GLOB A L NETWOR K

Boosting Innovation, Sustaining Growth

Main Taiheiyo Cement Group Business Locations

Corporate Profile
The Taiheiyo Cement Group “aspires to play a leading role in pioneering a sustainable future by ensuringthat its business activities reflect not only economic development priorities, but also environmental and social
responsibility considerations.” We practice this philosophy by working to utilize business resources efficiently in
an integrated, cost- and risk-minimizing manner to maximize the sum total of our corporate value underpinned
by a robust earnings and financial structure.
We are at the same time committed to protecting the Earth’s environment and realizing a recycling-basedsociety by leveraging the unique ability of cement plants to process and recycle large volumes of waste andbyproducts as well as the recycling technologies we have developed over time to enable this approach.
In keeping with our Vision and Direction for the mid-2020s, we strive to demonstrate the Group’s overallcapabilities to contribute to the safety and security of communities around the Pacific Rim.

Contents

Financial Highlights

		 Corporate Profile / Contents / Financial Highlights

CONSOLIDATED
For the year:

1 Main Taiheiyo Cement Group Business Locations
2 To Our Stakeholders
4 Feature: Solid Foundation for Sustainable Growth
6 Review of Operations of Fiscal Year ended March 201914 Directors and Corporate Auditors
16 Consolidated Balance Sheets
18 Consolidated Statements of Income
		Consolidated Statements of Comprehensive Income
19 Consolidated Statements of Changes in Net Assets
21 Consolidated Statements of Cash Flows(Thousands of U.S. dollars)

2019¥ 871,113
65,12958,642
38,525$ 8,253,642
594,765
533,150
391,499

Net Assets
Total Assets

450,645
1,034,428

432,326
1,020,111

4,060,232
9,320,015

311.403.16

351.72

Yen

Note: U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥110.99=US$1, the approximate exchange
rate prevailing on the Foreign Exchange Market on March 31, 2019.

2019

UNCONSOLIDATED
For the year:

Net Sales
Operating Income
Income before Income Taxes
Net Income
At year-end:

Net Assets
Total Assets

3

Profit Attributable to Owners of Parent (Net Income ( Uncon.)(Millions of yen)

(Millions of yen)

(Millions of yen)

800,000

28 Taiheiyo Cement Group Network

600,000
400,000

842,848 835,359 798,588

50,00040,000312,712 300,642 300,398 321,162

67,89060,22560,000329,525

200,000
0

70,00030,00059,80264,366 64,306

36,21434,70232,35930,00027,33720,0000274,554574,1092,480,114
5,289,034

187.41
60.00

1.21
0.72

20,00047,597

44,11436,40427,40626,32636,970Con.)

Mar/15 Mar/16 Mar/17 Mar/18 Mar/19 (Fiscal year)

Yen

U.S. dollars

43,452

Employees
15,000013,05938,525Composition of Sales byGeographic Segments(As of March 31, 2019/Consolidated)

Other
9.3%
U.S.A.
15.7%

Japan

75%

Note: Contributions to sales by country or region,
based on customer location.
12,57413,00813,055 13,083

10,00023,254
16,6565,000

10,00010,000Mar/15 Mar/16 Mar/17 Mar/18 Mar/19 (Fiscal year)

50,00040,00039,469275,267
587,029

Dividends per share figures reflect the actual dividend paid before the reverse stock split.
Converted to reflect the reserve stock split, dividends per share were 80.00 yen, which includes commemorative dividends of
20.00 yen for the 20th anniversary of the company’s founding at the year to March 2019.

Ordinary Income

1,000,000

2019$ 2,968,965
224,683
197,884
150,074134.4880.00

Net Sales(■Con. / ■Uncon.)
916,071871,113(Thousands of U.S. dollars)

2018¥ 321,162
27,86329,562
23,254Net Income per ShareDividends per Share2, 32(Millions of yen)

¥ 329,525
24,937
21,963
16,656

1

U.S. dollars

The Company, effective October 1, 2017, conducted a reverse stock split for its common stock at a ratio of one for 10. EPS (Con.)and Net income per share (Uncon.) are calculated assuming the share consolidation took place at the year to March 2018.

22 Notes to the Consolidated Financial Statements
29 Corporate Data2018

¥ 916,071
66,012
59,17443,452

Earnings per Share (EPS) 1
1(Millions of yen)

Net Sales
Operating Income
Income before Income Taxes
Profit Attributable to Owners of Parent
At year-end:

8 Business Strategies of Fiscal Year ending March 2020
15 Major Corporate Data

2019

Main Domestic Business Locations

1,710
Mar/15 Mar/16 Mar/17 Mar/18 Mar/19 (Fiscal year)

0

1,697

1,702

1,746

1,760

Mar/15 Mar/16 Mar/17 Mar/18 Mar/19 (Fiscal year)

TAIHEIYO CEMENT CORPORATION1To Our Stakeholders

Boosting Innovation,
Sustaining Growth

Japan’s economy during fiscal year ended March 2019 (FY2019)
maintained a mild recovery trend on expanding capital investment
and improvements in employment and employment income
buoyed by robust corporate performance. Negatives included theongoing uncertainties due to US–China trade friction and theslowing of China’s economy in addition to repercussions from astring of natural disasters and Japan’s tightening labor market.
The US economy also enjoyed a continuation of its mild
growth trajectory on low unemployment and robust personal
consumption. China’s economy showed signs of slowing
economic expansion with slackening exports and softening
consumer demand; but the other two economies we serve,
Vietnam and the Philippines, both trended favorably thanks torobust personal consumption and other factors.
In these circumstances, the Group’s FY2019 consolidated
net sales increased ¥44,958 million from the previous year to¥916,071 million, consolidated operating income increased¥883 million to ¥66,012 million, consolidated ordinary income
contracted ¥59 million to ¥64,306 million, and profit attributableto owners of parent increased ¥4,927 million to ¥43,452 million.
2

A N N UA L R EP O R T 2 0 1 9Going forward, we anticipate that Japan’s economy willcontinue up the path of mild recovery on better corporate
profitability and improvements in the unemployment and wage
situations, though the effects of October’s Consumption Tax
hike are a concern. The overall business environment, however,remains unpredictable given the uncertainties of where theglobal economy is headed, especially the repercussions of
US–China trade friction, a slowdown in China, and turmoil
accompanying Brexit. These factors are further complicatedby the situation in the U.S. Though robust corporate profits
and the favorable employment situation show all signs ofcontinuing, we must stay alert for increasingly uncertainchanges in the application of government policy.
With regard to the Group’s immediate operating environment,
our mainstay cement business enjoys a solid underpinning of
demand for projects associated with the Tokyo Olympics, urban
redevelopment investment and disaster mitigation efforts, and canlook forward to demand in conjunction with Chuo Shinkansen
construction; a seriously tightening labor shortage, higher input
costs, and other factors will, however, be keeping us on our toes
for changes in business conditions.

In this climate, the Group committed itself to leveraging its
cumulative capabilities to become a corporate group providing
safety and security to Pacific Rim communities as the vision
for itself and where it wants to be by the mid-2020s. Having
defined a clear mid- to long-term direction for sustainablegrowth, we are actively pursuing this vision in three steps. Our
20 Medium-Term Management Plan, which runs for the three
years to FY2021 and is themed on “establishing a solid businessfoundation for sustainable future growth,” is positioned as thesecond of these steps.
FY2020 is the second year of the management plan.
It characterizes by work to strengthen existing businesses’
revenue bases through cost cutting, process innovation andother efforts, and pursuit of competitive advantage throughnew-value creation and further competitive differentiation.
We are also working to generate earnings capacity throughgrowth-oriented investment. In our involvement in Chuo
Shinkansen construction, as well as other national projects, weleverage the Group’s strengths to the maximum, demonstrating
its cumulative capabilities by ensuring stable supplies of quality
products and delivering reliable solutions. And on top of allthese business strategies, we are and will continue taking
steps to build greater resilience into the fundaments of ourmanagement structure through stronger governance at theGroup and corporate levels, as well as engaging in R&D tofacilitate growth throughout the Group.
Looking forward to FY2020, at the consolidated level
we estimate sales of ¥936,000 million, operating income of¥71,000 million, ordinary income of ¥69,500 million, andprofit attributable to owners of parent of ¥45,000 million.
In closing, allow me to express my gratitude for yourinterest in the Taiheiyo Cement Group and my hope that you
will continue standing by us as we move into the future.

Masafumi Fushihara

President and Representative Director

TAIHEIYO CEMENT CORPORATION

3FEATURE

Solid foundation for sustainable growth

Advancing our Materials Recovery Complex initiative▶Taiheiyo Cement produces clinker and cement for
Hitachi Cement.

*Clinker is the basic component of cement. A nodular material, it isproduced in a kiln by heating limestone and clay to about 1450ºC. Cement
is made by grinding the clinker with an appropriate amount of gypsum into
powder.

Ceremony marking the first shipment of clinker to Hitachi Cement (Kumagaya Plant)

Addition of clinker mill at Oro Grande Plant (USA)
Wholly owned subsidiary CalPortland Company (CPC) completed
an expansion of the clinker mill at the cement plant in Oro Grande,
California, acquired by the Company in September 2015. The newcen▶ Taiheiyo Cement and Hitachi Cement sell the products
manufactured under the agreement to their respective
customers under their own brands.

sta▶ Taiheiyo Cement supplies Hitachi Cement withproducts from its plants and service stations

Varioussectors

sub▶ Hitachi Cement manufactures a portion of Taiheiyo
Cement’s blended cements

Aversive▶ Hitachi Cement uses the clinker and cement at its own
plants to manufacture its own blended cements andsoil stabilizers.

Av

s t an c e s

SummarysceMunicipalities

Cementindustry

Cementshippedsuballiance as described below to further develop their cement businesses.
During FY2020 Taiheiyo Cement will supply Hitachi Cement withsome 600,000 tons of clinker*.

tances
subs
ive
ers

The history of collaboration between Taiheiyo Cement and Hitachi
Cement Co., Ltd. is long, typified by joint investment in readymixed concrete and calcium carbonate manufacturing interests. The
two companies recently formed a new toll-manufacturing and supply

s

r ed

Cement and clinker alliance with Hitachi Cement

non-ferrous metals, scrap smelting, chemicals and recycling) would work
together to recover, repurpose and reuse one another’s energy surpluses, waste
and byproducts as resources—energy or inputs—for their own industrial
processes. As part of this initiative, in March 2018 Taiheiyo Cement launchedtrials at its Ofunato Plant to demonstrate how precious and heavy metals canbe recovered from municipal incinerator ash using physical separation.
Committed to leading the corporate sector in resource recycling,
Taiheiyo Cement will continue pursuing more multi-faceted undertakingsfor turning wastes into resources through robust private–public and crossindustry collaborations in the field.

ferout by the Fundamental Policies of its 20 Medium-Term Management Plan.

Preferre
d su
bst
an

The Taiheiyo Cement Group is concentrating its energies on building a solid business foundation for sustainable growth as laid

The cement industry recycles waste and industrial byproducts byincorporating them in the cement manufacturing process, either
repurposing them as inputs or burning them as fuel. But our methods,
while reusing them completely, fall short inasmuch as wastes andbyproducts also contain substances that themselves are valuable
resources—resources that are going wastefully untapped.
To address this Taiheiyo Cement proposed its Materials Recovery
Complex initiative and is now working with government, academia andother businesses to come up with a practical operational model. The action
envisions collaborations in which players in different industries (such as

Pre

Infrastructure andother projects

Role of the cement industry in Taiheiyo Cement’s Materials Recovery Complex initiative

Equipment for demonstrating viability of precious and heavy metals recovery(Ofunato Plant)

A framework formulated for our long-range vision of greenhouse gas emissions reduction toward 2050
The Taiheiyo Cement Group positions CO₂ emissions reduction as
an important growth strategy. We have been actively working to
reduce CO₂ emissions from cement production since proclaiming
our CSR Objectives 2025 we formulated in 2015. And along withannouncing our support for the Recommendations of the TCFD* incapacity came online in April 2019, increasing the plant’s annual
cement production by some 800,000 tons.
CPC serves the US west coast, where demand has recovered robustly
since a dip in the wake of the 2008 financial crisis.
The expansion allows CPC to maximize the plant’s
potential, giving it the infrastructure for supplying
enough cement to meet rising demand, which looks
set to continue.
Going for ward, we will be optimizing the
production and distribution capabilities of the Oro
Grande and other two plants in California andArizona to further enhance earnings at our US
cement business.

June 2019, the following month we formulated a framework for our
long-range vision of greenhouse gas emissions reduction.
The Taiheiyo Cement Group will be exploring various strategies
oriented to realizing our Long-term Vision goals as part of our active
commitment to further reducing CO₂ emissions.
*The Task Force on Climate-related Financial Disclosures (TCFD): Established in 2015 by the Financial
Stability Board (FSB) to promote disclosure of climate-related financial information. In 2017, for theappropriate investment decisions of investors, the TCFD published recommendations to promote
disclosure of information on the financial impacts of climate-related risks and opportunities.

Framework Formulated for our Long-range Vision of Greenhouse Gas Emissions Reduction
Reduction of CO₂ emissions in cement production
Long-term goal:
Measures to realize our long-term goal80%

• Increased use of alternatives to fossil energy• Increased use of fossil energy which generates less CO₂
emissions• Development of low-carbon clinkers and cements, including
those with higher admixture content• CO₂ capture from exhaust gases and the effective use andstorage of the CO₂

reduction by 2050
Advancing the system
Establish a new dedicated organization
within the Central Research Laboratory
to strengthen research and developmentof technical measures, including carbon
recycling (effective use of CO₂)

Contribution of cement products to avoid CO₂ emissions
Long-term goal: contribute to
avoiding emissions equivalent to
Measures to realize our long-term goal

Oro Grande Plant

4

A N N UA L R EP O R T 2 0 1 9

Test plant for separating and recovering CO 2

20%of the CO₂ emissions in
cement production• Formulate the Calculation and Reporting Protocol for Accounting and Reporting of Avoided GHG Emissions
through the Value Chain of Cement and Cement-based Products.
• Develop and provide products that contribute to a greater contribution of cement products to avoid CO₂
emissions using the protocol.

TAIHEIYO CEMENT CORPORATION

5

Review of Operations of Fiscal Year ended March 2019 (FY2019)

Cement Business

Environmental Business

Sales and profits up on robustness in U.S.,
other overseas markets
During Fiscal Year ended March 2019 (FY2019) domestic demandfor cement rose across the board: Demand from the public sector
grew as construction in preparation for the 2020 Tokyo Olympics
got into full swing and progress picked up on projects around thecountry for extending the Shinkansen network. Private sector
demand, too, was robust on rising capital investment thanks to
improving corporate earnings and urban redevelopment projects,
particularly in the Tokyo metropolitan region. In numbers, overall
domestic demand increased 1.7% over the previous year to 42.58
million tons; of that, 90,000 tons was imported, a 48.1% year-onyear decrease. Total cement exports came to 10.37 million tons, a
12.1% decrease on the previous year.
In this environment, the Taiheiyo Cement Group’s domestic
cement sales by volume, including sales in conjunction with tollmanufacturing agreements, increased 3.5% year-on-year to 15.24
million tons whereas exports by volume fell 17.7% year-on-year to
3.48 million tons. These volumes delivered sales of ¥434,875 million,
an increase of ¥26,362 million year on year, though operating
income fell ¥4,094 million to ¥21,410 million, mainly on increased
variable and fixed costs.
Meanwhile, on the overseas front: Our cement and ready-mixed
concrete businesses on the US west coast did well as shipment
volumes grew amid recovering market prices. In China prices arerecovering, but in Vietnam our business is vulnerable to competitive
forces. Prices have bottomed out in the Philippines and internal
demand is expanding there.
Sales at the Group’s overseas cement segment were up ¥8,195
million from the previous year to ¥211,601 million, and operating
income rose ¥5,185 million over the previous year to ¥20,332 million.
Sales¥646,477 million
up ¥34,558 million year-on-year

Increased costs push profits down
Environmental Business revenues rose on robustness in fuel sales andwaste processing, particularly of waste plastics and sludge; however,segment operating income fell compared to the previous year due
to increases in logistics and new business development costs, whichcame on top of lower coal-fired power plant capacity utilization due togrowth in renewables.

Operating
Income¥41,743 million

6¥84,262 million

up ¥2,778 million year-on-year¥8,242 millionup

A N N UA L R EP O R T 2 0 1 9¥92,693 million

up¥6,614 million

down ¥848 million year-on-year¥2,486 million year-on-year

Construction Materials Business
Ground improvement projects recovery raises
sales and profits
Along with a recovery in ground improvement projects, increased
sales of materials used in civil engineering and construction led tohigher revenues and boosted operating income.
Sales
Operating
Income¥82,185 million

up ¥5,151 million year-on-year¥4,999 millionup¥259 million year-on-year

Other Business

Burgeoning aggregate demand pushes sales andprofits higher
Earnings at our aggregates business grew as demand generated byredevelopment projects and preparations for the 2020 Olympics
in the greater Tokyo area went into overdrive, making up forlower demand in the Great East Japan Earthquake recovery andreconstruction demand wind down.
Our mineral products and geo-solutions businesses also posted
robust performance.

Operating
IncomeOperating
Incomeup ¥1,091 million year-on-year

Mineral Resources Business

Sales

Sales

Sales and profits up on robustness in engineering
The Other Business includes our interests in real estate, engineering,data processing, finance, transport and warehousing, chemical
products, and sporting facilities. The engineering business inparticular posted strong performance, leading to increased sales
and profits for the segment.
Sales
Operating
Income¥86,028 million

up ¥7,008 million year-on-year¥4,658 million

up¥731 million year-on-year¥180 million year-on-year

TAIHEIYO CEMENT CORPORATION

7

Business Strategies of Fiscal Year Ending March 2020 (FY2020)
Shore up revenue base, ensure disruption-free supply of product

Domestic Cement Business

The new National Stadium area (Tokyo)

Kamiiso Plant

Urban redevelopment site

8

A N N UA L R EP O R T 2 0 1 9

Hokuyumaru cement tanker (launched on August 2019)

Four pillar strategies
We forecast that domestic cement demand will reach 43 million tons in
Fiscal Year ending March 2020, an increase of 500,000 tons over theprevious year. Although numerous urban redevelopment, infrastructure
and other public works are in planning, and several national-project scale
works such as the Chuo Shinkansen and extensions of the Hokkaido and
Hokuriku Shinkannsen lines are in progress, domestic demand remains
stuck at about 43 million tons annually. We believe this is attributableto delays in project progress due to chronic shortages of constructionsite labor and a tight logistics situation. To cope, we are working tostrengthen our revenue base by implementing measures via four pillar
strategies 1) sales, 2) ready-mixed concrete, 3) concrete products and 4)
acquiring more large-project orders.
We are approaching sales from two aspects: price and volume. We
asked customers to allow us to raise product prices for deliveries starting
April 1, 2018, and have received positive responses from most users;with the rest of our customers, negotiations on the timing and scale ofprice hikes are in the final stages. Although the coal price increases ofthe past several years have finally settled down, materials costs, logistics
costs, cement tanker fuel costs and other input prices continue their
upward climb, mainly to due labor shortages. We also anticipate cost
increases stemming from a tightening of regulations on bunker-fuelsulfur content scheduled to go into effect in January 2020. In negotiating
more favorable prices we will work to persuade customers that higher
prices are the inevitable consequence of these shifting externalities whilereassuring them of our continued commitment to cost cutting. With
regard to volumes, we are working to move more product by enhancing
distributers’ system to market our products, winning more construction
project orders and ensuring that we can supply specialty cements without
disruptions. To enhance distributers’ capabilities, we will be working
more closely with them to reach out to prospective and existing customers
and more effectively communicate the advantages of our products andservices. Technically savvy company sales and marketing personnel
will accompany sales representatives on their rounds to maximize
Taiheiyo Cement’s field experience-driven prowess. To encourage moreconstruction project orders we will be stepping up sales and marketingcalls attended by personnel with engineering expertise so they can pitch
products and solutions optimized for the needs of specific worksites,
which are characterized by larger scale and demand the utilization ofnewer technologies. Furthermore, we will reinforce our ability to supply
moderate-heat1 and other specialist cements without disruption as
demand for these products remains brisk in city centers. We will carefully
watch demand points and trends from multiple perspectives so as tooptimally configure our supply infrastructure.
Our ready-mixed concrete strategies entail working more closelywith our directly run ready-mixed businesses to acquire human resourcesin sufficient numbers and train them to have the requisite skills, as well
as bolstering collaboration between them in a manner conducive tosharing vital information on local demand trends and other issues they
face. To be able to provide products and services that better satisfy theneeds of project owners, we are also working to increase opportunities
for Company marketing and sales personnel to accompany directly run
businesses’ personnel on their sales calls. And last year, in a move designed
to further bolster our ability to market and supply products and services
in the greater capital region (Tokyo and surrounding prefectures), we
integrated Daiichi Concrete Co., Ltd. into our network of directly run

ready-mixed concrete companies. The company does business mainlyin this region, where demand remains brisk, so we will be collaborating
more tightly with it to maximize the benefits of the integration down theroad ahead.
In concrete products, the Group’s ownership of several manufacturers
gives us a major advantage in the category. We intend to leverage it byproviding technical support so these makers can improve the attractivenessof their products. We believe this will facilitate their adoption by builders
and contribute to higher cement-sales volumes.
To acquire more large-project orders we are working to gain theconfidence and trust of project owners and general contractors byproviding interruption- and disruption-free supply of product, even amid
the seriously tight labor situation, as well as reliably accommodating
the diverse engineering and technical needs of each worksite we serve.
Moreover, since large-scale projects bring with them more opportunities
for getting the non-cement and non-ready-mixed concrete products andservices of Group companies adopted, we will be doing more to share
information and enhance collaboration between Group companies andboost project owners’ and general contractors’ confidence in Taiheiyo
Cement in order to maximize orders in this category.
Finally, underpinning these actions to shore up our revenue baseare our efforts to enhance logistics—our ability to get product to sites
where it is needed, when it’s needed. In that context, too, we initiated atoll-manufacturing agreement with Hitachi Cement Co., Ltd. in April
2019 to supply product disruption-free while maintaining the trust andconfidence of the company’s customers.
1 A cement used in concrete for large-mass structures such as dams and bridge piers. It is formulated to limit

the heat generated by the hydration reaction between the cement and water in concrete as it sets.

Unwavering commitment to safety and compliance
To minimize work and industrial accidents at high-risk service stations,
Taiheiyo Cement makes strategic safety-oriented capital investments inaddition to more safety patrols, ongoing driver training and other routine
efforts.
Given the series of corporate scandals involving quality-data
falsification in 2017, Taiheiyo Cement has been, and in FY2020 willcontinue, moving to ensure a quality control infrastructure worthy ofcustomers’ trust and confidence. We extended the purview of the Quality
Assurance & Product Liability Committee, which operates under our CSR
Management Committee, from just our own plants to Group companies
and, in addition to its original mandate of collating test data, had it review
all work flows for loopholes and other weaknesses conducive to falsificationand in FY2019 we continued informational campaigns designed to prevent
instances of non-compliance.
And for us to be able to accommodate
the varied and diverse needs of each
worksite we serve, we work to train humanresources and encourage interaction between
personnel, transcending both category anddivisional boundaries, to ensure that sales
and marketing personnel are widely anddeeply knowledgeable of not just cement andconcrete, but aggregates, admixtures and thebroad range of products and services thatToshiaki Suzuki
Group companies offer.
Director, Managing Executive Officer
Senior General Manager, Cement Business Division
TAIHEIYO CEMENT CORPORATION9FY 2020 Business Strategies

Garo Quarry

Sodegaura aggregates yard

Building an optimal business organization for sustainable growthMineral Resources Business
Strengthening existing core businesses to maximize profits

The Mineral Resources Business’s flagship strategies for FY2020 are “working
to enhance the earning capabilities of existing core businesses and maximizing
profits” and “formulating and implementing growth strategies to facilitate
development of future core businesses.” Our existing core businesses consistof Taiheiyo Cement’s aggregates business, mineral products business and geosolutions business.
The aggregates business continues to work to build an optimal logistics
system to meet brisk demand for limestone aggregate, especially in the greater
capital region (Tokyo and surrounding prefectures). Demand for sand is also
increasing in the circum-Tokyo Bay area, but sand extracted from our main
source in Chiba Prefecture is becoming finer grained just as demand forcoarser grained sand is growing. To date, we have been working to ramp up
production of coarse sand from our Shin-Tsukumi Quarry in Oita Prefecture,
but going forward we will be working to expand sales of sand by formulatinga Taiheiyo-Brand Sand, blended from coarse material from Shin-Tsukumi
Quarry and fine material, including product extracted by Group member DC
Co., Ltd. from its mines in Chiba Prefecture.
At our mineral products business we are working to build an optimal
production and supply infrastructure to ensure that we can provide product stably
over the long term given the outlook of continuing brisk demand, particularly
for limestone used by steel makers located overseas. Since demand for white
crystalline limestone used in paper manufacturing is likely to be impacted byfalling demand for paper itself, we also are working to enhance its earnings
capacity as well as strategically expand sales of the product. We currently produce
white crystalline limestone at our Kawara Quarry in Fukuoka and will soon beable to extract quality white crystalline as well as regular limestone from our
Ofunato Quarry’s Horoshi sector, currently under development. When Horoshi
comes on stream we will be able to build supply locations sourced from east
Japan, which we believe will allow us to enhance the product’s earnings capacity
through greater efficiencies in both production and logistics.
Brisk demand for quicklime (calcium oxide: CaO), particularly fromsteelmakers, has us running production at full throttle; going forward, we will
be seeking higher prices and expanding the scope of our sales area in a bid toboost the product’s earnings capacity. To date the main source of demand forsilica (stone and powder) has been cement making, but we are working to expand
sales of the material to users in other industrial sectors, principally steel makers.
In this context we have reactivated our mothballed silica-mining operations andare looking to move ahead with development of new silica sources.
The focus at our geo-solutions business is on telling the market about the10

A N N UA L R EP O R T 2 0 1 9

performance characteristics and quality of Taiheiyo Cement’s Denite®, whichis effective for immobilizing heavy metal contaminants in soil. Progress on
the most promising source of Denite® demand, construction of the TokyoGaikan Expressway, has stalled; so we are working to persuade potential
users to incorporate the material into their large-scale project designs in
FY2020 by leveraging the reputation it has garnered through use in freeway
construction in Yokohama and other similar works.
Generation of surplus construction soil is concentrated in the greater
capital region, where construction is booming. We are working to maximizeorders in this category by building out our framework for accepting surplus
soil. This includes enhancing collaboration with subsidiaries Mitsui Wharf
Co., Ltd. and DC Co., Ltd., both of which have maritime shipping facilities
in the capital region.

Growth-oriented investment for future core businesses

In formulating and implementing growth strategies to facilitate developmentof future core businesses, we will be working to capitalize on the know-how
our Mineral Resource and Environmental businesses have accrued in Japan by
putting it to work overseas. As an early step, we set up a subsidiary in Vietnam
in April 2019 to prepare for the Mineral Resources Business striking out into
Southeast Asia. We believe Vietnam presents good opportunities for our
Mineral Products Business to supply limestone and quicklime to the local steel
industry, which plans to build a number of blast furnaces. This development also
holds promise for our Environmental Business, which collects and processesslag and fly ash generated by the steel and power-generation industries. And
the rest of Southeast Asia is home to a number of other developing economies
as well, making Vietnam a good steppingstone for gradually rolling out these
two businesses across the region.
Our functional materials business is another segment we believe has abright future as a core mainstay. At present we are concentrating on resolving
engineering issues and developing mass-production techniques so we can quickly
bring to market promising products like functional hollow particles and HighPurity Silicon Carbide (SiC). The former is lightweight and displays excellent
heat insulation, while the latter is a focus of attention for its potential in nextgeneration power semiconductor applications. Since manufacturers we deliver
them to have already moved ahead with capital investments, we are watching
trends carefully so as to not miss the coming wave of market expansion.
We are also providing Group companies with backup to ensure that they
will be able to make capital investments when it will be optimal for shoring up
and solidifying their earnings capabilities.

PKS (Malaysia)

Lithium-ion battery embrittlement demonstration plant (Tsuruga Cement)

Developing a new business model while maximizing
existing businesses’ earnings capacity

Environmental Business
Address business-environment changes, maximize
earnings capacity

Given that FY2020 is the second year of the three-year 20 Medium-Term
Management Plan we will be stepping up efforts to maximize the earnings
capacity of our businesses to achieve our ¥9 billion operating income target.
The e-materials business finds itself operating in an environment thathas changed drastically since the 20 Medium-Term Management Plan
was formulated. Attitudes towards coal-fired power generation, a major
contributor to carbon dioxide emissions and thus global warming, arehardening significantly around the world. In Japan alone, several plansto add new coal-fired capacity are now under review or have already been
shelved. These developments bode ill for e-materials business revenues,
which are likely to shrink: The lower coal-fired capacity utilization, the lesscoal ash will be available for us to process; sales of calcium carbonate, used
for scrubbing plant emissions, will fall commensurately, resulting in lower
volumes of flue gas desulfurization (FGD) gypsum to trade as well. To easesome of this pressure we are striving to secure coal ash stably given that it
is an indispensable alternative to clay at Japan’s cement plants. In parallel,
we are also working to procure disruption-free supplies of biomass to fuela power plant Group company Ofunato Power Inc is building. The plant isscheduled to launch commercial operations in early 2020.
Our materials recycling business is encountering higher demand for its
services thanks to China’s and other Southeast Asian countries’ curtailing ofwaste-plastic imports. Waste plastic offers big advantages as an alternativefor other thermal sources at cement plants. At present, however, ourconventional plants are unable to consume all of this increased volume as-is
due to factors such as high chloride content. We are therefore moving to
upgrade the plants with chlorine bypass equipment to boost our capacity toaccept waste plastics through a combination of the processing techniques wehave always used and substance-separation techniques. We are also seeing
increases in demand for sewage- and water-treatment sludge processing.
Since we want to do as much as we can to contribute to resource recycling,
we are looking for ways to accurately gauge municipalities’ needs and accept
as much of their sludge as possible.
To date our aqua segment has dealt mostly in water-filtration and-treatment materials for aquariums, but moving forward we will be putting
more effort into expanding sales of our Ceraclean® water quality stabilizer.
Ceraclean® acquired the Environmental Technology Verification (ETV)
mark from Japan’s Ministry of the Environment in 2018 and is enjoying
rising market awareness. It has been gaining a reputation for effectiveness atsites where it is used extensively, such as golf course ponds and tidal (mud)flats, so we will be actively pitching Ceraclean’s utility to increase sales for use
in such applications.

Developing advanced technologies fora new business model

We are focusing on developing advanced technologies that will enable us
to construct a new business model. In this context we will continue ouraction to realize the Materials Recovery Complex initiative, envisioning
collaborations in which players in different industries (such as non-ferrous
metals, scrap smelting, chemicals and recycling) work together to recover,repurpose and reuse one another’s energy surpluses, waste and byproducts
as resources—energy or inputs—for their own industrial processes. We havealready established technology for recovering gold, silver and other precious
metals from municipal solid waste incineration bottom ash and deployed
and commercialized it at Group company Tokyo Tama Ecocement Inc., andwe are running demonstration tests of the technology at the Ofunato Plant
in Iwate Prefecture in preparation for extending the new business to otherplants. Tsuruga Cement Co., Ltd., another Group company, is similarly
conducting demonstration tests for the processing of discarded lithium-ion
batteries, and plans are in the works to develop a methane fermentation
process for producing hydrogen gas (H₂) derived from the biogases it
generates. Meanwhile, DC Co. is moving to deploy a test plant using lowtemperature embrittlement for separating and recovering useful metals
from automobile shredder residue (ASR), which is generated when cars
are scrapped. And Chichibu Concrete Industry is developing technology
for using electrostatic separation as a meansof ensuring stable JIS-compliant supplies in
anticipation of advancing coal-ash shortages
in Japan.
To bring forth innovations from initiatives
like those described above, and in search oftechnologies destined to become future pillarsof the Environmental Business or yield hugecost savings to the Taiheiyo Cement Group,
we are committed to diligently pressing ahead
with technological development oriented to
Kunihiro Andoestablishing a new business model.
Director, Managing Executive Officer
Mineral Resources Business Division
Environmental Business Development Department
TAIHEIYO CEMENT CORPORATION11

FY 2020 Business Strategies

Nghi Son Cement (Vietnam)

Taiheiyo Cement Philippines (Philippines)

Ground improvement works (LDis-Dy Method) (Onoda Chemico)

Enhance earnings capacity with region-based business development

Pursue labor savings, reinforce earning bases

Increase earnings potential attending to local trends

Three strategies for a sustainable business foundation

International Business

Cement demand in the U.S. has recovered from its post-2008 financial crisis
nadir and is well on its way to crossing the 100-million-ton line in 2020.
Demand in the five West Coast states where we do the most of our business(Washington, Oregon, California, Arizona and Nevada), growing morebriskly than elsewhere in the country, is set to continue providing solid groundfor doing business in FY2020. The newly added clinker mill at our Oro Grande
Plant in California was completed on schedule and came onstream in April
2019. We are now ready to accommodate the increase in demand this climate
is likely to bring. To date we have been successful in maintaining a supplydemand balance by supplementing local supply shortfalls with imported
cement, and going forward we see the US market as continuing to be a pillar of
our overseas business given its promise for growth driven by rising population.
Meanwhile, although China’s massive market has grown to accountfor about half of the world’s cement demand, the government continues
tightening restrictions on cement-plant operations as part of its more rigorous
regulatory regime to protect the environment, exemplified by its impositionof a peak-shift policy to flatten peaks in environmental load associated with
manufacturing. But for Taiheiyo Cement this situation is also an opportunity,
and we hope to roll out our world-class environmental technologies and makethem a driver of our cement business in China.
With its high economic growth, Vietnam is one of the countries promisingplenty of room for growth in Southeast Asia. Cement demand is trending
favorably, reaching 65 million tons in 2018, but with domestic capacity now
exceeding 90 million tons the country has to export the surplus and is now
Asia’s largest cement exporter. We will be working to further enhance ourearnings capability there by differentiating ourselves with an extended logistics
network and offering a broader selection of products domestically, as well as
leveraging our Group’s network to secure stable revenues through exports.
In Vietnam we also launched a mineral resources- and environmentalbusiness subsidiary in April 2019 and are moving to leverage our capabilities
in limestone and blast furnace slag. Numerous blast-furnace and power-station
construction projects are in planning in Asia and there is plenty of room forgrowing our mineral resources and environmental businesses there, so wehope to pursue synergies between our cement and other businesses throughcloser collaboration among them.
As in Vietnam, cement demand in the Philippines is trending robustly
thanks to the high economic growth of the past several years. It reachedabout 30 million tons in 2018, but insufficient local clinker capacity means
shortages have to be covered by cement and clinker imports. An influx ofcheap product from Vietnam and other neighbors over the past year or two
12

A N N UA L R EP O R T 2 0 1 9

precipitated a rapid deterioration of the cement market, but the Philippine
government is countering with safeguards to stem the influx of cheap cement.
We forecast continuing cement-demand growth in light of the numerous
large infrastructure projects in the works under the Duterte administration’s
Build, Build, Build initiative and, to ensure our ability to take advantage ofthe opportunities this demand presents, we will be looking into new capital
investments to enhance our local production capacity and logistics network.

Developing the trading businessIn addition to exporting product from Japan, our trading arm is working toleverage the Group’s network of overseas operations to develop direct trading
links between offshore sources and destinations. We intend to grow total
trading to 10 million tons annually in 2023 and believe that once we haveestablished supply routes that can be serviced from total sources, we will beable to continue supplying high volumes of product to overseas markets evenif circumstances force us to limit exports from Japan.

Assuring safety and quality, developing global
human resources

Safety is a fundamental requisite of sustainability, and in the spirit ofsafety first we are working to eliminate industrial accidents and injuries in
the workplace. We will also commit to assure and improve the consistent
performance of quality for which our products enjoy a solid reputationin overseas markets. We will be fostering closer collaboration amongorganizational units responsible for quality.
To develop the human resources we need down the road, we will
be sending employees early in their careers for a certain period to amass
experience overseas. We believe this will also help us—the company andthem personally—ascertain early whether
they have the aptitude and qualities requisite
for long-term overseas postings in leadershipor managerial positions. Further, theGroup intends to train employees of manydifferent nationalities to be able to thrive intransnational roles in future. The International
Business Division has already begun assigning
local employees of Group companies inVietnam and the Philippines to duties in Japanto give them this kind of experience, and we
Yoshifumi Taura
intend to further enhance initiatives
Director, Managing Executive Officer
like these.

Senior General Manager,
International Business Division

Construction Materials Business
The Construction Materials Business will be pursuing three pillar strategies in
FY2020: 1. labor savings in all aspects of our business activities, 2. enhancing
the earnings bases of our existing businesses, and 3. accelerating developmentof new businesses in growth areas.
Our first strategy, achieving labor savings, entails investing in effective ways
to reduce the labor intensity of operations and enhance productivity. Typicalexamples to date include a total revamping of the layout of subsidiary Clion
Co., Ltd.’s plant and utilizing more large-diameter high-pressure jets at Onoda
Chemico Co., Ltd. Since these initiatives are both proving effective, we will betaking similar steps at other Group companies. We will also be consolidating
existing businesses’ product lines and optimizing production sites.
Further, we will be working to achieve greater efficiencies by strengthening
collaboration between Group companies and combining their technical andengineering know-how. As an example, in FY2019 we brought to market
Porouscrete, jointly developed by Onoda Chemico and Chichibu Concrete
Industry Co., Ltd. Moving forward, we will be strengthening collaboration
among Onoda Chemico, Chichibu Concrete Industry and Taiheiyo Materials
Corporation to position them at the core of our materials manufacturing segment.
Our second strategy, to reinforce existing businesses’ earnings bases,
entails working to maximize orders by offering innovative proposals forcomprehensive solutions in large infrastructure projects like construction of
the Tokyo-Gaikan Expressway and the Chuo Shinkansen. SubstantiatingGroup companies’ ability to supply diverse and multifaceted products andservices make sales propositions all the more attractive. Currently the Groupis working as a unified force gathering intelligence conducive to winning as
many orders as possible for Expo 2025 Osaka projects.
Another indispensable part of reinforcing Group companies’ revenue
bases is organizing a logistics infrastructure capable of keeping supply of
product running disruption-free by alleviating the impacts of Japan’s laborshortage. As an example of how this could be done, we are seriously exploring
the potential of collaborative frameworks and how to make them happen. We
envisage partnering with other companies, including those outside the Group,
to have them manufacture product under toll manufacturing agreements
at locations close to our customers. Cooperation like this could help to not
only alleviate the effects of the tight labor market, but also cut costs andenhance business efficiency across the board. Group companies have also beenenhancing the Group’s overall enterprise value by demonstrating leadership inconstruction engineering and work methods at professional and trade research
associations. We believe that facilitating this kind of engagement serves toenhance Group companies’ earning bases over the long run.

Our third strategy, to step up cultivation of new growth-promisingbusinesses, entails concentrating on developing and bringing to market products
and services that provide solutions addressing real-world construction-site needs.
As an example, subsidiary A&A Material Corporation developed a new method
for installing noncombustible decorative board that obviates adhesives, achieving
a 30% improvement in work efficiency at installation sites. This approach is likely
to present the Group with great business opportunities so we will continue toactively develop better engineering technologies and work methods, embodying
them in products and services to address practical construction-site needs.
Moving forward we anticipate that advancing deterioration of older
infrastructure will present another growth area as a market for maintenance andrepair services emerges and expands. We will win orders by combining Group
companies’ technologies in materials optimized for maintenance and repair.
And finally, we see overseas markets as having huge growth potential for
the Construction Materials Business, and subsidiaries Onoda Chemico andA&A Material have already made progress outside Japan. Going forward
we will be fully leveraging the Company’s overseas networks to help Group
members roll out overseas businesses, such as by expanding Taiheiyo Materials’
exports, mainly to Southeast Asia.

Eliminating work accidents and non-compliance incidents

We will actively work to further strengthen safety measures, our quality
control structures and corporate governance. Work-related accidents are a toppriority issue in our industry, and we want to eliminate them through diligent
safety training and effective capital investment. The steps we have taken toenhance quality control are typified by our establishment of quality assurance
units independent of the production process such as at Taiheiyo Materials andChichibu Concrete Industry, where a large range of products are produced
under toll manufacturing agreements. Moving
forward we will be helping other Group
companies set up quality control frameworks
that similarly match their respective businessformats. And we are ensuring good corporate
governance, consistently and throughout
the Taiheiyo Cement Group, by integrating
subsidiaries into tighter groups (as we havedone with the Onoda Chemico Group andthe Taiheiyo Materials Group) and emplacing
rigorous governance frameworks under the
Katsuhide Fukuhara
leadership of each group’s parent.
Director, Managing Executive Officer
Construction Materials Business Department
TAIHEIYO CEMENT CORPORATION

13

FINA NC IA L S EC TION

Directors and Corporate Auditors(As of June 29, 2019)

Major Corporate Data
（百万円／円）Total Domestic Cement Demand/
Group Sales

Board of Directors
Chairman and
Director

842,848 835,359

President andRepresentative Director

Vice President andRepresentative Director

45.55

Directors,
Senior Executive Officers

42.66

41.77

41.87

Yuuichi Kitabayashi

Keiichi Miura

871,113916,071

65,406

7.8

15.96

14.67

14.37

14.72

15.24

FY Mar/15

16

17

18

19

Masahiro Karino

Return on Equity (ROE)
13/3

14/3

15/3

16/3

60,43365,12963,23566,01247,597

44,11443,452FY Mar/15

16

17

18

19

Net Sales ■■FY Mar/15

7.2

7.9

7.5

7.2

16

17

18

19

Operating Income■■
Operating Income on Net Sales

14/3

15/3

16/3

17/3

（百万円）

Total Assets

383.91359.06FY Mar/15

16

17

1,040,602 1,014,075 1,015,415 1,020,111 1,034,428

14.0（百万円／％）

13/3
14/3
15/3
16/3
Ordinary
Income/Return on Assets (ROA)

17/3

Net Assets/
Equity Ratio

67,89060,22564,36659,80264,306400,034

6.6
5.9

6.3

5.9

432,326

347,490 357,073
35.6

10.7

19
■

11.7
10.2

18

（百万円／％）

16.3

Directors, Managing Executive Officers

351.72311.40296.31

Profit Attributable to Owners of Parent ■■Earnings per Share (EPS)			
13/3
14/3
15/3
16/3
17/3

■

17/3

38,52536,404

13/3

Masafumi Fushihara

798,588

Profit Attributable to Owners of Parent/
Earnings per Share (EPS)*

42.58

Total Domestic Cement Demand ■■Group Sales■

Shuji Fukuda（百万円／％）
Operating Income/Operating Income on Net Sales

Net Sales

38.7

450,645

40.1

31.4

6.3
29.1

FY Mar/15

16

17

Return on Equity (ROE)

Kunihiro Ando

Katsuhide Fukuhara

Directors, Managing Executive Officers

Toshiaki Suzuki

Yoshiyuki Uenoyama

18

19

13/3

Hideaki Asakura

Net Assets per Share*

Directors

FY Mar/15

2,930.15
2,463.14

16

17

18

19

Total Assets ■■

■

14/3

15/3

16/3

（百万円）

Interest-Bearing Debt

3,193.65

17/3

FY Mar/15

16

Ordinary Income
Return on Assets (ROA)
13/3
14/3

17

18

19

■■
■

16

■

15/3

16/3

17/3
（年）

Interest-Bearing Debt/
Cash Flow

1.9

340,930
5.2

19

15/3

16/3

17/3

（百万円）

67,79617.3

399,138 394,497
279,615

18

Capital Expenditure

54,3842,591.08

288,60617

196,144

18,496

3,388.41

FY Mar/15

Net Assets ■■Equity13/3
Ratio
14/3

42,16044,076FY Mar/15

16

58,097

5.2
3.6

Tetsuya Ohashi

Yoshifumi Taura

Yoshiko Koizumi

Yuzo Arima

Corporate Auditors (Standing)Corporate Auditors

Executive Officers

Toshihide Nishimura
Shigeru Matsushima

Wakako Mitani
Yoshio Fujima

Seiichi Araki
Yoshiaki Tominaga
Yukimasa Nakano
Takayoshi Okamura
Atsuhiro Koike
Koshiro Hidaka
Susumu Miyazaki
Naoyuki Kira
Masaki Takahashi
Yasushi Ushiki
Shinji Fukami

FY Mar/15

16

Net Assets per Share
13/3

17

18

19

14/3

15/3

16/3

17/3

Depreciation
13
138.0942,401FY Mar/15

43,957

13/3
A N N UA L R EP O R T 2 0 1 9

13/3

44,45944,00314/3

14/3

44,008
4,422

16

16

17

18

17

18

19

FY Mar/15
R&D Expense

15/3

19

16/3

17/3

13/3

4,228

16
■■

14/3

FY Mar/15

16

17

Interest-Bearing Debt/Cash Flow

15/3

16/3

4,538

4,452

R&D Expense

Depreciation ■■14

FY Mar/15

Interest-Bearing Debt ■■

■

17/3

13/3

14/3

15/3

2.7

2.9

18

19

16/3

17

Capital Expenditure ■■

■

17/3

13/3

14/3

15/3

18

19

16/3

17/3

（百万円）

4,311

17

18

19

15/3

16/3

17/3

*The Company, effective October 1, 2017, conducted a reverse stock split for its common stock at
a ratio of one for 10. Earnings per Share (EPS) and Net Assets per Share is calculated assuming
the share consolidation took place at the year to March 2015.

TAIHEIYO CEMENT CORPORATION

15FI N AN C I A L S E C T I O NConsolidated Balance Sheets
Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2019

2019

2018
(Millions of yen)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Electronically recorded monetary claims-operating
Merchandise and finished goods
Work in process
Raw materials and supplies
Short-term loans receivable
Other
Allowance for doubtful accounts
Total current assets¥53,766

182,272
10,98929,193
2,383
41,761
3,464
10,560(1,116)333,275¥56,561

180,535
12,99831,1382,268
43,314
3,421
11,714(646)
341,307$509,610
1,626,595
117,115
280,549
20,441
390,259
30,822
105,547(5,824)
3,075,119

134,456
136,603
158,057
20,99832,64722,674505,438

135,653
134,649
157,638
22,12048,67822,199520,939

1,222,212
1,213,167
1,420,290
199,300
438,583
200,017
4,693,572

Intangible assets
Goodwill
Other
Total intangible assets

777
32,26133,038321
30,55330,875

2,895
275,286
278,181

86,834
2,941
21,29817,484
28,341(8,539)148,360
686,836¥1,020,111

83,692
1,754
17,807
17,10928,374(7,432)
141,306
693,120¥1,034,428

754,055
15,804160,441
154,150
255,652(66,962)
1,273,141
6,244,895$9,320,015

16

A N N UA L R EP O R T 2 0 1 9

2019(Millions of yen)(Thousands of U.S. dollars)

Noncurrent assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment, and vehicles, net
Land
Leased assets
Construction in progress
Other, net
Total property, plant and equipment

Investments and other assets
Investment securities
Long-term loans receivable
Asset for retirement benefits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

2018

2019

2019
(Thousands of U.S. dollars)

Liabilities
Current liabilities
Notes and accounts payable-trade
Electronically recorded obligations-operating
Short-term loans payable
Commercial papers
Current portion of bonds
Income taxes payable
Provision for bonuses
Other provision
Other
Total current liabilities¥91,113
4,670
153,181–
15,035
6,416
6,021
121
83,986
360,546¥96,275
8,716
135,381
4,000
10,000
8,376
6,046
220
80,373349,390$867,429
78,535
1,219,761
36,03990,09875472
54,474
1,985
724,152
3,147,948

Noncurrent liabilities
Bonds payable
Long-term loans payable
Deferred tax liabilities
Liability for retirement benefits
Provision for directors’ retirement benefits
Provision for special repairs
Other provision
Lease obligations
Asset retirement obligations
Other
Total noncurrent liabilities
Total liabilities

20,000100,390
8,024
24,559520
128
750
18,844
7,553
46,466227,238
587,785

30,000100,233
7,630
24,206535
75
757
17,616
7,619
45,718234,392
583,783

270,294
903,089
68,746
218,094
4,826
679
6,821
158,718
68,648411,914
2,111,834
5,259,782

86,17460,339260,016(10,947)
395,582

86,17460,408294,265(16,081)424,767

776,414544,271
2,651,283(144,893)
3,827,075

10,941
1
5,057(16,201)
(111)
(313)
37,058432,326¥1,020,111

8,688
(3)
5,019
(20,128)(3,632)(10,057)
35,935
450,645¥1,034,428

78,279(31)
45,222(181,357)(32,732)(90,619)
323,776
4,060,232$9,320,015

Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Retirement benefits liability adjustments
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

TAIHEIYO CEMENT CORPORATION

17

FI N AN CI A L S E C T I O NConsolidated Statements of Income

Consolidated Statements of Changes in Net Assets

Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2019

Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2019

2018

2019
(Millions of yen)

Net Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Real estate rent
Equity in earnings of unconsolidated subsidiaries and affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on disposal of inventories
Provision of allowance for doubtful accounts
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on disposal of non-current assets
Gain on sales of investment securities
Other
Total extraordinary income
Extraordinary loss
Loss on disposal of non-current assets
Loss on sales of investment securities
Loss on valuation of investment securities
Impairment loss
Other
Total extraordinary loss
Income before income taxes and non-controlling interests
Income taxes-current
Income taxes-deferred
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

2018(Millions of yen)

2019

Shareholders’ equity(Thousands of U.S. dollars)¥871,113
664,996
206,117140,987
65,129¥916,071
712,660
203,411
137,398
66,012$8,253,642
6,420,943
1,832,699
1,237,934
594,765

810
1,159
301
3,196
2,910
8,378

632
1,227
247
2,288
3,294
7,691

5,698
11,0602,233
20,621
29,681
69,295

4,639
258
1,030
3,213
9,141
64,366

4,068
1,126
–
4,202
9,397
64,30636,653
10,152037,861
84,667579,394

1,417
92
106
1,616

1,149
532
234
1,917

10,358
4,798
2,114
17,272

4,725
23
1,356
577
658
7,341
58,642
10,2007,356
41,085
2,559¥38,525

4,828
133
326
1,101
660
7,049
59,174
11,7601,796
45,6162,164¥43,452

43,502
1,200
2,941
9,921
5,949
63,515533,150
105,961
16,188410,999
19,499$391,499

2018

2019

Balance at pre end of term
Changes of items during period	Change in treasury shares ofparent arising from transactions
with non-controllingshareholders
Dividends of surplus
	Profit attributable to owners ofparentPurchase of treasury stock
Disposal of treasury stock
Increase by merger ofconsolidated subsidiary andnon-consolidated subsidiary
Adjustment to retained earnings
due to change in US tax rate
Net changes of items other thanshareholders’ equity
Total changes of items during
the period
Balance at end of this term

Capitalstock¥86,174

Capitalsurplus¥59,548

Retainedearnings¥228,914

Accumulated other comprehensive income

Treasurystock¥(10,911) ¥363,725

66(7,423)38,525724

Valuationdifference
on availableTotal
for-saleshareholders’securities
equity¥9,830

Deferred
gains orlosses onhedges¥48

Revaluation
reserve forland¥5,065

Foreigncurrencytranslation
adjustment¥(12,862)

Total
Retirement accumulated
benefitsotherliability
comprehensive
adjustments
income¥(3,987)¥(1,906)

Noncontrollinginterests¥38,215

Total
net assets¥400,034

66

66(7,423)(7,423)38,52538,525

(113)

(113)

(113)

78

802

802
–
–

–

790

31,101¥86,174¥60,339¥260,016

1,111

(47)

(8)

(3,338)

3,875

1,592

(1,157)435

31,856

1,111

(47)

(8)

(3,338)

3,875

1,592

(1,157)32,291¥(10,947) ¥395,582¥10,941¥1¥5,057¥(16,201)¥(111)¥(313)¥37,058¥432,326(35)

Consolidated Statements of Comprehensive Income
Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2019

(Millions of yen)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit retirement plans, net of tax
Share of other comprehensive income of associates accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests
18

A N N UA L R EP O R T 2 0 1 9

2019(Thousands of U.S. dollars)¥41,085¥45,616$410,999

811(7)(4,620)
3,994
423
601
¥41,686(1,657)(4)(4,733)(3,553)(641)(10,590)¥35,026(14,934)(43)(42,645)(32,014)(5,777)(95,414)$315,585¥40,118¥1,568¥33,746¥1,280$304,046$11,538TAIHEIYO CEMENT CORPORATION

19

FI N AN C I A L S E C T I O NConsolidated Statements of Changes in Net Assets

Consolidated Statements of Cash Flows

Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2019

Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2019

2019

2018

(Millions of yen)
Shareholders’ equity

Balance at pre end of term
Changes of items during period	Change in treasury shares ofparent arising from transactions
with non-controllingshareholders
Dividends of surplus
	Profit attributable to owners ofparentPurchase of treasury stock
Disposal of treasury stock
Increase by merger ofconsolidated subsidiary andnon-consolidated subsidiary

Adjustment to retained earnings
due to change in US tax rate
Net changes of items other thanshareholders’ equity
Total changes of items during
the period
Balance at end of this term

Capitalstock¥86,174

Capitalsurplus¥60,339

Retainedearnings¥260,016

Accumulated other comprehensive income
Valuationdifference
on availableTotal
for-saleshareholders’securities
equityTreasurystock¥(10,947) ¥395,582

69¥10,941

Deferred
gains orlosses onhedges¥1

Revaluation
reserve forland¥5,057

Foreigncurrencytranslation
adjustment¥(16,201)

Total
Retirement accumulated
benefitsotherliability
comprehensive
adjustments
income¥(111)¥(313)

Noncontrollinginterests¥37,058

Cash flows from operating activities:		
Total
net assets¥432,326

69

69(9,909)(9,909)(9,909)43,45243,45243,452(5,134)(5,134)(5,134)

0

0

0

(53)

(53)

(53)

759

759

759

0

–

69

34,249¥86,174¥60,408¥294,265(2,252)(4)(37)(3,927)(3,521)(9,744)(1,122)(10,866)

29,185(2,252)(4)(37)(3,927)(3,521)(9,744)(1,122)

18,318¥(16,081) ¥424,767¥8,688¥(3)¥5,019¥(20,128)¥(3,632)¥(10,057)¥35,935¥450,645(5,134)(Thousands of U.S. dollars)

Balance at pre end of term
Changes of items during period	Change in treasury shares ofparent arising from transactions
with non-controllingshareholders
Dividends of surplus
	Profit attributable to owners ofparentPurchase of treasury stock
Disposal of treasury stock
Increase by merger ofconsolidated subsidiary andnon-consolidated subsidiary

Adjustment to retained earnings
due to change in US tax rate
Net changes of items other thanshareholders’ equity
Total changes of items during
the period
Balance at end of this term

20

A N N UA L R EP O R T 2 0 1 9

Capitalstock$776,414

CapitalsurplusRetainedearnings$543,645 $2,342,698

Accumulated other comprehensive income
Valuationdifference
on availableTotal
for-saleshareholders’securities
equityTreasurystock$(98,634) $3,564,123

626$776,414$11

Revaluation
reserve forland

Foreigncurrencytranslation
adjustment$45,563 $(145,971)

Total
Retirement accumulated
benefitsotherliability
comprehensive
adjustments
income$(1,007)$(2,825)

Noncontrollinginterests

Total
net assets$333,889 $3,895,188

626

626

(89,279)(89,279)(89,279)

391,499

391,499

391,499(46,262)(46,262)(46,262)

3

3

3

(481)

(481)

(481)

6,845

6,845

6,845

0

–

$98,578

Deferred
gains orlosses onhedges(20,298)

(42)

(341)

(35,385)(31,725)(87,794)(10,112)(97,907)262,951(20,298)

(42)

(341)

(35,385)(31,725)(87,794)(10,112)

165,044$544,271 $2,651,283 $(144,893) $3,827,075$78,279$(31)$(45,222) $(181,357)$(32,732)$(90,619)$323,776 $4,060,232

626

308,584(46,259)

2019(Thousands of U.S. dollars)Profit (loss) before income taxes
Depreciation
Amortization of goodwill
Share of (profit) loss of entities accounted for using equity method
Loss (gain) on valuation of investment securities
Increase (decrease) in net defined benefit asset and liability
Increase (decrease) in provision for directors' retirement benefits
Increase (decrease) in provision for bonuses
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in other provisionInterest and dividends income
Interest expenses
Loss (gain) on sales of investment securities
Loss (gain) on disposal of non-current assets
Impairment loss
(Increase) Decrease in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Cash flows from operating activities:¥58,642
44,003
2,497(3,196)
1,356
2,390
(48)
276
946
(513)
(1,969)
4,639
(69)
3,307
577
(21,864)
1,859
16,405
10,200
119,442
2,678(4,630)(9,808)
107,683¥59,174
44,008490(2,288)326(1,364)
15
24
(185)
52
(1,860)
4,068
(399)
3,678
1,101
(2,728)(4,207)
9,577(1,218)108,266
2,844(4,019)(9,808)97,283$533,150
396,511
4,423(20,621)2,941(12,297)140
223(1,668)474(16,758)
36,653(3,597)33,144
9,921(24,585)(37,905)
86,292(10,978)
975,462
25,629(36,216)(88,371)876,503

Decrease (Increase) in time deposits
Purchase of property, plant, and equipment
Proceeds from sales of property, plant, and equipment
Purchase of other depreciated assets
Proceeds from sales of other depreciated assets
Purchase of investment securities
Proceeds from sales and redemption of investment securities
Proceeds from sales of shares of subsidiaries resulting in change in scope of consolidation
Payments of loans receivableCollection of loans receivable
Other, net
Cash flows from investing activities:(492)(52,588)
2,812
(108)
0
(121)
1,157
55
(2,792)
3,393
223(48,460)

1,995(64,520)
2,208
(142)
–
(43)
1,132
1,308
(2,639)3,078(402)(58,025)

17,976(581,316)
19,898(1,285)–(388)
10,199
11,793(23,782)
27,734(3,625)(522,795)(14,323)–
16,659(41,802)–(11,120)
1,123
(102)
(7,423)(2,619)(6,209)(65,818)(459)(7,054)
51,97457¥44,976

1,509
4,000
57,127(75,721)
20,000(15,035)
0(5,026)(9,909)(1,565)(9,133)(33,753)
(543)
4,960
44,976147¥50,084

13,59936,039514,710(682,235)
180,196(135,462)
3(45,287)(89,279)(14,107)(82,292)(304,116)(4,899)44,692405,233
1,326$451,253

Cash flows from investing activities:

Shareholders’ equity

2019(Millions of yen)

Cash flows from financing activities:

Net increase (decrease) in short-term loans payable
Increase (decrease) in commercial papers
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Proceeds from sales of treasury stock
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling shareholders
Other, net
Cash flows from financing activities:
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting from merger
Cash and cash equivalents at end the period

TAIHEIYO CEMENT CORPORATION

21

FI N AN C I A L S E C T I O N

Notes to the Consolidated Financial Statements
Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2019

1.	Notes, etc. on Significant Matters serving as the Basisfor Preparation of Consolidated Financial Statements(1) Matters Concerning Scope of Consolidation(i)		 Number of consolidated subsidiaries and name of major 						 consolidated subsidiaries
Number of consolidated subsidiaries: 119
Name of major consolidated subsidiaries:				 Major consolidated subsidiaries are DC Co., Ltd., Clion
Co., Ltd., Myojyo Cement Co., Ltd., Taiheiyo Materials
Corporation, CalPortland Company, Jiangnan-Onoda Cement
Co., Ltd., Qinhuangdao Asano Cement Co., Ltd., Dalian
Onoda Cement Co., Ltd., Nghi Son Cement Corporation andTaiheiyo Cement Philippines, Inc.
				 Of note, Yokohama Taiheiyo Namacon Co., Ltd. and one
other company had completed the liquidation process, andShenzhen Haixing-Onoda Logistics Development Co., Ltd.
had completed the transfer of equity, so these subsidiaries were
excluded from the scope of consolidation. Sakai Remicon Co.,
Ltd. was also excluded from the scope of consolidation as aresult of disappearance due to absorption-type merger wherein
the Company’s consolidated subsidiary Osaka Asano ConcreteCo., Ltd. is the surviving company.
(ii)		 Name, etc. of major unconsolidated subsidiaries
Name of major unconsolidated subsidiaries:
			 Major unconsolidated subsidiaries are Taiheiyo Singapore Pte.,
Ltd., and Taiheiyo Services Co., Ltd.
Reason for excluding from the scope of consolidation:				 All unconsolidated subsidiaries are small companies, andnone of them have a material impact on the consolidated financial
statements in terms of the amount of equity interest including
total assets, net sales, net income and retained earnings as a whole;accordingly, they were excluded from the scope of consolidation.
(2) Matters Concerning Application of Equity Method(i)		 Number of unconsolidated subsidiaries and affiliates accounted 						 for by the equity method and name of major companies, etc.
Number of unconsolidated subsidiaries accounted for by the equity
method: 6
Name of major companies, etc.:
			 Major unconsolidated subsidiaries accounted for by the equity
method are Taiheiyo Singapore Pte., Ltd.
Number of affiliates accounted for by the equity method: 37
Name of major companies, etc.:				 Major equity-method affiliates are Okutama Kogyo Co., Ltd.,
A&A Material Corporation, Fuji P.S Corporation, Yakushima
Denko Co., Ltd., Chichibu Railway Co., Ltd. and Azuma
Shipping Co., Ltd.
				 Transfer of company accounted for by the equity method is asfollows: Morehead Company., Ltd. and Jidong Taiheiyo (Beijing)
Environmental Engineering Co., Ltd. had completed theliquidation process, so these companies were excluded from thescope of equity-method.
(ii)		 Name, etc. of unconsolidated subsidiaries and affiliates not 						 accounted for by the equity method
Name of major companies, etc.:
22

A N N UA L R EP O R T 2 0 1 9(Unconsolidated subsidiaries)
		 Unconsolidated subsidiaries not accounted for by the equity
method are Taiheiyo Services Co., Ltd. and 66 other companies.
(Affiliates)
		 Affiliates not accounted for by the equity method are Cement 		Terminal Corporation and 65 other companies.
Reason for not applying the equity method:
Unconsolidated subsidiaries and affiliates not accounted for by
the equity method were excluded from the scope of the equity
method because the amount of equity interest including theirrespective net income and retained earnings all have minimal
impact on the consolidated financial statements.
(iii)		 Particularly noteworthy matters concerning procedures for 					 application of the equity method
For companies accounted for by the equity method whose fiscal yearend is different from the consolidated fiscal year-end, their respective
non-consolidated financial statements for the most recent fiscal year
have been used.
(3) Matters concerning Accounting Policies(i)		 Standards and methods for valuation of significant assets
a. Available-for-sale securitiesa) Securities with market value:
Such securities are marked to market by the Company and someconsolidated subsidiaries based on the average market price, etc.
in the one-month period before the end of the fiscal year.
(Valuation differences are all charged/credited directly to net
assets, and the cost of selling the securities is determined by themoving-average method.)b) Securities without market value:
			 Such securities are stated at cost, based on the moving-average 					method.
b. Derivatives
Derivatives are stated at market value.
c. Inventories
Inventories are mainly stated at cost, which is determined by
the moving average method (subject to write-down due todiminished profitability.)
However, the cost for contract work in process is determined by
the specific identification cost method.
Of note, inventories at the consolidated subsidiary in the U.S. arestated at lower of cost or market, based on the gross average method.
(ii)		 Depreciation method for significant depreciable assets
a. Property, plant and equipment (excluding lease assets)
The declining balance method is adopted by the Company and its
domestic consolidated subsidiaries, and the straight-line methodby its consolidated overseas subsidiaries.
However, the depreciation of buildings (excluding accompanying
facilities) purchased on and after April 1, 1998 andaccompanying facilities and structures purchased on and after
April 1, 2016 is computed based on the straight-line method by
the Company and its domestic consolidated subsidiaries.
The range of useful lives of main property, plant and equipment
is as follows:				 Buildings and structures:
10 - 75 years				 Machinery, equipment and vehicles:
4 - 15 years		 b. Intangible assets (excluding lease assets)
Intangible assets are amortized by the straight-line method.
However, software is amortized by the straight-line method overits useful life assuming in-house use (5 years).
		 c. Lease assets
Lease assets are depreciated by the straight-line method thatassumes their lease periods are useful lives and residual values
are zero (or if there is a residual value guarantee, the guaranteed
residual value).
(iii)		 Accounting standards for significant provisions
a. Allowance for doubtful accounts
Allowance for doubtful accounts is provided for by the Company
and its domestic consolidated subsidiaries at the estimateduncollectible amount, which is calculated based on the historicalcredit loss ratio with respect to ordinary receivables, and inconsideration of collectibility on a case-by-case basis with respect
to specified receivables such as doubtful accounts. Consolidated
overseas subsidiaries mainly provide for such allowance atthe estimated uncollectible amount with respect to specified
receivables.
		 b. Provision for bonuses
To prepare for the payment of bonuses payable to employees, theCompany and its domestic consolidated subsidiaries record theestimated payable amount to be borne in the consolidated fiscal
year under review.
		 c. Provision for directors’ retirement benefits
Certain consolidated subsidiaries provide for retirement
allowances for directors and corporate auditors at the necessary
payment amount in full at the year-end based on their internal
regulations.
(iv)		 Accounting standards for revenue recognition of construction
Completed construction volume is recorded under theconstruction progress method (percentage of completion
estimates for construction are via the cost to cost method) for
construction for which progress results can be determined withcertainty by the end of the fiscal year under review, and forothers, the completed construction method is applied.
(v)		 Standards for translating significant foreign currency assets and			 liabilities into Japanese yen
Monetary claims and obligations denominated in foreign
currencies are translated into Japanese yen based on the
spot exchange rate as at the consolidated closing date, andtranslation gains (losses) are recognized in profit (loss). Of
note, consolidated overseas subsidiaries’ assets and liabilities aretranslated into Japanese yen based on the spot exchange rate
as at the consolidated closing date, revenue and expenses aretranslated into Japanese yen based on the average exchange rate
for the fiscal year, and translation gains (losses) are included in“Foreign currency translation adjustments” and “Non-controllinginterests” under Net Assets.
(vi)		 Significant hedge accounting methods
		 a. Method of hedge accounting
Gains/losses on hedges are deferred. Allocation treatment
is applied when the currency swaps meet the conditions forapplication of such allocation treatment. Exceptional treatment
is applied when the interest rate swaps meet the conditions forapplication of such exceptional treatment.
b. Hedging instruments and hedged items
Hedging instruments:
Interest rate swaps, currency swaps, raw materials and fuel swaps,
interest-rate options, currency options, raw materials and fueloptions and forward exchange contracts are employed as hedging
instruments.
Hedged items:
Borrowings, bonds payable, fuel, etc.
		 c. Hedging policy
Hedge accounting policy is to limit hedging to those aimed at
hedging against the risk of interest rate, exchange rate, and raw
materials and fuel price fluctuations of the hedged items andthose aimed at eliminating hedging.
		 d. Method of evaluating hedge effectivenessHedge effectiveness is verified on a transaction-by-transaction
basis at the end of each accounting period with respect tohedging instruments and hedged items; however, if the principal,
interest rate, period, and other such significant terms of thehedging instruments and hedged items are the same, suchverification is omitted.
(vii)		 Method and period of amortization of goodwill
Goodwill is amortized over the estimated number of years
in cases that the number of years can be estimated based onpractical judgment starting from the fiscal year of acquisition
while the entire amount of goodwill is amortized in the fiscal
year of acquisition without analyzing the causes in cases that theamount of goodwill is insignificant.
(viii)		 Accounting procedures for liability for retirement benefits
To prepare for the payment of retirement benefits to employees,
liability for retirement benefits is recorded in the amount of
retirement benefit obligation less plan assets based on the
projected amount at the end of the consolidated financial year
under review.
Actuarial gains and losses and prior service cost are amortizedin equal amounts as expenses by the straight-line method over acertain number of years (primarily 10 years) within the averageremaining years of service of employees at the time of accrual,commencing in the consolidated fiscal year following the yearof accrual for actuarial gains and losses and in the consolidated
fiscal year of accrual for prior service cost.
Unrecognized actuarial gains and losses and unrecognizedprior service cost are recorded as “Retirement benefits liability
adjustments” in “Accumulated other comprehensive income”
under Net Assets, after making tax effect adjustments. Whenthe value of plan assets exceeds the amount of the retirement
benefit obligation, the amount of such excess is recorded in“Assets for retirement benefits”.
(ix)		 Accounting treatment of consumption tax, etc.
Tax exclusion method is applied.
Of note, there were no applicable transactions in consolidated
overseas subsidiaries.
(x)		 Amounts shown in these consolidated financial statements are 					 rounded down to the nearest million yen.

TAIHEIYO CEMENT CORPORATION

23

FI N AN C I A L S E C T I O N

Notes to the Consolidated Financial Statements
Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2019(4) Changes in Accounting Policy(2) Accumulated depreciation of property, plant and equipment

The “Income Statement – Reporting Comprehensive Income (Topic
220)” (Accounting Standards Update No. 2018-02 issued by Financial
Accounting Standards Board (FASB) on February 14, 2018) has been
applied from the consolidated fiscal year under review, at overseas
consolidated subsidiaries that apply US GAAP prior to the mandatory
effective date. Consequently, the effects of revaluation of deferred tax
assets and deferred tax liabilities that were previously recognized as net
income or loss, resulting from the change of tax rate by the Tax Cuts
and Jobs Act in 2017, have been reclassified from accumulated othercomprehensive income to retained earnings.
		 As a result, as of the end of the consolidated fiscal year under review,
accumulated other comprehensive income decreased by ¥759 million
and retained earnings increased by ¥759 million. There is no impact on
the consolidated statement of income and per share information for the
consolidated fiscal year under review.
(5) Changes in presentation
		 The Consolidated Balance Sheets
		 The Company has adopted the Ministerial Order for Partial
Revisions of the Regulation on Corporate Accounting and Enforcement
Regulations of the Companies Act (Ministry of Justice Order No.
5 issued on March 26, 2018) due to the Partial Amendments to
Accounting Standard for Tax Effect Accounting (ASBJ Statement No.
28, issued on February 16, 2018) from the fiscal year under review. As
a result, deferred tax assets are presented under investments and otherassets while deferred tax liabilities are presented under noncurrent
liabilities.
		 The Consolidated Statements of Income“Loss on disposal of inventories,” which has been included in “Other”
under “Non-operating expenses” in the previous consolidated fiscal year,
is separately presented in the consolidated fiscal year under review due
to its increased monetary importance.

2. Notes to the Consolidated Balance Sheets(1) Assets pledged as collateral and secured liabilities(i)Assets pledged as collateral		 Cash and deposits
		 Property, plant and equipment
		 Intangible assets
		 Investment securities
		 Investments and other assets-other		 Total(ii) Secured liabilities
		 Notes and accounts payable-trade
		 Notes discounted
		 Short-term loans payable
		 Other current liabilities
		 Long-term loans payable
		 Other noncurrent liabilities
		 Total

24

A N N UA L R EP O R T 2 0 1 9(Millions of yen) (Thousands of U.S. dollars)¥653¥35,326¥790¥97¥1,728¥38,596$5,883$318,289$7,121$879$15,575$347,750(Millions of yen) (Thousands of U.S. dollars)¥5,492¥13¥6,384¥3¥4,806¥45¥16,746$49,490$120$57,527$33$43,306$406$150,885			(Millions of yen)

¥1,160,135(Thousands of U.S. dollars)$10,452,613(3) Guarantee obligations(Millions of yen)(Thousands of U.S. dollars)

			 Guarantees for loans payable 								from banks, etc.
¥1,290$11,627
			Guarantees for account payables 				to Ready-mixed Cooperative 				Association, etc.
¥1,942$17,497(4) Discounted trade notes receivable(Millions of yen)(Thousands of U.S. dollars)							
¥2,052$18,494
			 Trade notes receivable transferred 								by endorsement¥1,088$9,804
			 Discounts on electronically recorded 								monetary claims-operating¥164$1,484(5) Trade notes maturing on the balance sheet date
The settlement of trade notes maturing on the balance sheet date of
the consolidated fiscal year under review is accounted for on the date ofbank clearance.
		 As the balance sheet date of the consolidated fiscal year under review
was a bank holiday, the following notes maturing on the balance sheet
date were included in the balance of the respective items outstanding at
the end of the consolidated fiscal year under review:(Millions of yen)(Thousands of U.S. dollars)			
Notes receivable-trade¥10,768$97,018
			Electronically recorded monetary 			claims-operating¥2,041$18,392			
Notes payable-trade¥4,474$40,317
			Notes payable-facilities¥132$1,197
			 Electronically recorded 								obligations-operating¥1,683$15,168(6) Revaluation of Land
A&A Material Corporation and Chichibu Railway Co., Ltd., the Company’s
affiliates accounted for by the equity method, revalued their business-purpose
land in accordance with the Act on Revaluation of Land (Act No. 34,
promulgated on March 31, 1998) and the Act on Partial Revision of the Act
on Revaluation of Land (revised on March 31, 1999). With respect to thevaluation difference, the amount of the Company’s share in the valuationdifference is recorded in Net Assets as “Revaluation reserve for land.”3. Notes to the Consolidated Statements of Changes in 		
Net Assets(1) Class and total number of outstanding shares as at the endof the consolidated fiscal year under review:			Common stock			
127,140,278 shares(2) Matters concerning dividends(i) Amount of dividends paid
Resolution

Class ofsharesOrdinary General
Meeting ofStockholders
held on June 28,
2018

Commonstock

Meeting of Board of Common
Directors held on
stock
November 8, 2018

Total amountof dividends(millions of
yen)
3,722

(Note 1)

6,203

(Note 2)

Amount ofdividend per
share

Record date

Effective date

¥30.00March 31,2018

June 29,2018¥50.00

September
30, 2018

December 4,
2018(Note 3)(Notes) 1. Includes dividends of ¥6 million associated with treasury stock held						 by consolidated subsidiaries.
				 2. Includes dividends of ¥10 million associated with treasury stock held					by consolidated subsidiaries.
				 3. The dividend per share by the Meeting of Board of Directors held 							 on November 8, 2018 includes commemorative dividends of ¥20.00					 for the 20th anniversary of the Company’s founding.

(ii) Dividends whose record date is at the end of the consolidated 					 fiscal year under review whereas its effective date falls in the next 					 consolidated fiscal year
The following matters concerning dividends for common stock
are scheduled to be proposed at the Ordinary General Meeting ofStockholders.
				 Total amount of dividends:¥3,681 million				 Amount of dividend per share: ¥30.00				 Record date:		March 31, 2019				 Effective date:		June 28, 2019
Of note, the source of funding dividend payments is scheduled
to be retained earnings.
Total amount of dividends includes dividends of ¥6 million
associated with treasury stock held by consolidated subsidiaries.
(iii) Class and number of shares to be issued upon exercise of share			 options at the end of the consolidated fiscal year under review 					 (excluding those for which the first day of the exercise period has
			 not yet arrived)
				Not applicable.

4. Notes on Financial Instruments(1) Matters concerning Status of Financial Instruments
The Taiheiyo Cement Group limits its fund management activities
to short-term deposits, etc., and raises funds principally by bankborrowings and corporate bonds. It performs derivative transactions
for the purpose of averting risks due to future exchange-rate, interestrate, and raw materials and fuel price fluctuations and does not perform
speculative transactions.
		 While notes and accounts receivable-trade and electronicallyrecorded monetary claims-operating. which are operating receivables,
are exposed to credit risk in relation to customers, each responsible
department periodically identifies the financial position, etc. of thecounterparties and manages the due date and outstanding balancewith respect to each counterparty, in an effort to identify and reduce
collectibility concerns in the early stages. In addition, operatingreceivables denominated in foreign currencies related to exporttransactions are exposed to exchange rate fluctuation risks. Investment
securities are primarily shares of companies with which the Company
has a business relationship, and are exposed to the risk of market pricefluctuations.
		 Notes and accounts payable-trade and electronically recorded
obligations-operating, which are operating payables, have payment due
dates within one year. For a portion of raw materials and fuel procurement,
derivative transactions (foreign exchange contracts and raw fuel swap
transactions) are used as hedging methods to limit risk of exchange andprice fluctuations of raw materials and fuel. Among borrowings, shortterm loans payable are mainly funds raised in connection with business
transactions, and long-term loans payable and bonds payable are
principally funds raised for the purpose of making capital investments.
Some long-term loans payable have financial covenants and may
influence liquidity risks regarding fund raising activities. Borrowings
with variable interest rates are exposed to interest rate fluctuation risk;
however, to avert the risk of fluctuations of interest payable and fix
interest expenses for some long-term loans payable, derivatives (interest
rate swap transactions) are used as hedging instruments on a contractby-contract basis. Additionally, borrowings in foreign currencies are
exposed to foreign exchange risk, but of these, for a portion of long-termborrowings, derivative transactions (currency swap transactions) are used
as a hedging method to avoid foreign currency fluctuation risk.
(2)	Matters concerning Market Value, etc. of
Financial Instruments
The consolidated balance sheet amount and market value of financial
instruments and the difference between the two at March 31, 2019(i.e., end of the consolidated fiscal year under review) are shown in thefollowing table.
(Unit: Millions of yen)
(i)
(ii)
(iii)

Cash and deposits
Notes and accounts receivable-trade
Electronically recorded monetaryclaims-operating(iv) Investment securities
Total assets(v) Notes and accounts payable-trade(vi) Electronically recorded obligations-operating(vii) Short-term loans payable(viii) Commercial papers(ix) Bonds payable(x) Long-term loans payable
Total liabilities(xi) Derivative transactions*

Consolidated balance Market value
sheet amount

Difference

56,561
180,535

56,561
180,535––

12,99812,998–41,746
291,842
96,27535,538285,634
96,275(6,208)(6,208)
–

8,716

8,716

–

80,4104,000
40,000155,204
384,607(46)

80,4104,000
40,015
155,143384,561
(46)

–
–
15
(61)
(46)
–

* Net payables arising from derivative transactions are shown in parenthesis.
(Notes) 1.		 Calculation method of market value of financial instruments and 								 matters related to securities and derivative transactions(i) Cash and deposits, (ii) Notes and accounts receivable-trade and (iii)Electronically recorded monetary claims-operating
Since these items are settled in a short period of time, their market
value is more or less the same as carrying value; therefore, the carrying
value is adopted.
(iv) Investment securities
The market value of investment securities is based on quoted market prices.
(v) Notes and accounts payable-trade, (vi) Electronically recorded
obligations-operating, (vii) Short-term loans payable, (viii)
Commercial papers
TAIHEIYO CEMENT CORPORATION

25

FI N AN C I A L S E C T I O N

Notes to the Consolidated Financial Statements
Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2019

[Industry Segments]			
Since these items are settled in a short period of time, theirmarket value is more or less the same as carrying value; therefore, thecarrying value is adopted.
(ix) Bonds payable		 The calculation method involves discounting the sum of the principal
and interest by an interest rate that takes into account the credit
risk. The presentation of market value of bonds payable includes thecurrent portion of bonds.
(x) Long-term loans payable		 The calculation method involves discounting the sum of the principal
and interest by the interest rate that is expected to be applied if a similar
new loan is taken out. The presentation of market value of long-termloans payable includes the current portion of long-term loans payable.
A portion of long-term loans payable are subject to appropriatedtreatment for currency swaps and exceptional treatment for interest
rate swaps (see (xi) below), and the calculation method involves
discounting the sum of the principal, which is an aggregate of thecurrency swap and interest rate swap, with a reasonably-estimatedinterest rate that would be applied if a similar loan is taken out.
(xi) Derivative transactions
		 The market value of derivatives is calculated based on prices, etc.
presented by financial institutions with which derivative transactions
are performed. Of note, those subject to allocation treatment for
exchange rate swaps and exceptional treatment for interest rate swaps
are processed integrally with the hedged long-term loans payable, so
their market value is included in the presentation of such long-termloans payable (see (x) above).
2.		 Unlisted stocks and investments in capital, etc. (consolidated balance
sheet amount: ¥41,946 million) are not included in “(iv) Investment
securities” as it is deemed extremely difficult to determine theirmarket value because there is no quoted market price and it is
impossible to estimate future cash flows.

5. Notes on Real Estate for Rent, etc.

(2) Matters concerning market value of real estate for rent, etc.
(Unit: Millions of yen)

Consolidated balance sheet amount
51,666

Market value

A N N UA L R EP O R T 2 0 1 9¥3,388.41¥351.72

7. Notes on Significant Subsequent Events
Not applicable.

8. Other Notes(Notes on Impairment Loss)
The Company’s assets are grouped together based on segments by business type,
except for assets for rent, important idle properties and assets scheduled for disposal,
which are grouped together by treating individual property as a single unit.
		 In the case of consolidated subsidiaries, in principle, a business company isdeemed as a single asset group, and in the case of important companies, assets aregrouped together based on management accounting classifications, etc., except forimportant assets for rent, idle properties and assets scheduled for disposal, which
are grouped together by treating individual property as a single unit.
As a result, the carrying value was reduced to the recoverable amount withrespect to assets for business and assets for rent with reduced profitability due tosuch factors as the decrease in demand and substantial fall in the market valueof land, and idle properties that are not expected to be used in the future as
follows, and such reduction in the amount of ¥1,101 million was recorded as an
impairment loss under Extraordinary loss.

(Unit: Millions of yen)

PurposeLocation

Type

Assets for business

Kumagaya City,
Saitama Prefecture,etc.

Buildings and structures,
machinery, equipment andvehicles, land, etc.

Assets for rent

Togane City, Chiba
Prefecture, etc.

Land

Impairment loss*
223
196

Hokuto City,
Buildings and structures,
Hokkaido Prefecture, machinery, equipment andetc.
vehicles, land, etc.

* Breakdown of Impairment loss by purpose
Purpose681(Unit: Millions of yen)

Breakdown

Assets for business

Buildings and structures: 30, Machinery, equipment and vehicles: 151,
Land: 16, Other: 25, Total: 223

Assets for rent

Land: 196, Total: 196

Idle properties

Buildings and structures: 60, Machinery, equipment and vehicles: 2,
Land: 296, Other: 323, Total: 681

111,495(Notes) 1. Consolidated balance sheet amount equals the acquisition cost minus					 accumulated depreciation and accumulated impairment loss.
2. The market value of major properties as at the end of the consolidated
fiscal year under review is the amount based on a real estate appraisal
conducted by an outside real estate appraiser, whereas the market
value of other properties is a certain appraisal value or the amountcalculated in-house based on indicators deemed to properly reflect
the market price. However, if there are no significant changes in acertain level of valuation amounts or indices which are believed toaccurately reflect market values from the most recent evaluation,amounts utilizing these valuations and indices are applied.

26

Net assets per share:
Net income per share:

Idle properties(1) Matters concerning status of real estate for rent, etc.
The Company and some of its consolidated subsidiaries have plants,
warehouses (including land), etc. for lease purposes in Tokyo and otherregions.

Information of net sales, profit or loss, assets, liabilities, and other items by reportable segment are as follows:

6. Notes on Per Share Information

Recoverable amount is measured at the higher of net selling price orvalue in use.
If it is measured at net selling price, it is calculated by making reasonableadjustments based on real estate appraisal standards, etc.
If it is measured at value in use, it is calculated by discounting future
cash flows by 5%.

Net sales:(1) Net sales to outside customers(2) Inter-segment net sales
Total
Segment profit (loss)
Segment assets
The Others
Depreciation
Amortization of goodwill
Equity in earnings ofunconsolidated subsidiaries
and affiliates
Impairment loss
Investment in unconsolidated
subsidiaries and affiliates
accounted for by the equity
methodIncrease for property, plant,
equipment, and intangible assets¥601,598
10,320¥611,918¥40,652¥644,687¥58,185
23,298¥81,483¥8,061¥95,405¥82,964
7,241¥90,206¥7,463¥20,787¥73,210
3,822¥77,033¥4,740¥74,805¥815,959
44,683¥860,643¥60,917¥835,685¥55,153
23,866¥79,020¥3,926¥212,681¥871,113
68,550¥939,663¥64,843¥1,048,790¥–(68,550)¥(68,550)¥286¥(28,255)¥871,113–¥871,113¥65,129¥1,020,111¥30,686¥2,495¥4,578¥–¥397¥1¥2,391¥–¥38,053¥2,497¥5,490¥–¥43,543¥2,497¥460¥–¥44,003¥2,497

¥731

¥(62)

¥10

¥1,505¥2,185¥1,005¥3,191¥5¥3,196

¥37

¥91

¥12

¥–

¥141

¥436

¥577

¥–

¥577

¥17,529¥–¥272¥13,695¥31,497¥16,435¥47,933¥337¥48,270¥36,186¥8,476¥1,780¥3,462¥49,905¥7,624¥57,529¥557¥58,0872019
Construction
materials

Subtotal

Other

Total

¥636,385
10,092¥646,477¥41,743¥647,846¥59,401
24,860¥84,262¥8,242¥101,608¥85,081
7,611¥92,693¥6,614¥21,292¥77,940
4,245¥82,185¥4,999¥80,813¥858,808
46,809¥905,618¥61,559¥851,561¥57,263
28,765¥86,028¥4,658¥217,462¥916,071
75,575¥991,647¥66,257¥1,069,023–(75,575)¥(75,575)¥(244)¥(34,595)¥916,071–¥916,071¥66,012¥1,034,428¥31,023¥490¥4,279¥–¥671¥–¥2,405¥–¥38,381¥490¥5,258¥–¥43,639
¥490

¥368
¥–

¥44,008
¥490

¥508

¥40

¥11

¥1,481¥2,042¥252¥2,295¥(6)¥2,288

¥39

¥353

¥–

¥103

¥496

¥604

¥1,101¥–¥1,101¥17,145¥–¥281¥15,166¥32,593¥15,683¥48,276¥437¥48,714¥38,557¥10,246¥1,852¥3,626¥54,282¥11,899¥66,182¥1,614¥67,796

Mineral resources

Environmental
business$5,733,717
90,928$5,824,645$376,097$5,836,985$535,195
223,991$759,187$74,260$915,475$766,572
68,575$835,148$59,593$191,841$279,517$4,423$38,561$-$4,5822019
Construction
materials

Subtotal

Other

Total

Adjustment

Consolidated total(Thousands of U.S. dollars)
Subtotal

Other$702,226
38,251$740,477$45,047$728,112$7,737,712
421,747$8,159,459$554,999$7,672,415$515,930
259,173$775,104$41,971$1,959,297$8,253,642
680,921$8,934,564$596,970$9,631,713$–(680,921)$(680,921)$(2,205)$(311,698)$8,253,642
0$8,253,642$594,765$9,320,015$6,053$-$21,675$-$345,807$4,423$47,379$-$393,187$4,423$3,324$-$396,511$4,423$365$103$13,351$18,403$2,277$20,680$(58)$20,621$354$3,188$-$928$4,471$5,450$9,921$-$9,921$154,479$-$2,536$136,646$293,662$141,301$434,964$3,940$438,905$347,396$92,319$16,690$32,672$489,077$107,213$596,291$14,544$610,835

Total

Adjustment

Consolidated total(Millions of yen)Japan

Net sales

Consolidated total

Environmental
business[Geographic Segments]

Non-current assets

Adjustment

Mineral resources

CementNet sales:(1) Net sales to outside customers(2) Inter-segment net sales
Total
Segment profit (loss)
Segment assets
The Others
Depreciation
Amortization of goodwill
Equity in earnings ofunconsolidated subsidiaries
and affiliates
Impairment loss
Investment in unconsolidated
subsidiaries and affiliates
accounted for by the equity
methodIncrease for property, plant,
equipment, and intangible assets(Millions of yen)

Environmental
business

CementNet sales:(1) Net sales to outside customers(2) Inter-segment net sales
Total
Segment profit (loss)
Segment assets
The Others
Depreciation
Amortization of goodwill
Equity in earnings ofunconsolidated subsidiaries
and affiliates
Impairment loss
Investment in unconsolidated
subsidiaries and affiliates
accounted for by the equity
methodIncrease for property, plant,
equipment, and intangible assets

2018
Construction
materials

Mineral resources

Cement687,422
371,335

U.S.A.

143,663

103,813

Other

84,98545,790

Total

916,071
520,939TAIHEIYO CEMENT CORPORATION

27

Taiheiyo Cement Group Network

Corporate Data
(As of March 31, 2019)

DOMESTIC NETWORKMAJOR SUBSIDIARIES AND AFFILIATES

Company Name

Taiheiyo Cement’s facilities include the head office, Research &Development Center, eight branch offices, and six cement plants.

CEMENT AND READY-MIXED CONCRETE

Head Office

OVERSEAS NETWORK
Taiheiyo Cement U.S.A., Inc.
2025 East Financial Way, Glendora, CA 91741, U.S.A.
Tel: +1-626-852-6200
Fax: +1-626-852-6217
Taiheiyo Cement (China) Investment Co., Ltd.
Room 4008, Chang Fu Gong Office Building, 26,
Jian Guo Men Wai Da Jie,
Chao Yang District, Beijing, China
Tel: +86-10-8591-1815
Fax: +86-10-8591-1870
Taiheiyo Singapore Pte. Ltd.
16 Raffles Quay, #41-03 Hong Leong Building,Singapore 048581
Tel: +65-6220-9495
Fax: +65-6225-5853
Vietnam Representative Office
Suite 801, 8th Fl., Sun Red River Building,
23 Phan Chu Trinh Street,
Hoan Kiem District, Hanoi, Vietnam
Tel: +84-4-3933-0913
Fax: +84-4-3933-0922
Bangkok Representative Office
17th Fl., 5 Sitthivorakit Building, Soi Pipat, Silom Road,
Silom, Bangrak, Bangkok 10500, Thailand
Tel: +66-2-266-8741
Fax: +66-2-266-8742
Taipei Representative Office
5th Fl., 139, Cheng-Chou Road, Taipei 103, Taiwan
Tel: +886-2-2557-8098
Fax: +886-2-2553-9853
Hong Kong Representative Office
20th Fl., Tern Centre, Tower 1, 237 Queen’s Road Central,
Hong Kong
Tel: +852-2545-9987
Fax: +852-2542-0474

DC Co., Ltd.
Kokusai Kigyo Co., Ltd.
Myojyo Cement Co., Ltd.
Tsuruga Cement Co., Ltd.

MINERAL RESOURCES

Abekawa Kaihatsu Co., Ltd.
Buko Mining Co., Ltd.
Chichibu Mining Co., Ltd.
Chichibu Taiheiyo Cement Corporation
Ishizaki Co., Ltd.
Kansai Matech Co., Ltd.
Kansai Taiheiyo Minerals Corporation
Kosyu Saiseki Co., Ltd.
Oita Taiheiyo Mining Corporation
Okutama Kogyo Co., Ltd.
Ryushin Mining Co., Ltd.
Yuko Mining Co., Ltd.

ENVIRONMENTNACODE Corporation
Tokyo Tama Ecocement Inc.

CONSTRUCTION AND CONSTRUCTION MATERIALS

A&A Material Corporation
Chichibu Concrete Industry Co., Ltd.
Clion Co., Ltd.
Fuji P.S Corporation
Onoda Chemico Co., Ltd.
Taiheiyo Materials Corporation
Taiheiyo Precast Concrete Industry Co., Ltd.

OTHERS

Azuma Shipping Co., Ltd.
Chichibu Railway Co., Ltd.
Onoda Chemical Industry Co., Ltd.
Pacific Systems Corporation
Taiheiyo Accounting & Financial Services Corporation
Taiheiyo Engineering Corporation
Taiheiyo Real Estate Co., Ltd.

Established
Paid-in Capital
Fiscal Year
Annual Meeting
Common StockTAIHEIYO CEMENT CORPORATION

Daiba Garden City Building, 2-3-5 Daiba, Minato-Ku, Tokyo 135-8578 JapanMay 1881¥ 86,174 million

April 1–March 31
June

Authorized: 197,730,800

Issued: 127,140,278 (including 4,421,453 shares of treasury stock)
No. of Stockholders

53,116

Agent of Record

Sumitomo Mitsui Trust Bank, Ltd.

Major Stockholders

Shares Owned (in thousands)

Holding (%)*

The Master Trust Bank of Japan, Ltd. (Trust Account)

10,431

8.5

JP MORGAN CHASE BANK 385632

3,135

2.5

Japan Trustee Services Bank, Ltd. (Trust Account)
SSBTC CLIENT OMNIBUS ACCOUNT

Japan Trustee Services Bank, Ltd. (Trust Account 5)
Mizuho Bank, Ltd.		

JP MORGAN CHASE BANK 385167

STATE STREET BANK WEST CLIENT - TREATY 505234
JP MORGAN CHASE BANK 385151
GOVERNMENT OF NORWAY

8,788
2,673
2,478
2,375
1,989
1,930
1,893
1,879

7.1
2.1
2.0
1.9
1.6
1.5
1.5
1.5
* Excludes treasury stocks.

OVERSEAS BUSINESSES

CalPortland Company (USA)
Dalian Onoda Cement Co., Ltd. (CHINA)
Jiangnan-Onoda Cement Co., Ltd. (CHINA)
Kalahari Dry (Thailand) Co., Ltd. (THAILAND)
Nghi Son Cement Corporation (VIETNAM)
PNG-Taiheiyo Cement Limited (PAPUA NEW GUINEA)
Qinhuangdao Asano Cement Co., Ltd. (CHINA)
Shanghai Sanhang Onoda Cement Co., Ltd. (CHINA)
Taiheiyo Cement Philippines, Inc. (PHILIPPINES)
Taiheiyo International (Thailand) Co., Ltd. (THAILAND)

28

A N N UA L R EP O R T 2 0 1 9

TAIHEIYO CEMENT CORPORATION

29