Sumitomo Chemical Launches New Corporate Business Plan for FY2019 to FY2021 "Change and Innovation 3.0: For a Sustainable Future"

Mar. 12, 2019

Sumitomo Chemical ("the Company") today announced its new Corporate Business Plan for the period from fiscal 2019 to fiscal 2021. Looking ahead to the coming Society 5.0 (Super Smart Society), the Company will enhance efforts to raise productivity significantly through promoting digital innovation. At the same time, the Company will work vigorously to accelerate technological or other innovation to help solve an array of problems facing society, thereby contributing to the realization of a sustainable society. The new Corporate Business Plan carries a slogan "Change and Innovation 3.0: For a Sustainable Future", under which the Company will work through six key management agendas, such as "Accelerate the development of next-generation businesses" and "Improve productivity through digital innovation", to achieve its stated performance targets.

1. Development of Three-Year Corporate Business Plans

2. Basic policy

(1) Accelerate the development of next-generation businesses

For domains of our next-generation business, we have identified four priority areas which are vitally important for solving serious social challenges or improving Quality of Life and at the same time where the best of the Sumitomo Chemical Group's proprietary technologies can be deployed. Those priority areas are Health Care, Reducing Environmental Impact, Food, and Information and Communication Technology (ICT). To further strengthen our own technological capabilities, we will collaborate with startups, academia and others to build an innovation ecosystem so that we can accelerate delivering innovation autonomously and sustainably and creating new businesses.

 

(2) Improve productivity through digital innovation

By the expanded use of AI and IoT, we will realize drastic improvement in efficiency and quality in R&D, manufacturing, supply chain, sales, and indirect jobs. In addition, we will make active use of materials informatics to ensure more speedy, efficient and sophisticated R&D.

 

(3) Further improve business portfolio

We will concentrate management resources on those businesses, as a growth driver, where we can expect sustainable market growth and technology can play a key role as a source of competitiveness.

 

(4) Build a more robust financial structure

We will ensure closer control of costs and assets through more effectively managed operations, such as rationalization, shorter Cash Conversion Cycle (CCC), and business restructuring or withdrawal, while generating cash flow as planned from capital investments and loans hitherto conducted.

 

In addition to the four points above, we will also work to: (5) Employ, develop and leverage human resources for sustainable growth; and (6) Ensure full and strict compliance and maintain safe and stable operations.

3. Performance targets

Performace targets to achieve on a consolidated basis under the new Corporate Business Plan are as follows:

(Billions of yen)

	FY2021 targets	FY2018 forecast
Sales revenue	2,950.0	2,410.0
Core operating income	280.0	220.0
Operating income (IFRS)	260.0	190.0
Net income attributable to owners of the parent	150.0	120.0

* Assumptions for FY2021: Naphtha price: ¥51,000/kl
                                        Exchange rate: ¥110.0/US$

In the medium- to long-term, we aim to achieve stably the following figures of financial
indicators:

	Medium- to long-term targets	FY2021 targets	FY2018 forecast
ROE	10% or higher	13%	12%
ROI	7% or higher	7%	7%
D/E ratio	approx. 0.7 times	0.7 times	0.7 times
Payout ratio	approx. 30%	-	30%
Profit growth*1	7% or higher per year	13% per year*	-

* Compounded annual growth rate of Net income attributable to owners of the parent from FY2015

4. Plans for Investments, R&D Expenditures, etc.

We plan to allocate corporate resources as below for FY2019 to FY2021.

	Capital Expenditures, Investments and Loans	R&D Expenditures
Total amount (Billions of yen)	approx. 700.0	approx. 540.0
Specialty chemicals	approx. 70%	approx. 90%

Cautionary Statement

Statements made in this document with respect to Sumitomo Chemical’s current plans, estimates, strategies and beliefs that are not historical facts are forward-looking statements about the future performance of Sumitomo Chemical. These statements are based on management’s assumptions and beliefs in light of the information currently available to it, and involve risks and uncertainties. The important factors that could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to, general economic conditions in Sumitomo Chemical’s markets; demand for, and competitive pricing pressure on, Sumitomo Chemical’s products in the marketplace; Sumitomo Chemical’s ability to continue to win acceptance for its products in these highly competitive markets; and movements of currency exchange rates.

Contact

Corporate Communications Dept.
27-1, Shinkawa 2-chome, Chuo-ku, Tokyo, 104-8260, Japan
TEL: +81-3-5543-5102 FAX: +81-3-5543-5901