Message from the President
Progress under the Long-term Business Plan
Achieved Record-high Earnings as Signs of a Change in Employees’ Awareness Begin to Emerge
In recent years, conditions surrounding the corporate sector have evolved at an increasingly fast pace. In moving forward, we recognize the important need to set specific targets and a long-term vision while flexibly adapting to change in order to secure sustainable growth and respond appropriately to prevailing conditions.
To date, the Mitsui Chemicals Group has continued to promote triple bottom line management, which focuses on balancing economic, environmental, and social concerns. In an effort to evolve even further, we put in place a long-term business plan, which takes the Group through to 2025, and are engaging in a host of new activities.
Fiscal 2017 was an important year in carrying out the Group’s Long-term Business Plan. In similar fashion to the previous fiscal year, we again achieved record-high profit, and on this basis alone I am confident that we have taken a successful first step. Under the Long-term Business Plan, we have set the challenging operating income target of ¥200 billion. From the environmental and social perspectives, we have identified 13 goals that cover a wide range of endeavors. These targets include reducing GHG emissions, ensuring safety, and increasing the percentage of female managers. As we work toward achieving these goals, signs of a change in employees’ mindsets are beginning to emerge. I can sense a genuine evolution within the Group as a whole.
Review of the Group’s Three Growth Business Domains
Achieved Operating Income in Excess of Plans by Expanding Sales of Major Products
Anticipating an upswing in global demand, Mitsui Chemicals has positioned efforts to establish a stable supply system as an important management issue in the Mobility domain. We have decided to set up a European base for polypropylene (PP) compounds, a mainstay business, and continue to consider on an ongoing basis the options of expanding facilities or establishing new bases for other existing products where increased production is required.
In addition, we acquired ARRK Corporation, a company that boasts unique technologies across such wide-ranging fields as the design, experimental production, and analysis of automobiles. We are also strengthening our ability to provide solutions that address social needs, which include the growing trend toward electric vehicles together with lighter-weight components and parts as well as the creation of comfortable spaces.
In the Health Care domain, our performance has been mixed. On the one hand, we have witnessed steady growth in vision care materials, where we hold a top share in the global market, and such products as the highly functional nonwoven fabrics used in soft premium disposable diapers that offer outstanding comfort. On the other hand, we recognize the urgent challenge and need to address stagnant earnings and persistent harsh conditions in the dental materials field.
Currently, our ICROS™ TAPE, a protective tape used for semiconductor manufacturing and a mainstay earnings pillar, is exhibiting robust results in the Food & Packaging domain. Taking into consideration the strong performance of this product, we are promoting the construction of a new production base in Taiwan. In the agrochemicals field, where we work to support various endeavors including efforts to increase food production, we are partnering with leading agrochemical producers in Europe and the U.S. to promote the development of new insecticides and fungicides. We are looking to bring to the market a string of products around 2020 as the next step toward further growth.
Next Generation and Basic Materials Businesses
We Will Create Next Generation Businesses That Look to the Future While Further Reinforcing the Basic Materials Business
Looking 10 and 20 years into the future, we have positioned the Next Generation Business at the heart of efforts to create new solutions geared toward further growth. Signs that the PV plant diagnosis business, which draws on the Group’s 20-odd year track record of providing encapsulant materials used in solar panels, is contributing to results are beginning to emerge. At the same time, we are working to commercialize our rapid diagnostic system for bacterial identification to help in the treatment of sepsis, an infectious disease with a high mortality rate as well as our iCAST™ advanced cultivation system, which controls the use of water and fertilizer, to help address shortages in the supply of food with a sense of urgency. Both systems are attracting increased demand from society. In addition to open innovation as a matter of course, we are also drawing actively on such alternatives as corporate venture capital (CVC) in efforts to set up new next generation businesses.
To date, we have implemented bold structural reforms in the Basic Materials Business. In addition to providing the materials that form the cornerstone of society and industry, the Basic Materials Business is for all intents and purposes the platform from which Mitsui Chemicals pursues opportunities in each growth business domain. Moving forward, we will work to increase the efficiency of production while at the same time undertaking the necessary investment required to enhance quality in order to strengthen our long-term competitiveness as a chemical company.
Investment Geared Toward Growth
We Will Actively Undertake Investments Geared Toward New Growth
We will take bold steps and actively inject management resources in a bid to secure new growth under the Long-term Business Plan. Plans are in place to undertake growth investments of around ¥1 trillion. This is roughly three-times the amount undertaken over the past decade. Annual investments aimed at strengthening our operating platform and maintaining facilities are budgeted at between ¥30 and ¥35 billion. This recognizes the critical need to enhance the quality of safety. We will also work vigorously to introduce new gas turbines in a bid to realize an in-house power generation system and improve our operations through the use of cutting-edge AI and IoT technologies.
While we acknowledge the importance of strategic M&As as a means to expand each of these businesses, the simple pursuit of expansion does not necessarily ensure sustainable growth. Our goals are to incorporate unique technologies and know-how while at the same time generating synergies with existing businesses. This we believe is the surest route to new growth and the crux of our target M&A strategy.
Developing human resources and investing in R&D are also key to securing sustainable growth on a long-term basis. As far as R&D investment is concerned, we plan to double expenditures in fiscal 2025 compared with the previous Mid-term Business Plan, to ¥70 billion.
Corporate Sustainability Management
We Will Identify Opportunities and Risks from an ESG Perspective while Promoting Our Business Strategies
Sustainability has become a universal keyword since the United Nations identified specific Sustainable Development Goals (SDGs)*. Recently, ESG concerns are attracting increased interest as important criteria for investment.
Based on these societal trends, the manner and degree to which companies are promoting innovation while adopting business models that are capable of properly identifying opportunities and risks as the means to realize sustainable growth in concern with society is being brought into question.
Measures to address climate change and such offshore problems as micro plastics that drift in the ocean pose significant challenges to the chemical industry. In addition to confronting these challenges in a serious manner, we must ask ourselves what solutions chemicals can provide to increase people’s quality of life going forward. Despite the daunting task of coming up with the innovations necessary to realize a sustainable society, we see the road ahead as a major opportunity.
Here, it is vital that the corporate sector take the initiative to properly ascertain all relevant opportunities and risks while identifying the role that it should play through business activities to achieve SDGs and resolve various social challenges from an ESG perspective. As a group that continues to expand its operations globally, this is a critical theme and driving force for ensuring our sustainable growth.
*Sustainability Development Goals (SDGs) :
The 17 Sustainable Development Goals (SDGs) identified in the Transforming Our World: the 2030 Sustainable Development Agenda adopted at the United Nations Sustainable Development Summit in 2015.
Strengthening ESG Initiatives
Establishing the Corporate Sustainability Division Embodies the Group’s Determination to Position ESG Concerns as a Central Feature of Management
Mitsui Chemicals set up the Corporate Sustainability Division in April 2018. The goals are to incorporate ESG concerns into the Group’s management and business strategies while at the same time improving the disclosure of ESG information to stakeholders. In other words, our decision to establish this division reflects our determination to engage in corporate sustainability management with ESG as a central feature.
The Mitsui Chemicals Group has continued to engage in activities in a bid to achieve 13 environmental and social targets set under the Long-term Business Plan. Of these 13 targets, the Group is looking to lift the sales ratios of certified products and services for Blue Value™, representing environmental contribution, and Rose Value™, representing QOL improvement contribution, to 30% respectively in fiscal 2025 and for that purpose we are endeavoring to visualize social value improvements attributable to its business activities. Recognizing the task of resolving long-term social challenges as a business opportunity, we are working diligently to pinpoint what solutions we can provide, deepening our search for business opportunities, and ramping up efforts to expand certified products.
In terms of the governance function, the need to clarify opportunities and risks from an ESG perspective is becoming increasingly important amid the growing trend toward business globalization. In the future, we will engage in lively debate on matters pertaining to corporate sustainability at Board of Directors’ and Group-wide Strategy Committee meetings and reflect all findings in the Group’s management.
In order for employees to share the importance of corporate sustainability and remain acutely aware of social challenges on a daily basis, I feel it is imperative that we change the Group’s mindset from within. As the requirements of society continue to evolve at a rapid pace, management must remain vigilant in order to properly grasp opportunities as they arise and more importantly to share this understanding with employees.
Corporate Sustainability Activities
Incorporate ESG elements in the Group’s management and strategies
- Reflect ESG elements in strategic discussions and management at Board of Directors’ and Group-wide Strategy Committee meetings
- Generate opportunities and advance innovation that involve business as well as R&D operations
Improve the disclosure of ESG information
- Increase appeal to customers as well as investment and corporate sustainability rating agencies
- Deepen ESG dialogue
We Will Work to Ensure Safety and Increase Quality while Fulfilling Our Corporate Social Responsibility
One target under the Long-term Business Plan is to pursue thorough safety, high quality, and fairness across the entire supply chain. I am particularly interested in the need to pursue safety.
From a safety perspective, we must never forget the explosion and fire at our Iwakuni-Ohtake Works in 2012. At every opportunity, I have tried to convey to employees the need to put safety first in everything that we do. Despite these efforts, fires broke out at our Mobara Branch Factory in fiscal 2017 and at our Osaka Works in June 2018. There is no easy path to ensuring safety. Treating these circumstances with the utmost gravity, I believe it is prudent that we review past initiatives and engage in steady and work earnestly to ensure safety.
Looking ahead, we will renew our commitment to ensuring safety and increasing quality across every process along the supply chain. At the same time, we will pursue effective global governance and fulfill our corporate social responsibility.
To Our Stakeholders
We Will Take the Initiative and Spearhead Efforts to Secure the Sustainable Development of Society and the Group
Mirroring the advance of cutting-edge technologies, growing interest and developments in AI and IoT, and the increased use of electric vehicles, society continues to undergo a major change. I am convinced that this period of transformation represents a significant opportunity for the chemical sector. In addition to its role as a cornerstone of industry, the chemistry field has consistently taken the lead in bringing innovation to society. This role remains unchanged irrespective of the era. Established in 1912, Mitsui Chemicals embarked on a number of endeavors. One such endeavor was the manufacture of raw materials for fertilizers, which the Company hoped would help address the shortage of food, a major social challenge of the day. Given the circumstances as they currently stand, I believe the time has once again arrived for the Mitsui Chemicals Group to play a principal role in triggering innovation in order to resolve a host of social challenges.
From a global perspective, the Mitsui Chemicals Group must work to resolve a multitude of social challenges. However, depending on the magnitude of the challenge, one corporate group is limited in its ability to come up with a solution. Rather than focusing on a principle of self-sufficiency, we recognize the important need to utilize open innovation and partner with other industries. At the same time, it is equally important that we properly recognize and build on our strengths.
It goes without saying that human resources are key to driving innovation. With this in mind, the Mitsui Chemicals Group will be required to adopt a spirit of “independence, self-support, and self-motivation” in the age to come. Against this backdrop, it is imperative that each employee fully recognizes his or her relationship with society. Individual employees must adopt a first-person approach and declare for themselves what they can and would like to do. Taking the initiatives in both thought and action, it is vital that the Group’s human resources trigger innovation. Drawing on the collective strengths of employees Group-wide, we must promote further advances in our triple bottom line management that balances economic, environmental, and social concerns while pursuing the sustainable growth of both society and the Group.