development Department takes theformulating CO2 reduction measures and medium- to long-lead in formulating biomass procurement policies and plans.

term targets since January 2020, has been reorganized into the

In addition, the GREEN Project Department, newly established

Carbon Neutral Strategy Division, directly under the President,
as of April 2021. Within the Carbon Neutral Strategy

in the Research & Development Division, is in charge of CO2
reduction measures for that division. To accelerate theDepartment, the Carbon Neutral Planning Department iscommercialization of green products and next-generation

mainly responsible for developing strategies to achieve our
reduction targets. This Department formulates and promotes
specific plans such as the best energy mix in cooperation with
the Corporate Planning Division, the business divisions, and the
Tokuyama Factory. The Executive Committee deliberates
proposed strategies and our policy is to implement the PDCA
cycle at the management level to simultaneously achieve bothour business strategy and our strategy for reducing CO2

energy-related services that use innovative reduction
technologies, we will work closely with the Carbon Neutral
Planning Department to investigate technological trends
and collaborate on technologies with external partners.
In February 2021, we announced our support for the
TCFD recommendations＊1, and we will also focus on highly
transparent information disclosure.
*1 A disclosure framework for investors to appropriately evaluate a company's
climate-related risks and opportunities, published by the Task Force on Climaterelated Financial Disclosures (TCFD) in 2017.

emissions.

Prospects for Biomass Utilization
The Tokuyama Factory has been focusing on biomass

In Shunan City, Yamaguchi Prefecture, where the Tokuyama

combustion power generation and has been using wood

Factory is located, we are participating in the Woody Biomass

chips and palm kernel shells (PKS) as fuel for power

Utilization Promotion Council managed by the city. We are

generation. In April 2021, we established the Biomass

studying the utilization of local forest resources, mainly

Development Department, an organization specializing incity-owned forests, together with the council members.

the stable procurement of biomass fuels, as the demand for

Also, considering the negative impact on the ecosystembiomass fuels is expected to increase in the future.

caused by the invasion of bamboo forests, we have started

Regarding PKS, we will build a sustainable supply chain

the practical application of biomass power generation using

while thoroughly implementing CSR procurement that

bamboo as mono-fuel. In the future, we plan to develop

takes into consideration human rights and compliance.

fuels that will facilitate easier loading, unloading, and storage.

Managing Supply Chain Emissions
Protocol, Tokuyama has calculated theUpstream

In-houseemissions for Scope 3 Categories 1 to 7 andScope3

Scope19, which are the emissions across the entire

Category 1

6.29 million tons ofsupply chain. Emissions in the categories wecalculated were 1.72 million tons, a decreaseof 70,000 tons from FY2019. This was due
to a decrease of 30,000 tons in emissions
from Category 1 (Purchased goods andservices).

Category 2

Capital goods

Upstream transportation anddistribution
Category 1

CO 2 emissions

1.72

42％

million tons

25％

Category 2
Category 3
Category 4
Others1％

Note: Due to rounding, the sum of the figures in the breakdown
does not equal the total amount.

direct emissions

Fuel use at Tokuyama

Category 5

Category 8

Category 4

Upstream transportation anddistribution
Category 9

Downstream transportationand distribution

Scope2

Processing of sold products:
Not calculated

Category 10

40 thousand tons
Energy-related
indirect emissions
Indirect emissions fromthe use of purchased
electricity and heat

Category 11

Use of sold products:
Not calculated
Category 12

End-of-life treatment of soldproducts: Not calculated
Category 13

Waste generated in operations

Upstream leased assets:
Not calculated(negligible level)

Scope3

Direct emissions frommanufacturing processes

Category 3

Activities related to fuel andenergy, not included in
Scope 1 and 2
Category 43％29％

Purchased goods and services

Downstream

Scope3Category 6

Business travel

Downstream leased assets:
Not applicable
Category 14

Franchises: Not applicable

Category 7

Category 15

Employee commuting

Investments: Not applicable* The GHG Protocol is an organization co-sponsored by the World Resources Institute (WRI) and the World
Business Council for Sustainable Development (WBCSD); the Scope 3 standard is a standard issued by the
protocol in November 2011 for calculating CO2 emissions across an entire supply chain.

TOKUYAMA REPORT 2021

Based on the Scope 3 Standard* of the GHG

35

Strategy 3: Promote Socially Responsible Management
Why Focus on Socially Responsible Management?
Socially responsible management plays a vital role in

Tokuyama’s Mission on guiding customers to a better future.

fulfilling Tokuyama’s newly redefined Mission. When we

Going forward, we recognize that it will become evenredefined our Mission, we looked squarely at the problem

more important to respond to CSR-related requests fromof CO2 emissions, which is the main cause of global warming,

our customers as well as to understand our businessand placed emphasis on achieving harmony with thepartners’ efforts in their own CSR initiatives. Moreenvironment. Our Mission represents our will totransparent management is required, not only in terms offundamentally change our energy-intensive businessproduct quality and environmental contribution, but also

structure, and to continue to be sustainable and resilient as afrom the standpoint of human rights, corporate ethics, andchemical manufacturer. In addition, from the CSR perspective,

diversity. In other words, we believe that socially responsible

we have clearly stated that we will create a bright future inmanagement is a prerequisite for sustainable business.

collaboration with our customers. In the areas of electronics,

Tokuyama aims to solidify our trust relationship withhealthcare, and the environment, which we will focus on insociety by strengthening our efforts in material topics (CSR

our Medium-Term Management Plan 2025, it is essential thatpriorities), while at the same time pursuing our own unique

we develop and propose products that are more consumer-

approach to socially responsible management.

oriented. To do so, we have decided to expand upon our
traditional role of meeting customer needs, and focus* For more information on addressing sustainability in management, please refer to“Corporate Governance”on page 44.

Tokuyama’s Materiality
Vision:1

Be a value-creative company that places ﬁrst priority on R&D and marketing2

Be a company that never stops challenging new domains while reﬁning and exploiting its unique strengths

Materiality
Relationship to Our VisionHelping to fightglobal warming
2

1

Developing
products
and technologies
that address social
issuesOur FY2025 Vision

Achievement of carbon neutrality by
FY2050Preventing
accidents andpreparing fordisasters
34Conserving
the environment
4

reduction in FY2030 (compared with FY2019)• Increased disclosure information, including Scope 3*

help to resolve social issues, focusing on SDGs

Expansion of development of
products and technologies that help
to resolve social issues, focusing on
SDGs

Environment: Creation of new technologies to reduce CO2 emissions
Electronics: Expansion of product line and creation of new
business in peripheral materials
Healthcare: Creation of new technologies for product line
expansion and globalization• Accident prevention and disaster

preparation• Improvements in process safety

management level• Zero accidents and zero lost time injuries; number ofincidents: zero
• Deepened risk assessment

・ Fostering and improvement of safety
culture• Promotion of smart security

・ Promotion of recycling andmaintenance of zero landfill waste

・Reduction of environmental impact:・ Maintenance of low emissions ofenvironmental impact substances

・ Compliance with legal requirements
and other regulations, achievement ofzero environmental accidents
・Contribution to biodiversity
conservation

36• Reduction of total CO 2 emissions of Tokuyama Group:30%

Promotion of development of products and technologies that

2

1

KPI

Effective utilization rate for waste ≥ 94%
Zero waste emission rate ≥ 99.9%

Maintenance of low emissions of environmental impact
substances・Compliance with legal requirements and other regulations,achievement of zero environmental accidents
・Contribution to biodiversity conservation

Goals for FY2025
Step up high-priority CSR initiatives to lay the groundworkfor further growth and realize our Vision
Formulation of Materiality KPIs
Based on the three priority issues that are the pillars of

In February 2021, we partially revised our material topics

Medium-Term Management Plan 2025, our Vision is a clear

in line with the new Medium-Term Management Planstatement of the“Tokuyama of the near future,”which we

2025, and formulated targets and KPIs for FY2025. We

will achieve through sustainable growth. This is not only ahave added“Promotion of physical & mental health”as aslogan -- it is closely related to the ten material topics we

new material topic, explicitly stating that the physical andhave established. Therefore, not only do our efforts towardmental health of our employees is fundamental tothese material topics contribute to SDGs, but they are alsoachieving our Vision.

action plans aimed at the achievement of our Vision.

3

Be a company with healthy employees who have healthy families and take pride in their work at their company

4

Be a company that fosters bonds with people in communities and societies worldwide

FY2020 Results• Formulated speciﬁc plans to achieve FY2030 CO 2 emission reduction target• Set new targets in next medium-term management plan
• Reduced per-unit energy consumption by 8.9％(compared to FY2005)• Included Scope 3, CO 2 reduction, and green products in CSR Report 2020
Environment and Energy Field:• Consolidated and strengthened development themes and personnel in Research & Development
Division based on new medium-term strategy for increased speed
IoT Field:• Increased customer satisfaction by providing accurate technical support and increased
development stage

Responsible Department
Carbon Neutral Strategy
Division
Responsible CareManagement Department
Factory Planning and
Administration Department

Research &Development
Division

Healthcare Field:• Made progress on preparations for commercialization in several themes
Number of accidents: 2
Occupational accidents - employees: 2 lost time injuries; contractors: 3 no lost time injuries
Created security skill maps, carried out VR hazard simulation training and disaster prevention training
Conducted steady state and nonsteady state risk assessments, reassessed work risks, andimplemented countermeasures

Responsible CareManagement
Department

ICT Project Department assigned frontline staff with latest ICT skills.

Zero waste emission rate: 99.7%
Maintained low emissions of environmental impact substances; efforts underway in eachdepartment
Exceeded regulatory values under Air Pollution Control Act: 1 caseEnvironmental accidents: 0

Responsible CareManagement
Department

TOKUYAMA REPORT 2021

Effective utilization rate for waste: 94.7%

37

Materiality
Relationship to Our Vision

Improved chemical
management andproduct safety ★

Our FY2025 Vision

Maintenance of appropriate
chemical management andpromotion of product safety in the
Tokuyama Group

4KPI• Compliance with chemical laws and regulations in eachcountry: Zero infractions of chemical-related regulations• Risk management of chemical products, including Group:
Zero accidents due to product safety
Promotion of survey and management of supply chains

Promoting CSR
procurement

based on CSR procurement guidelines

Management of supply chainsbased on CSR procurement

4

guidelines• More detailed investigation of suppliers by reﬁning
assessment sheet• Establishment of system to conduct on-site audits of suppliers• Reduction of environmental impact in logistics
Harmoniously co-existing and cooperating with communities• Dialogue with community

Engaging withlocal communities• Contribution to a decentralizedsociety through business• Providing a place where people

4

can grow and flourish• Active participation and cooperation in various community(residents, government, and organization) events
Solutions to community problems and contributions tosustainable development of community• Employment from community• Social contribution activities• Contributions to community through business

Development and strengthening ofDeveloping humanresources23

human resources as source of

Activation of human resources through career planning androtation of appropriate personnel: Improvements in
education system, etc.
• Development of next generation of managers

corporate competitiveness• Training of highly skilled engineers to support business execution

Strengthening of human resources• Enhanced initial training system by deﬁning required
human resources and job skills

for next generation

Establishment of culture of nurturing through work bylinking goal setting and feedback: Surveys based on
employee attitudes
Promotion of diversity and inclusion: Active promotion of
women: 20% of new graduates, ≥2% of management
positions

Promotion ofdiversity andcareer fulfillment★

Employment of persons with disabilities: ≥2.3%

Acceptance and utilization ofdiverse human resources2• Respect for diversity of experience and skills of eachindividual• Respect for diverse values
Promotion of work-life balance: Management of actual
working hours per year: Annual paid leave rate ≥80%

3

Improved childcare and nursing care support systems: At
least one male employee on childcare leave or parental
leave ≥75% (women ≥75%)

All executives and employees takean interest in maintaining &Promotion of physical &mental health☆
3

improving their health
Implement company-wide initiatives
to create a vibrant workplace
Eliminate harassment by fostering
good communication and mutual

Promotion of health and productivity management:
Leave rate: 0.5%
Smoking rate: 15%
Health consultation rate: 100%, etc.
Strengthen harassment prevention and response

trust in the workplace

38★ Item name revised in February 2021 ☆ Item added* Greenhouse gas emissions from organizational activities, including raw material procurement, manufacturing, logistics, sales, and disposal.
Note: For detailed information on our activities, please refer to CSR page of Tokuyama’s website https://www.tokuyama.co.jp/eng/csr/

Vision:1

Be a value-creative company that places ﬁrst priority on R&D and marketing

reﬁning and exploiting its unique strengths
their company

4

3

2

Be a company that never stops challenging new domains while

Be a company with healthy employees who have healthy families and take pride in their work at

Be a company that fosters bonds with people in communities and societies worldwide

FY2020 Results

Responsible Department

Product assessment (secondary and tertiary): Total of 57, labeling assessment: Total of 519
Understood and responded to domestic and overseas regulatory trends (Japan and overseas)

Responsible Care

Conducted interviews with departments and Group companies regarding training andManagement Department

management status

Ongoing assessment of business partners using assessment sheets(currently considering reﬁning assessment by changing assessment sheet)

Procurement Department
Logistics Department

Dialogue with community:
Community dialogues canceled or scaled down due to COVID-19
Concluded agreement with local community for emergency disaster shelter
Social contribution activities:
Mikage Bunko book program, Tokuyama Chemical Club, and factory all lit up at same time
Donated sodium hypochlorite and splash-proof panels to community
Business contributions to community:

General Affairs Department
Environment & Safety
Department
Factory Planning and
Administration Department

Supplied stable electricity to Shunan City Hall and Tokuyama Station Building (ongoing)

Held human resources development meeting and shared concept of human resourcesmanagement system with workplace
Clariﬁed human resources and skills required to achieve next medium-term management

Human Resources

plan; promoted development system

Department

Conducted total of 13 training sessions for evaluators (approximately 300 employees);
developed deeper understanding of appropriate goal setting

Action Plan to Promote Opportunities for Women / actual results, rate of employment of
persons with disabilities
Ratio of female managers: 1.8%
Promotion of diversity and inclusion: Promote mid-career hiring (105 employees in FY2019

Human Resources

and FY2020)

Department

Promotion of work-life balance: Continued to inform employees about paid parental leave
Number of male employees on childcare leave: 1 (40 days)
Respect for human rights: Implemented e-learning to prevent harassment

Leave rate: 0.64%
Smoking rate: 20.3%
Health consultation rate: 100%

Human Resources
Department
Health Care Center
Tokuyama Health Insurance
Association

TOKUYAMA REPORT 2021

Reference (to be established from FY2021)

39

External Director,
Audit and Supervisory Committee Member

External Director,
Audit and Supervisory Committee Member

Shin Kato

Yuzo Kawamori

Roundtable Discussion: Sustainable Growth and Our Mission
A roundtable discussion was held between Hiroshi Yokota, president, and external directors regarding issues
that need to be overcome to achieve sustainable growth, as we consider the qualitative changes tocorporate management wrought by the COVID-19 pandemic, as well as key points involved in putting theCompany’s new philosophy, announced alongside Medium-Term Management Plan 2025, into practice.

Opportunity Lies Where Economic Valueand Social Significance Overlap

number of changes as a result of the COVID-19 pandemic

Moderator: What is your awareness of the issues

to risks, and reflect those risks in management policies, itregarding global expansion by chemical manufacturers,

should benefit both economic growth and social

and the qualitative changes wrought on the corporate

contributions. For example, the diverse workstyles madeenvironment by the COVID-19 pandemic?

possible by the removal of restrictions on where work is-- from geopolitical risks to more familiar issues such as the
spread of remote work -- but if we can raise our sensitivity

performed -- primarily in the back office divisions -- not
Matsumoto: I see the importance of CSR as rising to that of

only provides the impetus for health and productivity

business growth and the pursuit of profit. Globalization

management, but can also offer hints for identifying newhas also increased companies’ social responsibility to abusiness opportunities.

level not seen before. The situation has completelychanged from the days, not so long ago, when companies

Kawamori: I see things the same way as Mr. Matsumoto does.

engaged in social contribution activities as“upstanding

Today, there is no way we can separate increasing corporate

members of society.”Going forward, companies need tovalue from social responsibilities. Given that new opportunities

contribute to the global environment even as they create

arise from the overlap between economic value and social

clear value for shareholders, local communities, employees

significance, strategies focused on that overlap will open a

and all other stakeholders. Moreover, the nature of thatpath to medium- to long-term growth. The Medium-Termvalue is also changing. For example, the new Vision set

Management Plan 2025 (the“Mid-term Plan”) announced

forth by the Company mentions the health of employees

recently is built around three strategic pillars based on thisand their families, something which I think is symbolic ofapproach, and is thus thoroughly realistic.

recent changes in management vision. We have faced a40

Companies have a responsibility to their employees --Representative Director,
President and Executive Officer

External Director,
Audit and Supervisory Committee Member

Hiroshi Yokota

Naoki Matsumoto

stakeholders whose importance is growing -- to supportchange is coming even faster. That is why I really empathize

career formation while helping each individual to develop

with Mr. Kawamori’s remark about bringing“determination

their hidden potential. Society is also changing direction

to their work.”Today, Tokuyama’s management and its

towards becoming more accepting of diverse values.

employees need to be tough. Employees working on theThat said, we are all still living in a competitive society. To

front lines are in the midst of investing a vast amount of

ensure the Company can survive in a global market, I

knowledge and effort in trying to open up a new world. It

hope to see its employees bring even more determination

is in these vigorous efforts, particularly in the chemicals

and a stronger sense of Mission to their work.

and cement businesses, that I most strongly sense

I think what the COVID-19 pandemic of the past 18

Tokuyama’s approach to sustainability.

months has revealed is how difficult it is to live a“normal”life, and how joyful it is to be able to do so.

Yokota: As you all have noted, changes in the competitive

How do we leave behind for generations of children

environment and the COVID-19 pandemic have revealed

and grandchildren to come an environment in which

the management issues Tokuyama faces. For myself, thisthey can lead healthy, happy lives? I see this as a

has reaffirmed that amidst these larger global trends, themajor theme those of us in management have beenvalue of a company’s existence lies in its ability to makegiven to address.

people happy -- to contribute to the public good -- throughKato: The business environment has changed

increasing the profits generated by its business. With thatsignificantly compared to when I first took office asin mind, I intend to refine how we compete in global

an Audit and Supervisory Board Member in 2013.

markets, while at the same time carefully identifying our

The lineup of products that are driving revenue has

strengths and attributes to put in place the right internal

also changed. Since 2020 with the COVID-19 issue,

systems and workplace environments.

TOKUYAMA REPORT 2021

products and services the world needs, while also41

A New Mission Based on Top
Management’s Strong Sense of Urgency

urgency. With that problem in mind, at a meeting of theModerator: Can you tell us more about your impressions

Values. The reply was that“employees lacked the heartof the Company’s new corporate philosophy, particularly

to truly take on new challenges, and we wanted toany points you are focused on?

change that mindset.” I sensed something in common

Board of Directors I asked about the intent behind the
addition of“... and boldness”at the end of the list of fourwith my own understanding of the problem.
Kato: I would like to start by saying that companies in which

I have also spent these past two years in dialogue witha philosophy is useful within the organization are rare. Once

the Company’s employees. I learned that, particularly at

a new philosophy has been in place for a time, nobody

the general manager level, the majority have diverse

pays it any attention. It will not function unless there is aexperience, including in overseas assignments.

strong will to firmly establish it within the company. At

Developing human resources through careers andTokuyama, however, the four Values that form the basis ofexperience is an extremely important point in terms ofthat philosophy were put in place five years ago, primarily

putting this renewed Mission into practice.

by Mr. Yokota himself. This is a reflection of Mr. Yokota’s
strong sense of urgency and pragmatism -- his belief that

Kawamori: What is important is what this philosophy will

unless all employees quickly put these four Values andgenerate. The first step is to view things in the long term,

actions into practice, the very survival of the Company

rationally and in their essence, rather than falling into awould be threatened. That is why the employees havepattern of transient, emotional, short-term thinking. If

successfully internalized his message.

each individual can then approach their work withThat strong sense of urgency and will is something I

determination, and with these Values and this Vision insense in this latest renewal of the philosophy. I would likemind, this should naturally lead to sustainable growth.

to focus on the new Vision, and in particular, the prominent

Also, Tokuyama is a much freer company than its

example of CSR management mentioned by Mr.

established corporate image in and outside the Company

Matsumoto, to“Be a company with healthy employees

might suggest. There is a sense that one is allowed towho have healthy families and take pride in their work at

speak freely. Leveraging this organizational culture should

their company.”I think the fact that the Company ismake it easier to push forward with the strategies

emphasizing well-being and pride in one’s work, rather

outlined in the Mid-term Plan.

than being overwhelmed by work in the process oftaking on new business domains, reflects the direction

Yokota: Tokuyama is a company with strong regional

the Company is taking with regards to CSR management.

characteristics, and I think it is healthy for us to be seen
as being unlike other companies in the chemical industry.

42

Matsumoto: It has been about two years since I began myBeing thought of that way is one of the sources of ourinvolvement with Tokuyama’s management, but I still lack aenergy. And as Mr. Kawamori mentioned, our four Values

full understanding of the Company’s essential culture.

are something I would like our employees to always lookThat said, when I considered that in the course of theback on as they do their work. I would like to create a

Company’s long, 103-year history it has become deeply

cycle in which each person does their work based onrooted in its communities, I inferred it was a culture thatthose Values, and the Company grows as a result, in turnfound it difficult to express innovativeness and a sense ofleading to a greater sense of fulfillment for our employees.

Already Possessing the Potential to
Cultivate the Seeds of Growthexperience, a company’s culture, for better or worse, has anModerator: Tell us about your outlook and expectations

is revealed. Recently, however, Tokuyama has increased its-- what kind of company do you want Tokuyama to behiring of mid-career personnel. I look forward to seeing

going forward?

the Company’s culture diversify and change, inspired by

Kato: Over the years, I have had a close-up look at apeople with a wide variety of values. I would also hopevariety of management styles in a great number ofthat those in charge of each organization work tocompanies, and without reservation I think Tokuyama is apromote diversity in response to this positive trend.

enormous impact on the personalities of its employees.
The more uniform the culture, the more easily its bad side

good company. Behind the Company’s establishment
was the clear vision of its founder, that the Company

Yokota: Tokuyama originally consisted of a select few.

would make for itself those things needed for Japan’s

Today, I would like to see us get back to what we wereindustrialization. Today, after more than a century, themeant to be. I would like us to be a collective in which

Company at its roots continues to take pride in the fact

each individual brings a sense of professionalism andthat it is creating social value. In the midst of rapid

passion to their work, maintains high aspirations, andchanges, when merely doing business as an extension ofcontinues to grow. As Mr. Kato pointed out, at this major

the past no longer works, I see the Company as alreadyturning point for our generation I cannot envision apossessing the human resources and technology it needs

future for Tokuyama unless we seek out a way into new

to ensure competitiveness. I hope the Company will

domains that are not just extensions of the present.

continue to offer the value generated by its respective

Fortunately, we do not go into this unarmed. We havebusinesses to all of its stakeholders, including employees,rich resources -- the wide range of technology we haveas it works to extract the full potential of those assets.

cultivated to date, our human resources, and ourcustomer base. By effectively leveraging these resources,

Kawamori: I would like to tell the employees to be

we will create new value that will be welcomed in times

entrepreneurs, not mere workers who do only what they

to come. I believe the latent needs that exist in peoples’

have been told to do. Many new seedlings are now

hearts will provide us with the opening for doing so.

emerging in the areas the Company has marked as
growth businesses, including electronics, healthcare andKawamori: And, I might add, that means giving deep

the environment. It is the individual employees, and theconsideration, from the position of a chemicalGroup as a whole, that will grow those seeds into

manufacturer, to the essential nature and true desires ofsomething larger. What is important in that process is thepeople living in these times.

Tokuyama that are capable of generating long-term

Yokota: That is exactly right. In this approach to constantly

profits. And as Mr. Kato noted, the Company already has

developing new fields, we should be able to gain somethe potential ability to develop those seeds of growth.

insight into peoples’ essential nature and latent needs. I
hope that through these actions and pursuits, Tokuyama

Matsumoto: Through its efforts in the ten material issues

will remain a youthful company even beyond its first

the Company has identified, aimed at achieving its

100 years.

Vision, I hope Tokuyama will become a company that has
a positive impact on society. And, speaking from my own

April 19, 2021

TOKUYAMA REPORT 2021

aspiration to create companies, so to speak, within43

Corporate Governance
Basic StanceIn the midst of enormous changes in society as a whole,

rights and equality of its shareholders and cooperating

the Company, in line with the business environment weproperly with various stakeholders, while strengthening theface, has redefined its Mission as follows:“To create asupervisory function, and securing the independence, ofbright future in harmony with the environment, inthe Board of Directors. At the same time, Tokuyama works

collaboration with its customers, based on chemistry.”This

diligently to accelerate decision-making and to clarify theincorporates our desire to be a company that contributes tobusiness execution responsibilities of its Board of Directors

a sustainable society by pursuing its business in harmony

while ensuring appropriate disclosure and transparency, aswith the environment, to create the future together withwell as promoting constructive dialogue with its shareholders.

our customers. We believe that the relationships of trustand cooperation that have been built with our shareholders,customers, business partners, employees, local communities
and other stakeholders will make this possible. These
relationships result in sustainable growth and an increase in

Steps to Strengthen Our Governance Structure(most recent five fiscal years)
FY2017

corporate value over the medium to long term. We
understand that corporate governance is one of the most

FY2018important management issues for achieving sustainablegrowth and enhancing corporate value, and that weshould keep working to strengthen corporate governance.
Taking into consideration the introduction of the

FY2019FY2020

Corporate Governance Code in Japan as its basic policy, theCompany places the utmost emphasis on ensuring the

FY2021

Shift to Company with an Audit and Supervisory Committee
Revision to basic policy regarding development of internal
control systems
Evaluation of effectiveness of Board of Directors conductedby external organization (conducted annually thereafter)
Introduction of performance-linked share-based
remuneration plan
Revision of criteria for determining independence of
external directors
Announcement of Tokuyamaʼs New Vision
Decision to abolish anti-takeover measures
One external director added (to strengthen diversity of Boardof Directors)

Corporate Governance Structure
As a Company with an Audit and Supervisory Committee,

committee members. They attend Board of Directors

Tokuyama seeks to enhance corporate governance at all

meetings and other important meetings to monitor thetimes by making the best of its rapid decision-making, as

execution of business by executive directors.

well as through effective supervising and auditing

Tokuyama introduced an executive officer system tofunctions. The Audit and Supervisory Committee itself isseparate the supervisory and execution functions.

comprised of five directors, including four outside

Basic Information Regarding Governance Structure (as of June 25, 2021)
Organization

Company with an Audit and Supervisory Committee

Chair of the Board of Directors

President

Term of office of directors

1 year (2 years for directors who are Audit and Supervisory Committee members)

Number of Board of Directors members

9 (of which 4 are external directors)

Number of independent* external directors

4
Introduction of performance-linked stock remuneration plan

Policy regarding granting incentives to directors(However, remuneration for directors who are Audit and Supervisory Committee
members consists of ﬁxed remuneration only)

Audit and Supervisory Committee Chair

Internal director

Number of Audit and Supervisory Committee members

5 (of which 4 are external directors)

Audit and Supervisory Committee support staff, etc.

Establishment of Audit and Supervisory Committee Ofﬁce

Number of executive officers

12

Bodies supporting President’s decision-making

Executive Committee: Body responsible for making decisions about business operations
Strategy Committee: Body responsible for discussing the direction of business execution

Voluntary establishment of committee(s)corresponding to Nomination or
Remuneration Committees

Human Resources Committee

Accounting auditors

Grant Thornton Taiyo LLC

Number of members: 7 (of which 4 are external directors)
Chair: Representative Director, President and Executive Ofﬁcer*See section“Criteria for Determining the Independence of External Directors”on page 46.

44Corporate Governance Structure
Shareholders’ Meeting
Appoint/dismiss

Appoint/dismiss

Appoint/dismiss
Whistle-Blowing System

Human Resources
Committee

Board ofDirectors

ReportAudit andsupervise

Audit and Supervisory
Committee
Assistance

Decide/supervise

Audit

Audit and Supervisory
Committee Office

Accounting
Auditors

Helpline

Cooperation

Audit

Business Operations

Executive
Committee
Strategy
Committee

President
Departments Responsible
for Internal Auditing
Auditing Dept.
RC Management Dept.
Internal audit

CSR Promotion Council

Helpline Committee

Risk Management andCompliance Committee
Seven Committees

Instruct/support/request

Business Divisions, Back-Office Divisions, Research Laboratories, Factories and Group Companies

Committees
Board ofDirectors

Deliberates and decides on important matters regarding business operations, while also supervising business operations

Audit andSupervisory
Committee

Attends meetings of Board of Directors and other important meetings to hear status of business operations and monitor
execution of business by executive directors

Human Resources
Committee

Discusses candidate selection and remuneration for directors (excluding directors who are Audit and Supervisory
Committee members), executive officers and others in advance of Board of Directors meetings

Executive
Committee

Business operations decision-making body comprising individuals designated by President and Executive Officer(hereinafter President ) from among executive officers; in principle, meets twice a month, and based on approval rules
determined by Board of Directors, discusses and makes decisions about important matters involving business operations

Strategy
Committee

Advisory body to President comprising individuals designated by President from among executive officers; meets once amonth to discuss direction of business execution, and in important decision-making matters, to 1) confirm thatmanagement resources will be invested in reviewing execution conditions, and 2) set direction of business operation
policy for those matters

CSR Promotion
Council

Chaired by President and comprises all executive officers in Japan; decides on CSR policies and goals, and facilitates
activities aimed at achieving those goals. CSR is built upon platform of appropriate corporate governance and internal
controls; accordingly, Council also discusses important matters related to internal controls

Risk Management
and Compliance
Committee

Established within the CSR Promotion Council, and chaired by director in charge of Corporate Social Responsibility
Division; primarily responsible for working to promote risk management and compliance, considered core and twin
wheels of internal controls

Seven
Committees

Tokuyama operates committees focused on risk management and compliance in seven critical and specialized areas,
separately from Risk Management and Compliance Committee; seven committees ̶ Financial Reporting Committee,
Fair Trade and Competition Committee, Security Trade Committee, Information Security Committee, Environment
Committee, Safety Committee and Product Safety and Quality Assurance Committee ̶ operate under CSR Promotion
Council

Helpline
Committee

Serves role overseeing helpline established as whistle-blowing system for acts within Group that are questionable interms of legal complianceDepartments
Responsible forInternal Auditing

Auditing Dept. and RC Management Dept. established as departments responsible for internal auditing; conduct internal
audits of Company s various departments and its Group companies• Number of meetings held in FY2020: 19

TOKUYAMA REPORT 2021

• Number of meetings held in FY2020: 24

45

Addressing Sustainability
The Company promotes socially responsible management

relevant departments responsible for implementing thoseas we work to achieve our Vision, revised in 2021. To

policies. Each year, the Corporate Social Responsibility

facilitate CSR activities, Tokuyama has established a CSR

Division compiles a report on the status of implementation,

Promotion Council that is chaired by the President andwhich is then reviewed by the CSR Promotion Council.

comprises all executive officers in Japan. The priority issues

In our Medium-Term Management Plan 2025 announced(material topics) identified in 2019 and revised in 2021 arein February 2021, Tokuyama also declared its goal of

also discussed and decided upon by the CSR Promotion

achieving carbon neutrality by FY2050. A Carbon Neutral

Council. Goals and KPIs for 2025, linked with the goals ofStrategy Division, reporting directly to the President, wasrelevant divisions and departments, have been establishedalso established in April of 2021 in preparation forto strategically manage these material topics, with theformulating an action plan for reducing CO2 emissions.

Criteria for Determining the Independence of External Directors
Under the Company’s“Criteria for Determining theD）Consultants, accountants or legal professionals who

Independence of External Directors,”individuals who do notcurrently receive or in the past three years have received

fall into any of the following categories are deemed as

substantial monetary consideration or other property*2

having sufficient independence:from the Company besides their executive remunerationA) Persons who are currently, or in the past 10 years

from the Company. (If the entity in receipt of said property

have been, an executive* of the Company or its

is a corporation, association or other such organization,affiliated companies.

then persons belonging to said organization).

1B) Major trading partners of the Company, or theirNote, however, that this includes those falling into

executives, or persons who have been in either

either of the following categories:

position in the past three years. Note, however, that

(1) Auditing firms that are responsible for the

the Company’s major trading partners are defined as
those falling into either of the following categories.
(1) Financial institutions that hold loan balances of 2% ormore of the Company’s consolidated total assets(2) Trading partners that account for 2% or more of
the Company’s consolidated net salesC) Persons who deem the Company to be a major
trading partner, or their executives, or persons who
have been in either position in the past three years.
However, persons who deem the Company to be amajor trading partner are defined as those to which
payments by the Company account for 2% or more ofsaid trading partner’s consolidated sales.

Company’s statutory audits(2) Law firms that serve as legal counsel to the Company
E) Spouses or relatives within the second degree ofkinship of the relevant persons in the sections above(but limited to important persons*3)*1 Pursuant to Article 2, paragraph (3), item (vi) of the Japanese Regulation for
Enforcement of the Companies Act.
*2 In the case of an individual, substantial monetary consideration or other property
is defined as an annual amount of not less than 10.0 million yen, and in the caseof an organization, an amount of 2% or more of the total annual income of thatorganization.
*3 In the case of companies, important persons are defined as those who holdpositions of responsibility equivalent to director, executive officer, operating
officer and manager; in the case of accounting and auditing firms, certified
public accountants; in the case of law firms and legal professional corporations,lawyers; and in the case of certified tax accountant offices and tax accountant
corporations, licensed tax accountants. In other organizations, an important
person means officers, such as a director or a councilor.

List of External Directors
Attendance at Meetings (FY2020)

Name

Audit andSupervisory
Committee
Members

Independent
External
Directors

Reason(s) for Selection

Shin Kato

○

○

Yuzo
Kawamori○

Naoki
Matsumoto○NobukoMizumoto○

Board ofDirectors

Audit andSupervisory
Committee

Given his wealth of experience and outstanding insight and knowledge as
an attorney at law, Mr. Kato is put forward for election as an external director
who is an Audit and Supervisory Committee member.

19/19

24/24

○

Given his outstanding insight and wealth of experience in overseas businessdevelopment as a manager of an industry-leading company, Mr. Kawamori is
put forward for election as an external director who is an Audit andSupervisory Committee member.

19/19

23/24

○

Given his wealth of experience and outstanding insight into ﬁnance andaccounting as a manager in a wide variety of businesses in the ﬁnanceindustry, Mr. Matsumoto is put forward for election as an external director
who is an Audit and Supervisory Committee member.

19/19

24/24

−

−

○

Given her broad and outstanding knowledge derived from her experience
as a researcher at a major heavy industry manufacturer and as a manager
through key posts at the head ofﬁce, Ms. Mizumoto is put forward for election
as an external director who is an Audit and Supervisory Committee member.
* Appointed June 25, 2021

46

Evaluating the Effectiveness of the Board of Directors
To ensure transparent and fair processes, the Company

pointed out that to further improve effectiveness, it iscommissioned an external organization to evaluate theimportant to implement effective monitoring of the priority

effectiveness of the Board of Directors.

issues established in the medium-term management plan.

In April 2021 a survey was taken of all directors, and an

It was also pointed out that in doing so, we should create aanalysis of the results was reported at a Board of Directors

forum where detailed discussion can be conducted tomeeting held in May 2021.

clarify issues from a company-wide perspective, analyze

While certain improvements were confirmed regarding

risks, and formulate measures to overcome those issues,

issues pointed out in the previous fiscal year, findings

rather than merely stopping at the discussion of occasional

revealed several remaining issues with risk management at

investment projects.

Group companies.
While the Board of Directors was generally found to have

We will continue working to improve the effectiveness of
the Board of Directors.

ensured its effectiveness in the current fiscal year, it was

Executive Remuneration
The Company has established policies for determining the• Performance-linked stock remuneration is based on thecontent of remuneration and so forth for directors on an

fiscal years covered by the medium-term management

individual basis (excluding directors who are Audit andplan as the target period, and is provided in the form ofSupervisory Committee members; the same below). These

the Company’s shares in accordance with theare summarized below; the policies are determined by theachievement level for the predetermined performance

Board of Directors following deliberation by the Humantargets.

Resources Committee*1. Note that in determining the• The ratio of remuneration for Company directors by typecontent of individual remuneration and so forth foris determined in consideration of the ideal balance

directors, the Human Resources Committee conducts a

between the basic standard for the required roles andmultifaceted review, including consistency with the draft

responsibilities, as well as incentives to increase theand the decision policy; the Board of Directors essentiallymotivation to achieve performance targets.

respects the report of the Human Resources Committee
and deems it to be in line with the decision policy.

• Providing remuneration and so on to the Company’s
directors on an individual basis serves to ensure that
directors work toward sustainable improvement in*1 The Human Resources Committee is composed of a majority of external directors
and deliberates matters related to human resources and remuneration regarding
officers. This Committee also serves as a voluntary advisory committee for theCompany that makes appropriate reports and recommendations to the Board of
Directors.
*2 All directors, except those who serve on the Audit and Supervisory Committee,
non-executive directors, external directors, and those not residing in Japan, areeligible for the performance-linked stock remuneration plan.

corporate performance and corporate value based on our
Vision. This also serves to secure and retain human
whereas the Basic Policy functions to determine suchcontent.

• Remuneration for the Company’s directors consists ofbasic remuneration (monetary remuneration) andperformance-linked stock remuneration*2.

• Basic remuneration is composed of a standard amountdetermined separately for each position from acomprehensive perspective that takes into account theroles and responsibilities of the director, as well as theCompany’s performance and remuneration data provided
by external expert organizations. An evaluation based on
the achievement level for the previous fiscal year’s targets
is added to this determination.

Amount of Remuneration Paid to Directors and Audit
and Supervisory Committee Members (FY2020)
Numberof People

Remuneration
AmountDirectors(excluding external directors)

5¥172 million

Directors who are Audit andSupervisory Committee members(excluding external directors)

1¥27 million

External directors

3¥42 million

Subject of Remuneration* The above includes refunds of ¥25 million in expenses for performance-linked
stock remuneration during the fiscal year in question. They do not include theemployee salary portion for executives also serving in employee positions.

TOKUYAMA REPORT 2021

resources through an appropriate level of remuneration,47

Abolishment of Anti-Takeover Measures
The "Policy Regarding Large-Scale Purchases of thelaws and regulations even after the abolition of the Policy.

Company’s Shares, etc. (Anti-Takeover Measures)" expired at

This includes requesting any party who intends to conduct

the conclusion of the Ordinary General Meeting ofa large-scale purchase of the Company’s shares to furnish

Shareholders held on June 25, 2021. After careful

all necessary and adequate information, and providing

consideration of the opinions of institutional investors inshareholders with pertinent details including the Board of

and outside Japan and other shareholders, and the impact

Directors’ appraisal and opinion of that information, as wellof changes in the social environment including application

as the business features pertaining to any large-scaleof the Corporate Governance Code, the Company haspurchase. At the same time, Tokuyama will work to secure

decided not to renew the Policy and has abolished it.

and improve the common interests of shareholders by

Note that Tokuyama will continue to implement all
appropriate countermeasures in accordance with relevant

steadfastly implementing Medium-Term Management Plan
2025.

Policy on the Holding of Listed Shares for Purposes Other Than Pure Investment
Tokuyama holds shares of publicly listed companies on aof two listed issues in FY2020, resulting in a total of 22 listed

strategic basis in accordance with the necessities of its businessissues of shareholdings as of March 31, 2021. In addition,

activities as a part of its overall management strategy. This

the Board of Directors takes steps to verify the economic

includes the need to maintain and bolster transactions,rationality of holding shares in publicly listed companies byraise funds and stably procure raw materials. As far as thecomparing capital costs that factor in associated risks withstrategic holding of shares in publicly listed companies is

accrued benefits while confirming the propriety of its holdings

concerned, the Company will limit its holdings to thebased on an outlook of the future each year. The Company

minimum level possible taking into consideration the needexercises its voting rights based on the contribution toto ensure efficient corporate management. It sold all shares

corporate value for both the Company and the investee.

ComplianceTokuyama understands“compliance”to have a broad

throughout the Group, the Company has put together ameaning, including not only complying with laws andhandbook that includes the Tokuyama Group Code ofinternal rules but also behaving sensibly in a manner that

Conduct. It is distributed to all Group officers and employees.

conforms with corporate ethics to meet social expectations.

In addition, we also conduct rank-based training and meetings

To communicate and spread awareness of compliancewith those in charge of compliance at our Group companies.

Risk Management
Tokuyama manages risk through the Risk Management andmanagement systems for understanding important laws

Compliance Committee, which operates under the CSR

and regulations that are relevant to business execution, andPromotion Council. It also has expert committees focused on risk

for keeping track of trends in amendments to these laws

management and compliance in seven critical and specialized

and regulations. To prepare against changes in the businessareas. These committees are set up separately from the Risk

environment and cyberattacks, which have become

Management and Compliance Committee to deliberateincreasingly advanced, in April 2021 the Company established

important matters and ensure management. The Company has

a Cyber Security Department. The Company has also

designated a department responsible for regulations concerning

established a business continuity plan (BCP) and othermanagement of the risk of loss for each committee, andmeasures in order to ensure an appropriate response by

conducts activities based on the management regulations.

type and severity in the event of natural disasters, accidents

It also works to mitigate compliance risk by establishingand other significant crises.

Business Continuity Management (BCM)
For the continuation of important operations in unforeseen

meetings 32 times in FY2020. Actions included notification

circumstances, the Company has formulated a BCP andof instructions issued by the government and industry

updates it, secures funding and resources to ensure

bodies, infection prevention measures, and establishment

business continuity, and engages in business continuityof a structure for contacts and public relations should an

management in normal times, including the taking of

infection event occur. Crisis response measures included

preventive measures, and thereby improving its ability toacquiring an understanding of infection responses andcontinue its business operations.

status of production at business sites in and outside Japan,

To address the COVID-19 pandemic, in February 2020 the48

as well as recommending work-from-home and staggered

Company set up a crisis response headquarters with thecommuting policies, increasing equipment for teleworking,President as general manager. The headquarters held

and imposing restrictions on entrance to manufacturing sites.

Management Team (as of June 25, 2021)*From left to right: Nobuko Mizumoto, Yuzo Kawamori, Youji Miyamoto, Hiroshi Nomura, Hiroshi Yokota, Hideo Sugimura, Fumiaki Iwasaki, Shin Kato, Naoki Matsumoto

Representative Director

Hiroshi Yokota

In charge of Chemicals, Cement, Auditing Department, Carbon Neutral Strategy

Hideo Sugimura

In charge of Corporate Planning, Corporate Social Responsibility, General Affairs
and Human Resources, Procurement and Logistics, Secretarial Department

Hiroshi Nomura

In charge of Electronic Materials, Tokuyama Factory, Environment &Safety and Manufacturing Technology of Kashima Factory

Director

Fumiaki Iwasaki

In charge of Life Science, Eco Business, Research and Development

Director, Audit and Supervisory
Committee Member

Youji Miyamoto

Audit and Supervisory Committee Chair

Shin Kato

External Director

Yuzo Kawamori

External Director

Naoki Matsumoto

External Director

Nobuko Mizumoto

External Director

President and Executive Officer

Hiroshi Yokota

Senior Managing Executive Officer

Hideo Sugimura

General Manager, Corporate Planning Division
General Manager, Electronic Materials Business Division and Tokuyama FactoryManaging Executive Officer

Hiroshi Nomura
Ryo Sugiyama
Fumiaki Iwasaki

General Manager, Research & Development Division and Tsukuba Research 		

General Manager, Eco Business Division

Executive Officer

Takahide Taniguchi

General Manager, Cement Business Division

Yutaka Tarutani

General Manager, Corporate Social Responsibility Division

Hiroshi Fujimoto

General Manager, General Affairs and Human Resources Division

Naoki Tamura

General Manager, Life Science Business Division

Hirotaka Nishihara

General Manager, Chemicals Business Division

Tomohiro Inoue

Deputy General Manager, Cement Business Division and General Manager, 		Cement Manufacturing Department

Takashi Satou

General Manager, Procurement and Logistics Division and Logistics Department

TOKUYAMA REPORT 2021

Laboratory49

Business Sites and Group Companies
Business Sites in JapanTokyo Head Office

Front Place Akihabara 7-5 Sotokanda 1-chome, Chiyoda-ku, Tokyo 101-8618, Japan

Osaka OfficeNakanoshima Central Tower 2-7 Nakanoshima 2-chome, Kita-ku, Osaka-shi, Osaka
530-0005, Japan

Hiroshima Branch

Hiroshima Nissay Green Bldg. 8-18 Teppocho, Naka-ku, Hiroshima-shi, Hiroshima
730-0017, Japan

Takamatsu Branch

New Annex, Takamatsu Dai-ichi Seimei Building 1-1 Kotobuki-cho 2-chome, Takamatsu-shi,
Kagawa 760-0023, Japan

Fukuoka Branch

Kyowa Building 8-38 Tenjin 2-chome, Chuo-ku, Fukuoka-shi, Fukuoka 810-0001, Japan

Sendai Sales Branch

Dai 6 Doya Building 17-20 Kamisugi 1-chome, Aoba-ku, Sendai-shi, Miyagi 980-0011, Japan

Shunan Sales Branch

1-1 Mikage-cho, Shunan-shi, Yamaguchi 745-8648, Japan

Tokuyama Factory

1-1 Mikage-cho, Shunan-shi, Yamaguchi 745-8648, Japan

Kashima Factory

26 Sunayama, Kamisu-shi, Ibaraki 314-0255, Japan

Tsukuba Research Laboratory

40 Wadai, Tsukuba-shi, Ibaraki 300-4247, Japan

Center for Commercialization ofAdvanced Technology

2-1, Minamihama 2-chome, Yanai-shi, Yamaguchi 742-0023, Japan

Global Network
U.S.A.

3655 Torrance Blvd., 3rd Floor, Torrance, CA 90503, U.S.A

Tokuyama America Inc.
Germany

Am Gierath 20A, 40885 Ratingen, Germany

Tokuyama Europe GmbH
Singapore

61 Robinson Road, #14-02 61 Robinson Singapore 068893

Tokuyama Asia Pacific Pte. Ltd.

］

China
Tokuyama (Shanghai) Co., Ltd.
Tokuyama Trading (Shanghai) Co., Ltd.

1003, Shanghai International Group Mansion, 511 WeiHai Road,
Shanghai China 200041#604, Korea Air City Terminal Bldg. 22, Teheran-ro 87-gil, Gangnam-gu,
Seoul, 06164, Korea

Korea
Tokuyama Korea Co., Ltd.

Group Companies
CapitalCompany(Millions of yen)

Scope

Ownership (%)

Electronic Materials
Tokuyama Chemicals (Zhejiang) Co., Ltd.*1

6,477

Tokuyama-Dowa Power Materials Co., Ltd.

250

Production and sale of aluminum nitride substrates

Tokuyama Electronic Chemicals Pte. Ltd.

704

Production and sale of high-purity chemicals for electronics manufacturing

100.0

822

Production and sale of high-purity chemicals for electronics manufacturing

100.0

Formosa Tokuyama Advanced Chemicals Co., Ltd.*

944

Production and sale of high-purity chemicals for electronics manufacturing

50.0

Hantok Chemicals Co., Ltd.*

553

Production and sale of photoresist developer

50.0

Taiwan Tokuyama Corporation
3

Production and sale of fumed silica

100.0
65.0

Category also includes 1 other company

Life Science
Shanghai Tokuyama Plastics Co., Ltd.*1
A&T Corporation
Tokuyama Dental Corporation
Tokuyama Dental America Inc. *2Category also includes 4 other companies
50

1,231

Production and sale of microporous ﬁlm

100.0

577

Production and sale of diagnostic reagents, analyzers and systems

100.0

100

Production and sale of dental materials and equipment

100.0

69

Sale of dental materials and equipment

100.0(100.0)

Eco Business
450

Production, sale and maintenance of ion exchange membranes
and related equipment

55.0

Excel Shanon Corporation

495

Production and sale of plastic window sashes

51.0

2

300

Production and sale of plastic window sashes

ASTOM Corporation

Tohoku Shanon Co., Ltd.*
Figaro Engineering Inc.*

99

Production and sale of gas sensor devices and related products

Tokuyama Soda Trading Co., Ltd.

10

Stocking and sale of soda ash and calcium chloride

1

2,000

72.0（72.0）
33.4

Category also includes 3 other companies

Chemicals

Shin Dai-ichi Vinyl Corporation*

Production and sale of PVC resin

100.0
85.5

98

Production and sale of PVC resin compounds

Hiroshima Tokuyama Ready Mixed Concrete Co., Ltd.*2

100

Production and sale of ready-mixed concrete

Tokuyama Nouvelle Calédonie S.A.

222

Production and sale of cement

75.6

Tokyo Tokuyama Concrete Co., Ltd.

80

Production and sale of ready-mixed concrete and concrete products

99.9

Sun Arrow Kasei Co., Ltd.

100.0

Category also includes 4 other companies

Cement67.2（17.2）

Seibu Tokuyama Ready Mixed Concrete Co., Ltd.

100

Production and sale of ready-mixed concrete

2

100.0

Kawasaki Tokuyama Ready Mixed Concrete Co., Ltd.*40

Production and sale of ready-mixed concrete

Chugoku Ready Mixed Concrete Co., Ltd.

80

Production and sale of ready-mixed concrete

52.3

Shirokawa Co., Ltd.

60

Production and sale of ready-mixed concrete

100.0

Tokuyama Tsusho Trading Co., Ltd.

95

Stocking and sale of cement and ready-mixed concrete

100.0

Kansai Tokuyama Trading Co., Ltd.

80

Stocking and sale of cement and ready-mixed concrete

100.0

Tokushou Co., Ltd.

40

Stocking and sale of cement and ready-mixed concrete

100.0

Tokushin Co., Ltd.

40

Stocking and sale of cement and ready-mixed concrete

100.0

Tokuyama Mtech Corporation

50

Processing and sale of building materials and chemical products

100.0

Sanyo Tokuyama Ready Mixed Concrete Co., Ltd.*50

Production and sale of ready-mixed concrete

50.0

Yamaguchi Eco-tech Corporation*

90

Recycling business of incinerated ash waste

50.0

Production and sale of plastic molded products

60.0

100.0（100.0）

Category also includes 18 other companies

Other
Tomitec Co., Ltd.

100

Tokuyama Asia Pacific Pte. Ltd.

62

Tokuyama Trading (Shanghai) Co., Ltd.

73

Stocking and sale of fumed silica, etc.

100.0

Tokuyama Korea Co., Ltd.

61

Stocking and sale of fumed silica, etc.

100.0

manufacturing and electrical materials, etc.

Management company to provide services for other

100.0

Tokuyama (Shanghai) Co., Ltd.

194

Shunan System Sangyo Co., Ltd.

100

Tokuyama Kairiku Unso K.K.

63

Transportation and warehousing

100.0

20

Information processing services

100.0

Tokuyama Information Service Corporationgroup companies in China
Civil engineering and construction work and planning, onsite
contracted factory work, and stocking and sale of construction materials

100.0
100.0

150

Warehouse operations for bulk cargoes of coal, etc.

Sun・Tox Co., Ltd.*300

Production and sale of polyoleﬁn ﬁlms

34.0

CoorsTek Tokuyama Corporation*

100

Production and sale of ceramics and electrochemical products

30.0

Tokuyama Polypropylene Co., Ltd.*100

Production and sale of polypropylene

50.0

Nishinihon Resicoat Co., Ltd.*50

Production of metal parts and anti-rust surface coating materials

50.0

Shunan Bulk Terminal Co., Ltd.*

2

Category also includes 10 other companies* Equity method affiliates * The capital stock of overseas group companies is converted into yen at the rate prevailing at the time the shares were acquired.
*1. The company is a specified subsidiary. *2. The percentage of voting rights held by the Company in parentheses includes indirect holdings.
*3. Although the Company’s holdings are 50% or less, the company is a subsidiary because the Company effectively controls it.

83.3（11.1）

TOKUYAMA REPORT 2021

Stocking and sale of high-purity chemicals for electric51

Stock Information
Total number of sharesauthorized to be issued(as of March 31, 2021)

Generalshareholders’ meeting

Common shares: 200,000,000 shares

Common shares: 72,077,412 shares

Number of shares issued

JuneTokyo Stock

Stock listing(excluding 10,915 treasury shareholders)

Exchange

Number of shareholders

Common shares: 20,566 shareholders

Number of shares per unit

100 sharesFiscal year

From April 1 to March 31

Securities code

4043

Dividend Policy

Major Shareholders

Dividends will be paid to theof the register of shareholders on March

Number of
Shares HeldNameshareholders stated in the final version(Thousands of shares)

Percentage ofShares Held (%)

The Master Trust Bank of Japan, Ltd. (trust account)

8,929

12.39

Custody Bank of Japan, Ltd. (trust account)

4,575

6.35

Nippon Life Insurance Company

2,174

3.02

The Yamaguchi Bank, Ltd.

1,649

2.29

consideration performance trends and

Meiji Yasuda Life Insurance Company

1,488

2.07

the roadmap established under its

Sojitz Corporation

1,296

1.80

Sumitomo Metal Mining Co., Ltd.

1,180

1.64

Tokio Marine & Nichido Fire Insurance Co., Ltd.

1,104

1.53

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

1,080

1.50

954

1.32

31 and September 30. As far as the
distribution of profits is concerned,
Tokuyama‘s basic policy is to ensure thecontinuous and stable payment ofdividends to its shareholders. In carryingout this policy, the Company takes into

medium- to long-term business plan.

Tokuyama Employee Shareholding Association

Note: The percentage of shares held is calculated after deducting the shares held by the Company astreasury shares (10,915 shares).

Shareholders by Type

Total Shareholder Return (TSR)

4.2 %Total Shareholder Return (TSR)（％）

18.6 %

11.7 %

Type ofshareholders

24.9 %

400
350

346.3
309.2

309.4

300

257.7

250

162.3

200

40.6 %

TOPIX

392.5

150

114.7

132.9

126.2

114.2

100
50

Securities Companies (2,990 thousand shares)
Other Domestic Corporations(8,467 thousand shares)

Financial Institutions (29,267 thousand shares)
Non-Japanese Corporations/Foreign Residents(17,971 thousand shares)

Individual/Other (13,392 thousand shares)

52

0

2016

2017

2018

2019

2020 (FY)Corporate Data
Corporate name
Established(as of March 31, 2021)

Tokuyama Corporation
February 16, 1918
Tokyo Head Office
Front Place Akihabara 7-5 Sotokanda 1-chome, Chiyoda-ku, Tokyo 101-8618, Japan
TEL. +81-3-5207-2500 FAX. +81-3-5207-2580

LocationTokuyama Factory (Registered Address)
1-1 Mikage-cho, Shunan-shi, Yamaguchi 745-8648, Japan TEL. +81-834-34-2000 FAX. +81-834-33-3790
Other Facilities in Japan
Kashima Factory, Tsukuba Research Laboratory, Osaka Ofﬁce, Hiroshima Branch, Takamatsu Branch,
Fukuoka Branch, Sendai Sales Branch, Shunan Sales Branch

Capital
Number of employees¥10,000 million
5,476 (consolidated basis; 565 working overseas) 2,256 (non-consolidated)

WebsiteFor detailed information about the Company, please visit the Company’s
website.
Corporate data: https://www.tokuyama.co.jp/eng/company/
Shareholder and investor information: https://www.tokuyama.co.jp/eng/ir/
CSR: https://www.tokuyama.co.jp/eng/csr/

Corporate
data

Shareholder andinvestor information

CSR

Editorial Policy
Publication of Integrated Report
The Tokuyama Report 2021 is our first issuance of an Integrated Report, which
combines financial and non-financial information with the aim of communicating
our value creation and business model in an easy-to-understand manner.
The Report explains the details and strategies of Medium-Term Management
Plan 2025, which begins in FY2021, and includes the top commitments made by
the President as well as a roundtable discussion between the President andexternal directors on“Sustainable Growth and Our Mission.”This discussion
highlights the perspective of the external directors, and focuses on how the
Company will change to compete in the global market to achieve sustainablegrowth in a rapidly-changing business environment such as the one we havewitnessed during the COVID-19 pandemic.
We hope that the Tokuyama Report 2021 will facilitate communication with ourHideo Sugimura

Report Scope

Report Period

Date of Issue

Tokuyama Corporation and Group

Actual data is for FY2020 (April 2020 to March 2021)

Published in September 2021

Companies in and outside Japan

Includes some FY2021 activities(next issue scheduled for September 2022)

TOKUYAMA REPORT 2021

stakeholders and will deepen understanding of the Company.

Representative Director,
Senior Managing
Executive Officer

53

Front Place Akihabara
7-5, Sotokanda 1-chome, Chiyoda-ku, Tokyo 101-8618, Japan
Corporate Social Responsibility Divisionhttps://www.tokuyama.co.jp/eng/