New Medium-Term
Management Plan 2025

- Accelerate Transformation to Realize
Our Vision -Sanyo Chemical Industries, Ltd.
May 12, 2023
© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

1

INDEX
I. What Sanyo Chemical Group Shall Be

Corporate Identity, Management Policy: WakuWaku Explosion 2030,
Sustainable Management

Ⅱ. ReviewMessage from the President, Financial Trends, Current Status

Ⅲ. New Medium-Term Management Plan 2025

Ⅲ-1. Revision of Financial Forecasts, Transformation of Business Portfolio
Ⅲ-2. Basic Policy・Business Strategy（2023～25）：
Growth from Core Business, Reformation of Existing Business,
Global Deployment
・Toward the Future Beyond 2025:
New Growth Path, Solutions to Social Issues, Initiatives to
Support GrowthⅢ-3. Cash Flow and Investment Policy
Ⅲ-4. Financial Policy© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

2

I. What Sanyo ChemicalGroup Shall Be- Corporate Identity- Management Policy:
WakuWaku Explosion 2030
- Sustainable Management© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

3

What Sanyo Chemical Group Shall Be

Corporate Identity
Company Mission

Vision 2030

MissionVisionEstablish a better
society through our
corporate activities

Grow into a global, unique, and highly profitable company
where every employee feels pride and satisfaction in his/her work

Values•••© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

Inspire WakuWaku feeling from all the stakeholders
Co-create environmental, social and economic values withthe stakeholders
Facilitate every employee’s value creation

4

What Sanyo Chemical Group Shall Be

Management Policy: WakuWaku Explosion 2030
Transformation Toward the Vision

SupportEnvironment

New Growth
PathContribution on resolving social andenvironmental issues through the innovation
beyond the boundaries of chemistry

Growth fromCore Business

Growth through expansion and evolutionof our core business domains

Reformationof Existing
Business

Acceleration of structural reform andbusiness transformation with anenvironmental perspective

Contribution to Carbon Neutrality

Support People
and Their Lives
Improvement of QOL

SupportDiversity
Improvement of Job Satisfaction© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

5

What Sanyo Chemical Group Shall Be

Management Policy: WakuWaku Explosion 2030
Activities to support the transformation" Every department is a profit center "・Every employee of the Sanyo Chemical Group plays a leading role.
・Promoting WakuWaku works by spotlighting everyone.

© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

6

What Sanyo Chemical Group Shall Be

Sustainable Management

Basic Policy on Sustainability
Our mission is to establish a better society through our corporate activities since the foundation. Sanyo Chemical Group
commits to realize sustainable growth towards future by enhancing both economic and social values in close
cooperation with all the stakeholders.
Sanyo identifies material issues in aspect with our value creation in long term

Identification of Material Issues
Achieve carbon neutrality as
Interface Innovator

CN

QOL

Life

Environment

Create innovations by supporting value
creation of industry, culture andeducation.

Six
Material Issues

In

SocialDevelop human resources andimprove work environment byrecognizing diversity

HC© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

Improve QOL(quality of life)
by Performance ThroughChemistry

RM

Conduct the risk management
thoroughly by strengthening theGuardian function

GovernanceTM

Implement challenge-oriented
and transparent management

7Ⅱ. Review- Message from the President- Financial Trends- Current Status© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

8

Message from the President
Sanyo Chemical Group implemented the "WakuWaku Explosion 2030" management policy
in March 2022.
Based on the company mission since our foundation, “ Establish a better society through our
corporate activities”, each and every employee has been working to create values toward becoming
a “WakuWaku* company”, where everyone can shine, with the three pillars of “Contribution to carbon
neutrality”, “Improvement of QOL“ and ” Improvement of job satisfaction” so that we can contribute tocreate sustainable societies.
On the other hand, in FY2022, negative factors such as China‘s lockdown due to COVID-19, soar ofenergy prices due to the turmoil in Ukraine, automobile production cutbacks due to semiconductor
shortages, sharp yen depreciation, and other global environmental changes have had significant
impacts on our business operations. Consequently, our approaches on“Reformation of existing business,” ”Growth from core business,” and “New growth path” initiatedbased on the management policy fell slightly behind from initial expectations and the company's
performance for the fiscal year ended March 31, 2023, fell short of its initial plan.
In order to realize the ideal status envisioned in our management policy, we have formulated a new
medium-term management plan, a three-year plan in which we describe a roadmap and specificinitiatives. Guided by this new medium-term management plan, Sanyo group as one team will pay
efforts to enhance our values through entire supply chain and accelerate the creation of new values
through innovation through the power of chemistry beyond the boundaries of chemistry.
We will continue to work together with our stakeholders to realize a better society.
We look forward to your further support and cooperation in our efforts to grow.
*”WakuWaku” is the Japanese word which express positive, bright, uplifting feeling inspired byinner motivations and/or own wills.
May 2023 Akinori Higuchi© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

99

Review

Financial Trends

Net Sales, Operating Profit, ROIC

Cash Flow

No growth in operating profit

Decrease in cash flow generation capability

sales(billion yen)

Operating Cash flow(billion yen)operating profit(billion yen)Free Cash flow(billion yen)

ROIC(%)
165.1 167.0

157.9

142.6

150.1

12.4

8.1
6.1
3.9

4.9

8.9
6.8
5.0

161.6 161.5

13.6

11.9

155.5

12.9

162.5

174.9

22.6
20.4

144.7

12.4

22.3

15.7

15.7

11.9 11.8
13.2

8.1
6.6

5.8

6.6

6.3

14.6
11.3 10.8
9.8

11.5

8.4

9.1

5.5

7.1

3.4

6.2
2.8

▲ 0.1
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

(FY)(注) ROIC=(Operating profitーCorporate Tax)÷Average invested capital© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

17.2

6.1
3.2
1.5

▲ 0.3 0.6

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

(FY)

10

Review

Current Status
We are positioned in downstream of the chemical value chain closer to consumer goods.
Our value is to provide solutions for diverse needs from customers of various industries
through functional chemicals (performance chemicals) with applying our expertise ininterface control technology.
In The 10th Medium-Term Management Plan (FY2018-2020), under the slogan “KAERU(Committed to Change)”, we aimed to transform our corporate culture, shift to high-value
products, reform existing businesses, and create new core businesses. While achieving
great success in corporate culture transformation such as diverse work styles, we wereunable to improve financial performance as progress on business reformation and new
business creation were behind our expectations.
Under this situation, we had extensive internal discussions on what value proposition wecan contribute to the society. Consequently, we formulated the new management policy,"WakuWaku Explosion 2030," in March 2022 as a compass towards our future.
In this new medium-term management plan, we have revised our financial targets set inour management policy, with the consideration on the changes in external environment andthe progress of internal transformation. However, we made no change on our vision. We will
pursue what we aim to be; focus our resources on growing area where we can contribute tocarbon neutrality and improvement on QOL(quality of life), and realize sustainable growth inboth existing businesses and creation of new cores.

© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

11

Ⅲ. New Medium-Term
Management Plan 2025
Ⅲ-1. Revision of Financial Forecasts andTransformation of Business Portfolio
Ⅲ-2. Basic Policy
Ⅲ-3. Cash Flow and Investment Policy
Ⅲ-4. Financial Policy© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

12

Ⅲ. New Medium-Term
Management Plan 2025
Ⅲ-1. Revision of Financial Forecasts andTransformation of Business Portfolio© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

13

New Medium-Term Management Plan 2025

Ⅲ-1. Revision of Financial Forecasts and Transformation of Business Portfolio
Revisionof Financial Forecasts
業績見通しの修正

・Reflected on the external environment and the progress of internal transformation, we revise thetarget of "20 billion yen in operating profit in FY2024" set forth in the management policy.
・Nevertheless, we maintain the vision of management policy and commit to realize growth under the
new medium-term management plan 2025.
sales(billion yen)

Initial target（operating profit）

FY2024 20 billion yen

operating profit(billion yen)operating profit ratio(%)
ROIC(%)

174.9

exchange rate:130yen/$domestic naphtha:65thousand yen/KL

180.0

190.0

162.5

200.0

15.0

12.0

11.8
10.0
8.4

7.3

Revised target（operating profit）

FY2025 15 billion yen

4.8
5.5
3.4
2021

© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

2022

5.6

4.8

2023

（plan）

6.3

5.7

2024

（plan）

7.5

7.0

2025 （FY）（plan）ROIC target

10%
or more14

New Medium-Term Management Plan 2025

Ⅲ-1. Revision of Financial Forecasts and Transformation of Business Portfolio
Financial
Forecasts
業績見通しの修正

High-value-added products category：
Five products contributing to CN and QOL are identified in this category (Chemicals for Special fibers
and electronics, Lubricant additives, Permanent antistatic agents, Medical and pharmaceutical products）• Basic products category：Various products other than above are included in this category.
•＜ High-value-added products ＞＜ Basic products＞

sales(billion yen)operating profit(billion yen)

135.8

operating profit ratio(%)

18.0

16.7

17.6
6.6

4.8
26.7

2021

18.8

19.2

5.4
32.4

2022

142.6

159.1

8.9

8.7

7.9

7.3

142.5

150.9

37.4

39.1

40.9

6.4

2023

2024

2025（FY）

2021

4.5

5.2

3.1

3.7

2022

2023

6.5

4.3

2024

5.6

（FY）
2025

(Note) Research and development expenses related to new businesses (approx. 2 billion yen per year) are not included in the above operating profit.

© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

15

New Medium-Term Management Plan 2025

Ⅲ-1. Revision of Financial Forecasts and Transformation of Business Portfolio

Steps Toward 15 Billion Yen

Reformation of Existing Business2.5(billion yen)

3.0

1.0

3.5

11.8
8.4

- 3.4

15.0

Recovery fromthe external
environment

Recovery of domestic automobile
production, demand growth by Post
Covid-19 in China

Transformationof the overall
supply chain

Price optimization linked to naphtha
prices, Improvement of efficiency
through “Monozukuri
transformation”

Structuralreforms

Urethane and Superabsorbent
Polymers (SAP) businesses
undertake drastic reforms

Growth from Core Business
High-valueadded products

Accelerate investment in 5 focus
products and expand overseas
sales

Increase in Fixed Cost
ERP system update, Increase in depreciation/repair costs
associated with renovation investments, rising labor costs© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

16

New Medium-Term Management Plan 2025

Ⅲ-1. Revision of Financial Forecasts and Transformation of Business Portfolio

Transformation of Business Portfolio
・Increase the proportion of high value-added products category contributing to CN/QOL
・Promote the overseas sales＜Composition of opearting profit＞＜Composition of opearting profit ＞
FY2021
11.8 billion yen

Highvalue-addedHigh

FY202515.0 billion yen

value-added
products

products
domestic
61%

overseas

36%

39%

overseas
domestic

Basic

products

products© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

47%

53%

Basic
64%

47%

53%

17

New Medium-Term Management Plan 2025

Ⅲ-1. Revision of Financial Forecasts and Transformation of Business Portfolio

Trend of Financial Forecast by Industrial Segments<Sales>(billion yen)(billion yen)
6.0

70.0
60.0

54.9

57.1

50.0

59.5

54.0

5.2

5.0
56.0

4.0

48.3

40.0
30.0
20.0

25.5
21.0
18.6

4.5

28.2
23.2

18.3

29.0
25.0

19.0

25.5

21.0

3.0

31.0
26.0

2.0

2.5
2.0

2022

2023

2024

2025（FY）© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

2.8

2021

(SAP, Medical andpharmaceutical products)
Petroleum andAutomotives(Lubricant additives,
Urethane)
Plastics and Textiles(Permanent antistatic

3.2

agents, Chemicals for

2.6

1.6

0.0

0.0

4.5

3.8

3.0

1.4

1.0

4.0

4.5

3.5

23.0

10.0

2021

4.0

3.8
3.7

42.5
30.0

Toiletries and Health Care

64.0

54.0
53.0

<Operating profit>

1.0

1.2

0.0

2022

2023

Electrics/Electronics(Chemicals for

0.3

0.1

1.4

Special fibers)
Information and

1.2

Special electronic parts)
Environmental Protection,
Construction and Others2024

2025（FY）(Uretahane)(Note) Research and development expenses (approx. 2 billion yen per year) related to new businesses
are not included in the above operating profit.

18

Ⅲ. New Medium-Term
Management Plan 2025
Ⅲ-2. Basic Policy© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

19

New Medium-Term Management Plan 2025

Ⅲ-2. Basic Policy
Business Strategy(2023～25)

Growth fromCore Business• Injection of resources tothe high-value-added
products category（5 Focus Products)

Reformation of Existing
Business• Profit improvement on Basic
products category• Improvement through the whole
supply chain
by ”Monozukuri Transformation”• Restructuring of Urethane andSAP business

Global Deployment• Promotion of overseas
sales

Toward the Future Beyond FY2025

New Growth Path
• New development related
to CN• New development related
to QOL

Solutions to Social Issues• CO2 emission reduction• Initiatives to humanrights issues© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

Initiatives to Support Growth• Human resources training
and improvement of
workplace environment• Safety-first management• Management with the transparency
20

Ⅲ. New Medium-Term
Management Plan 2025
Ⅲ-2. Basic Policy
Business Strategy（2023～25）:
Growth from Core Business
Reformation of Existing Business
Global Deployment© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

21

New Medium-Term Management Plan 2025

Business Strategy（2023～25）: Growth from Core BusinessAccelerate Investment in High-value-added Products Category

・Accelerate capital investment in 5 focus products that contribute to CN/QOL
・Pursue additional investment opportunities
分類

Product groups

CN

Chemicals for
special fibers

CN

Chemicals for
special electronic parts

CN

Lubricant additives

QOL

Permanent antistatic
agents

QOL

Medical andpharmaceutical products

2021

2022

2023

2024

2025

(FY)

Installation in Kashima(2024/0.7)
Expansion in Nagoya(2023/0.4, 2025/0.5)

FY2021 to 2025
Amount of total
investment

9.7 billion yen

Expansion in China(2021/0.3), Installation in Korea(2021/2.4)
Planned expansion in Kashima and Kyoto(2025/0.8)

Installation in Thailand(2022/3.4)© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

Expansion in Nagoya(2024/0.1)
Expansion in Kyoto(2024/0.３)

Incremental
operating profit
during this period

2.5 billion yen(Note) Amount of investment indicated in billion yen

22New Medium-Term Management Plan 2025

Business Strategy（2023～25）：Reformation of Existing BusinessProfit Improvement

・Improvement of decreased profit caused by the external
environment change in 2022
＜Recovery of automobile production＞

・Approx.40% of Sanyo products are related to the automobile industry
・Prepare sales & production for the expected demand recovery in andafter 2023

＜Post Covid-19 in China＞

Incremental
operating profit

3.5 billion yen

・Falloff in demand relating to diapers, construction paints etc in China
caused by the lockdown in 2022
・Demand recovery in and after 2023 is expected

・Transforming business processes throughout the supply chain
・Transfer the cost increase of raw materials, utilities and others on the
product prices
・Start-up of "Monozukuri Transformation"© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

Incremental
operating profit

3.0 billion yen
23New Medium-Term Management Plan 2025

Business Strategy（2023～25）：Reformation of Existing BusinessMonozukuri Transformation
•
•
•
•
•

Visualize data through the overall supply chain by the ERP renewal and promotion of DX
Establish new processes that enable smooth connection from order receipt to production planning
Conduct fundamental process reformation by dispatching dozens of R&D staffs to production sites
Promote investment of facilities renewal, incorporated with process optimization and automation
Implement total costs analysis and overhaul of operations•

Realize CF improvement by 5 billion yen through working capital reduction
Transforming business processes throughout the supply chain utilizing DX

Order
Systemintroduction

Procurement

Procuction

Raw material
cost cut

Process
innovation

Logistics

MarketingInventory
reduction

・early order receipt ・procurement globally・quality strabilizaiton ・inventory optimization
・DX promotion
・purchase from multiple ・reductions on the・automated inventory
sources, bulk purchaseprocess time
management
・optimization of specs© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

Sales
promotion
・application development
・salesforce utilization

24

New Medium-Term Management Plan 2025

Business Strategy（2023～25）：Reformation of Existing Business

Structural Reforms＜Polyurethane resins business unit.＞• Streamline production capacity through strategic
alliances with other partners• Process improvement and grade integration
through Monozukuri Transformation• Optimize production locations throughcollaboration with GC Polyols• Shift to high value-added products＜Superabsorbent polymers business unit.＞• Consolidate and/or eliminate surplus facilities• Process improvement and grade integration
through Monozukuri Transformation• Expand Chinese and South Asian sales with
regional sales strategy• Explore high value-added products other thanhygienic applications• Strategic alliances with other partners© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

Alliances

Incremental
operatingprofit1 billion yen

Monozukuri
Transformation

Efficientproduction in
strategic
location

Structuralreforms

Consolidation- eliminationof surplus
facilities

Highvalue-added
products
development

Strategic
sales

25

New Medium-Term Management Plan 2025

Business Strategy（2023～25）: Global Deployment

Promote Overseas Sales(billion yen )
20.0

16.0

domestic OP (billion yen)overseas incremental OP (billion yen)overseas OP (billion yen)
OP ratio (overseas) (%)
47
44

39

40

8.9

12.0

8.0

8.3
5.5

0.0

4.4

＜Strengthen functions of overseas sales offices＞• Boost sales to non-Japanese companies by promoting local
30 staffs to senior management positions• Strengthen technical service functions through R&D staff
involvement
20

3.5

4.0
5.3

＜Expand facilities in overseas plants＞
・Thailand：Permanent antistatic agents
1,500 m.t. (FY2022）
High functionality surfactants 1,800 m.t. (FY2024)
50
・Korea： Lubricant additives
11,000 m.t. (FY2021)
・China： Lubricant additives
2,000 m.t. (FY2021)

4.4＜Design global strategic plan by the business unit.＞•10 Launch product websites, participation in overseas exhibitions,
utilization of digital marketing tools• Pull-marketing strategy to attract potential international users•0 Expand sales of SAP in China and South Asia

(FY)
2021
2022
2025
(Note) Research and development costs related to new businesses (approx. 2 billion yen/year) are not included in the operating profits above© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

26

Ⅲ. New Medium-Term
Management Plan 2025
Ⅲ-2. Basic Policy
Toward the Future Beyond 2025:
New Growth Path
Solutions to Social Issues
Initiatives to Support Growth© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

27

New Medium-Term Management Plan 2025

Toward the Future Beyond 2025： New Growth PathCN

Development Related to CN to be Achieved by FY2025
Carbon Recycling (CCU* )•Establish basic technology of CCU utilizing ionic liquid method•Accomplish demonstrative trial through consortium withengineering partners and municipalities

Reinforcement of innovative actions including
opportunities on strategic alliances and M&A

Energy (organic cathode)•Establish manufacturing method of organic cathodes which contributes to weight
reduction•Initiate demonstrative trials lightweight batteries using our organic cathode

Agriculture (Peptide Materials)*Carbon dioxide Capture and Utilization© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

•Accomplish registration of fertilizers containing peptides naturally generated•Initiate sales of fertilizers in Miyazaki Prefecture•Establish mass production technology of fermentation-produced peptides

28New Medium-Term Management Plan 2025

Toward the Future Beyond 2025： New Growth PathQOL

Development Related to QOL to be Achieved by FY2025
将来の成長事業（CN関連）の25年度の目指す姿

Diagnostic and regenerative medicalcare (extracellular vesicles: EV)•Create new diagnostic businessusing EV* high concentration
purification technology•Establish technology and business model*Extracellular Vesicles

Wound healing materials andmeniscus repair (Silk-elastin)•Complete regulatory approval of wound healing
application and clinical trial for meniscus injury
applications•Initiate licensing business of wound-healing andmeniscus injury applications
to medical device manufacturers
and pharmaceutical companies© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

・Continuous resources injection into Bio and Medical fields.
・Exploration for new businesses through potential investment
in start-ups and M&A opportunities.

In vitro diagnostic medical products(Accuraseed)•Improve production efficiency at Fujifilm Sanyo Chemical
Healthcare Co. (FSHC), and promote sales through Fujifilm
sales channels•Complete IVDR* support for overseas marketing*European In Vitro Diagnostic Medical Device Regulation

Digital olfaction (smell sensor)•Initiate utilization in food industry
and social implementation in thesanitation industry

29

New Medium-Term Management Plan 2025

Toward the Future Beyond 2025： Solutions to Social Issues

CN

Initiatives to Reduce CO2 Emission
We pursue significant reduction of CO2 emission through our actions such as energy conversion,
efficiency in energy consumption, review of manufacturing processes, product portfoliochange, introduction of CCU.
2023 2024 2025 2026 2027 2028 2029 2030 2031 … （FY）
Introduction of energy
management

Energyconversion/
efficiency

Verification at domestic
factories

Introduction of non-fossil
energy equipment

Expansion to overseas factories

Introduction of solar power generation
Introduction in domestic
factories

Expansion of cogeneration

Green hydrogen

Intoroduction in overseas
factories

Improvement of manufacturing process

Fundamental review of processes through Monozukuri transformation

Environmental conservation activities

Environmental conservation activities at our factory

Business portfolio change

Decrease of products with high CO2 emission

CCU

Technical
verification

Demonstration test forcommercialization

Utilization in ourfactory

Demonstration completed in FY2025, contribute to reduce emission from FY2030© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

30

New Medium-Term Management Plan 2025

Toward the Future Beyond 2025： Solutions to Social Issues

CN

Target of CO2 Emission Reduction

Result of Emission (scope1)（10,000ton）

Result of Emission (scope2)
Base year
30.9

CO2

Estimated emissions (scope1+2)**

34.0

Target emissions (scope1+2)

30.8*scope1:direct emissions from the plant, such as fuel use in the
manufacturing process
Scope2:indirect emissions from purchase of electricity and heat

27.6
25.9

emissionContribution from CCU andGreen Hydrogen・Emission in FY2022 are forecasted to be 259,000 tons
(16% reduction from FY2013)

15.4

・During the period of FY2023-2025, higher emission is
anticipated as production volume increases. On the other
hand, implementation of manufacturing process
improvement will contribute CO2 emission reduction.
・Target to achive a 50% reduction by FY2030 (compared to
FY2013) has been set by introducing CCU and greenhydrogen.
（FY）
0© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

31

New Medium-Term Management Plan 2025

Toward the Future Beyond 2025： Solutions to Social Issues

RM

Human Rights Issues＜Basic policy＞

We proactively address human rights
issues in the supply chain in accordancewith newly formulated human rights
policy in FY2023.

人権問題への対応＜Human rights issues in the supply chain＞
Upstream
Procurement of raw
materials

R&D, Production,
DeliverySuppliers

Employees• Forced labor and childlabor• Conflict minerals• Infringements of rights
of indigenous people andimmigrants• Communities damage by
the environmental
destruction• Human rights violations
in suppliers• Unfair work environment
and work conditions• Labor accidents andhealth hazards• Discrimination andharassment• Invasion of privacy＜Priority measures＞• Implement human rights due
diligence in procurement activities• Eliminate harassment thoroughly• Promote DEI, educate LGBTQ, andcreate workplace where human rights
are addressed• Accept Ukrainian students

Downstream© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

Use, Consumption,
Disposal, Recycling
Customers• Human rights violations
through marketing or
advertisement• Use of products made byparties which violate
human rights

32

New Medium-Term Management Plan 2025

Toward the Future Beyond 2025: Initiatives to Support GrowthHC

Respect diversity and collaboration
Create an environment in which individual abilities
can be maximized.

Human Resource Development
and Work Environment Improvement＜HR Development Policy＞

Based on the principle of ｢Each and every employee contribute to create new value｣ and ｢All departments are
profit centers｣、we promote WakuWaku works by spotlighting everyone.

＜Work Environment Improvement Policy＞

Aiming to be a company where all employees can work comfortably with peace mind while valuing theirindividuality, we promote to create a work environment where all human rights and diverse values can berespected, accepted, and all employees perform proactive roles.

One Team

New HR System➢One Team➢Fairness, Transparency,
Balance of evaluation

HR Development➢ Proactive, Challenge➢ Leaders grow naturally

Work Environment➢ DEI (Diversity, Equity＆Inclusion)➢ Health Management➢ Work Style Reform

Becoming a Better Company© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

33

New Medium-Term Management Plan 2025

Toward the Future Beyond 2025: Initiatives to Support Growth
HR Development

New HR System(2023～)••••

Introduction of grade system that makes betteruse of capabilities
Introduction of evaluation system based oncompetence and role
Introduction of fair, transparent and balanced
evaluation system
Company-wide introduction of organizational
evaluation system
LeaderLeader

Team
Goals

•
•
•
•
•
•
•
•
•

Generalist, specialist→Unify into Associate grade
New career training program
Selection training program for potential leaders
Expansion of training program by levelOverseas study and training program
Positive rotation
In-house multiple jobs system
Self improvement support
Reskilling of middle and senior group

LeaderTeam
Goals

MemberAiming to working together to achieveorganizational goal with One Team
Aiming to evaluate with fair, transparent
and balanced evaluation© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

Creating a system where employee canlearn proactive, take on challenges, andleaders grow naturally
34

New Medium-Term Management Plan 2025

Toward the Future Beyond 2025: Initiatives to Support Growth
Work Environment（Health Management）

Work Environment（DEI、Work Style Reform）
•
•
•
•
•
•
•

Active recruitment of foreign nationals
Create a comfortable work environment forpeople with handicap
Promote understanding of LGBTQ and create anenvironment that respects diverse value“The challenge of getting to 30% by 2030”by組織
Keidanren(Ratio of female executives)
長Ratio of female management positions
15% ormore（Target for 2030）“IKUBOSU” declaration and membership
Create a flexible work environment

Promote work style reform anddiverse of employee© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

•
•
•
•
•
•

Regular health promoting meeting
Establishment of health promotion teams ineach office or factorySet 5 action goals(Exercise, sleep, eating,drinking, smoking), including training etc.
Health checkup follow-up and Health guidanceSupport for prevention of infectious disease
Support for purchasing health support app andequipment

Aiming for a workplace where
employee can work in good healthforever35

New Medium-Term Management Plan 2025

Toward the Future Beyond 2025: Initiatives to Support Growth
Number of Employees*1/Ratio of Female Managers*2
Male employees

Ratio of Female Directors

Female employees

Ratio of female manager
4.6

Ratio of female directors

4.9

22.2

22.2

4.0
1,698

1,714

1,705

1,677
軸ラベル

1,672

3.0
2.0

2018

2019

2020

2021

FY2030Target15%
or more2022 （FY）

10.0

10.0

10.0

2018

2019

2020

FY2030Target30%
2021

2022 （FY）*1 Sanyo chemical, secondment from Sanyo chemical*2 Ratio of female employees in management position© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

36

New Medium-Term Management Plan 2025

Toward the Future Beyond 2025: Initiatives to Support Growth

RM

Safety-First Management＜Basic policy＞•••

Safety and quality are top priorities in our management.

To ensure safety first operation, “Safety philosophy and policies” is established. Behaviors accorded with philosophy areencouraged.
Quality governance is strengthened by adapting independent Quality Assurance from Production Division.
Supervisions by Directors are introduced.

Safety＜Safety philosophy＞

We place the highest priority on Safety and Compliance in all ourbusiness activities.

＜Safety policy＞
Safety comes first.

＜Priority measures＞• Foster a safety-first mind led by the Safety Promotion
Department• Strengthen risk assessment and develop human resources• Expand safety education to employees including subcontractors• Assessment of factory safety by an outside audits© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

Quality＜Priority measures＞• Clarification of responsibility by isolating quality assurance
from production• Creating a system that prevent falsification by introducing inline analysis and LIMS* that do not require humanintervention* Laboratory Information Management System

37

New Medium-Term Management Plan 2025

Toward the Future Beyond 2025: Initiatives to Support Growth

TM

Transparent Management

透明性のある経営＜Basic policy＞• Commit to quantitative targets• Strengthen investor relations activities by engagementwith shareholders and investors through the transparent
disclosure by the integrated report and the Mediumterm management plan

＜Laboratory tour for shareholders＞＜Priority measures＞• Enhance disclosure in the Integrated Report and renew
the Sustainability Website• Promote mutual understanding by increasing thefrequency of communications with investors• Engage the shareholders through laboratory tours, etc.
• Report on the progress of the Medium-term
management plan to investors• Increase investment return by introducing hurdle rates
based on capital costs© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

38

Ⅲ. New Medium-Term
Management Plan 2025
Ⅲ-3. Cash Flow and Investment Policy
Ⅲ-4. Financial Policy© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

39

New Medium-Term Management Plan 2025

Ⅲ-3. Cash Flow and Investment Policy
Targets for 2023-2025

OperatingCF

JPY 70 billion

InvestingCF

FinancingCF
Inflow
Outflow

JPY
50 billion

Divi
dend

Debt

Operating CF＜EBT : 37 billion＞
Profit increase by High-value-added products and Basic products（Continue intensive expenditures in R&D： 17 billion）＜Depreciation : 34 billion＞
ERP system renewal and CAPEX＜Working Capital reduction : 5 billion＞
Cash generation by Monozukuri Transformation＜Miscellaneous including taxes : ▲6 billion>

Investing CF: Investment Plan of 50 Billion Decided by 2025

＜Growth from core business(high-value added products)：5 billion>
Production capacity increase in response to strong demands and emerging
markets＜Reformation of existing business : 35 billion＞
Process optimization in Monozukuri Transformation and facility renovation/automation＜New growth path (growing business) : 10 billion＞
Strategic investment in M&A and commercialization of new products
focusing on CN and QOL business＜Reduction of cross-holding：▲several billion>© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

40

New Medium-Term Management Plan 2025

Ⅲ-4. Financial Policy

Financial Policy＜Basic Policy＞-Aiming for higher P/B ratio, we do acknowledge cost ofcapital and make strategic evaluation of share prices andmarket capitalization＜Payout strategy＞-Dividend target higher than 30%-More attractive shareholoder return in the long run＜Financial Policy＞-Ensure sufficient cash for further investment by
increasing operating CF (higher profit in combination
with reduced WC)-Manage assets by structural reform and cross-holdings
minimization-Eusure fair distribution for multiple stakeholders-Make partial debt payments when available-Manage cost of capital efficiently-Increase the ratio of long-term shareholders forsustainable value creation-Attract international investors with successful ESG
scores© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

Divided per share (JPY)
Payout ratio(%)
51.5

66.0
170

170

150
140

125

170

57.7

56.0
45.4

40.2
2018

2019

2020

2021

2022

2023 (FY)(plan)

41

Disclaimer＜Note＞
The amounts shown in this document are rounded down to the nearest
unit, and other numbers, such as the proportional ratio, is rounded off tothe nearest unit.
＜Disclaimer＞
This document contains forward-looking assumptions, statements andforecasts based on plans as of May 12, 2023.
Actual results may differ materially from these forecasts due to risks anduncertainties associated with the global economy, competitive conditions,exchange rate fluctuations, raw material price trends, and other factors.
＜For IR inquiries ＞
Sanyo Chemical Industries, Ltd.
Public Relations Department, Corporate Planning Division
E-mail: pr-group@sanyo-chemical.group© All Rights Reserved by Sanyo Chemical Industries, Ltd., 2023

42