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Midterm Management Plan "GS21-SHINKA!" 2nd Stage Rolling Plan



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August 31, 2011
SEKISUI CHEMICAL CO., LTD.

Midterm Management Plan "GS21-SHINKA!" 2nd Stage Rolling Plan

Since FY2009, Sekisui Chemical Corporation (President: Naofumi Negishi) has been promoting its five-year midterm management plan "GS21-SHINKA!", which will terminate in FY2013, across the entire Sekisui Chemical Group. From FY2011, involvement has started with the establishment of a rolling plan for the latter three years (2nd stage) focusing on growth.

Summary of the Rolling Plan (Latter 3 Years)

For the purpose of achieving the "group vision (See Note 1)" that was established simultaneously, the midterm management plan aims as a group for large SHINKA (evolution, deepening and renewing) by advancing growth and reforms in all businesses centered on the seven fields ("Frontier 7 (See Note 2))" that have achieved high growth through the opening of the growth frontiers promoted to date.
During these latter three years, a "change of business model" is planned by further polishing the three SHINKA (Frontier SHINKA, Manufacturing Development SHINKA, and Human Resources SHINKA) to achieve sustainable growth in the face of social convolutions such as changes in the external environment.
Note 1: Group vision: See below.
Note 2: Frontier 7 (F7): Remodeling, pipe rehabilitation, water infrastructure (overseas), functional materials, AT (automotive materials), IT (electronic materials), and MD (medical)

1. Promoting Growth Policies by each of the 3 Portfolio Classifications in 2 Business Areas

As described in the group vision, Sekisui Chemical Group is heading in the direction of two business areas: "Creation of housing/social infrastructure" and "chemical solutions". Consequently, we have classified the work into three: "Basic business", "Frontier 7", and "Next-generation business", and clearly determined the targets for each. (See Fig. 1.)
The rolling plan aims to improve the profitability of the "basic business" and to steadfastly increase profits, and to make "Frontier 7" the global No. 1 with a 60% operating profit, which will become a pillar of company-wide profits. We will take up the challenge of opening up the NEXT Frontier by carefully determining the direction of the "Next-generation business".


Fig 1.

Group Vision

SEKISUI Chemical Group will continue to develop the frontiers of "Creation of Housing/Social Infrastructure" and "Chemical Solutions", utilizing its prominent technology and quality, thereby contributing to people's lives around the world and the global environment.

2. SHINKA (evolution, deepening, and renewing) in the Form Targeted by the "3 SHINKA"

The midterm management plan is involved in growth and reform by adopting as its basic strategy the three SHINKA (Frontier SHINKA, Human Resources SHINKA, and Manufacturing Development SHINKA) in each business to divert to being an "outstanding, high-profit premium company" by achieving the group vision.

1) Frontier SHINKA
Opening the frontier is ongoing by promoting market reforms along the three axes of "global development", "value chain development", and "development of potential segments".

<Global Development>
In the global market, which is the largest frontier, the aim is for overseas sales of 300 billion yen by opening new markets through the cutting-edge products and technologies held by the Sekisui chemical group.

Expanding sales through extending pipe rehabilitation construction partners in the USA and EU
Pursuing medical business synergy in 3-area system(USA/EU/Asia)
Strengthen cost competitiveness by pursuing optimum global allocation in the automotive field

<Value Chain Development>
Expanding business areas into peripheral regions by incorporating both horizontal and vertical contiguous fields such as work development in all processes from preprocessing (planning and diagnosis) to after-processing (fabrication and maintenance) in the owner-based business models for housing and pipe rehabilitation.

Value chain development in the owner-based business models for housing
Establishment of stock business through value chain development (strengthening development of pipe rehabilitation business)
Compounding value chain development in the strategic business field

<Opening New Growth Segments>
Involvement in opening new fields of growth from an awareness of new demands even in mature markets with the keywords "environment", "stock", and "energy".

Expansion of new building share in environmentally advanced housing
Updating social infrastructure and existing structures, and opening demand for earthquake-proofing
Opening of new energy fields such as energy-saving products and housing with built-in solar battery systems

The rolling plan aims to dynamically reform the business model not through independent individual implementation, but by the mutually related promotion of involvement in "global development", "value chain development", and "development of potential segments".


2) Manufacturing Development SHINKA
The aim is to achieve "SHINKA"(deepening) through a strong manufacturing base, and "SHINKA" (renewing) through technical revolution.

Contribution to operating profit compared to FY2010: 20 billion yen (FY2011 to FY2013)
Technical revolution towards attaining more than double the productivity, and half the energy
SHINKA(deepening) for global base strength (safety strength and improvement strength)
3) Human Resources SHINKA
Planning to further strengthen group human resource strength through involvement in revolutionizing human resources, which can achieve the target work format.

Global human resource creation: Human resource training on work experience, expanded use of foreign staff, students who studied abroad, etc.
Creation of human resources who can positively set their own goals and aggressively take on challenges: Deployment of in-house recruitment of human resources and trainees, career support
Thriving of diverse human resources: Global human resources, female, experienced employees

3. Main Planning Values

(Unit: Hundred million)

FY2008
(Actual Results)
FY2010
(Actual Results)
FY2011 FY2013
Amount of Sales 9,342 9,154 9,800 11,200
Housing 4,244 4,186 4,440 5,000
Environment and Lifeline 2,252 1,955 2,060 2,400
High Performance Plastics 2,626 2,816 3,100 3,600
Other 218 196 200 200
Operating Profits 335 493 570 800
Housing 171 243 270 340
Environment and Lifeline 16 15 50 150
High Performance Plastics 157 243 260 360
Other ▲9 ▲9 ▲10 ▲50
(Operating Profits Percentage) 3.6% 5.4% 5.8% 7.1%
Overseas Sales 1,515 1,800 2,000 3,000
(Overseas Sales Percentage) 16.2% 19.7% 20.4% 26.8%

4. Investment

20 billion yen expansion of the investment amount of the latter three years more than the original plan

Investment Amount
(Unit: Hundred million)

09 to 10
(Original Plan)
09 to 10
(Actual Results)
11 to 13
(Original Plan)
11 to 13
(Rolling)
Regular 400 320 600 700
Strategy 500 630 700 800
Total 900 950 1,300 1,500

Investment Target for Latter 3 Years

FY Company Field
11 to 13 Housing Construction of mass production factory in Thailand
UIEP Strengthen the three F7 fields overseas
HPP Strengthen the strategic 3 fields work (AT, IT, and MD) Purchased Suzutora in the IT field

5. Next Generation Business

The aim is to make the following three businesses bloom by incorporating directionality as the NEXT frontier.

(1) Advanced infrastructure solution: Establishment of (target) business model
(2) ES (Energy Solution) chemicals: 10 billion yen (target) sales in FY13
(3) Life science: 3 billion yen (target) sales in FY13

Further, Sekisui Chemical group will aim to expand into business with sales on a scale of 20 billion yen in the next ten financial years.

Core Policies for FY2011

Supporting the reconstruction of the region affected by the Great East Japan Earthquake through business, and strengthening competitiveness by accelerating global development

<Housing Company>

Contributing to Reconstruction of the Region Affected by the Great East Japan Earthquake
Contributing to reconstruction of the disaster zone by supplying high-quality housing that combines high livability with energy saving and high earthquake resistibility.
Advanced Housing
Launch in April of "Smart HEIM", with built-in Home Energy management System as standard. Not only is energy consumption displayed, but also the energy demand and supply status within each household is accumulated and analyzed to supply lifestyles suited to each individual customer. Further, we have also started verification testing for the actual use of household storage batteries.
Expanding Overseas Business (Thailand)
A joint investment of approximately 8 billion yen has been decided with our joint venture partner for genuine development in Thailand.
New construction of mass production plant with an annual production capacity of 1,000 homes.

<Urban Infrastructure and Environmental Products Company>

Contributing to Reconstruction of the Region Affected by the Great East Japan Earthquake
Sekisui Group has launched a disaster area reconstruction project, and in April sent teams for product and technical support for reconstruction, and to gather lifeline information in the areas affected by the Great East Japan Earthquake. We shall continue in the future also to contribute mainly to the provision of water-related infrastructure, such as pipes and joints for utility water, sewage and gas, and pipe rehabilitation methods.
Configuring a System for Comprehensive Renovation Project Orders
Joint venture with Swing Corporation in May. Sekisui Group started joint business and order reception activities to win orders for complex contracting issues in the field of utility water and sewage (contracted issues in which the pipes wand water treatment plants are integrated) both in Japan and other countries.

<High Performance Plastics Company>

Making Inroads into Touch Panel Films for Smartphones and Tablet Terminals
Sekisui made inroads into a new field (configuration materials for large-scale optical applications) by purchasing Suzutora Corporation, which has a hand in the production and sales of ITO films, in April. (From July, the company changed its name to "Sekisui Nano Coat Technology Co., Ltd.") In future, we are also scheduled to develop high-performance films in the field of energy (solar batteries and fuel cells).
Global Allocation and Development of Emerging Markets in the Automotive Field
Configuring the optimum global production and sales system using overseas bases to their maximum, centering on interlayer film for glass. Further, as one volley in strengthening development into emerging markets, we established a joint enterprise in vehicle parts molding in India in August.
Accelerating Overseas Development in the Medical Field
Sekisui Group is earnestly accelerating its global development using overseas bases such as Sekisui Diagnostics, LLC, which was established after purchasing the US test drug Genzyme Corporation.

Press Contact

Sekisui Chemical Co., Ltd.
Corporate Communication Department, Public Relations Group
Fax: +81-3-5521-0510

Disclaimer

This press release may contain forward-looking statements. Such forward-looking statements are based on current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements due to changes in global economic, business, competitive market and regulatory factors.



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