Contact
Sumitomo Chemical Launches New Corporate Business Plan for FY2022 to FY2024
Achieving Growth Driven by Green Transformation, Investing 1.3 Trillion Yen over Three Years
Mar. 3, 2022
Sumitomo Chemical today announced its new Corporate Business Plan for the period from fiscal 2022 to fiscal 2024, expressing a commitment to advance a broadly-defined green transformation (GX) and help resolve major social issues such as carbon neutrality and ecosystem conservation through its business in order to achieve a sustainable society.
Under the new Corporate Business Plan, which carries the slogan "Change and Innovation with the Power of Chemistry," the Company will work on seven key management priorities, including further improving its business portfolio (by strengthening and transforming its businesses), improving its financial strength, accelerating the development of next-generation businesses, and fulfilling obligations and providing contributions toward achieving carbon neutrality, which it has laid out in its basic policy.
The vision represented by the slogan "Change and Innovation with the Power of Chemistry"
1. Basic policy
(1) Further improving the Company’s business portfolio (by strengthening and transforming its businesses)
Sumitomo Chemical will enhance the earning power of its technology-driven businesses while also accelerating its metabolism by transforming its portfolio to advance a broadly-defined GX. To this end, the Company will direct management resources to business areas that need strengthening and transformation, with a particular focus on the reduction of environmental impact in Essential Chemicals & Plastics—the sector created by redefining the Company’s petrochemicals businesses—and semiconductor- and battery material-related businesses in the area of high-performance materials, as well as biotechnology and genomics in life sciences.
(2) Improving the Company’s financial strength
Sumitomo Chemical aims to achieve a D/E ratio of approximately 0.7 times by the end of fiscal 2024, reducing the interest-bearing debt that increased due to substantial investment in life sciences during the previous Corporate Business Plan period by vigorously implementing ROI management and enhancing cash flow generation capabilities. In addition, the Company will make an additional ¥50 billion of asset divestitures and also reduce working capital by ¥50 billion by shortening the cash conversion cycle.
(3) Accelerating the development of next-generation businesses
Sumitomo Chemical will continue to focus on the four key areas of environment, food, healthcare, and ICT, and speed up the development of next-generation businesses in these areas by leveraging its innovation ecosystem, which includes collaborations with startups and academia, while also advancing the reorganization and enhancement of its research functions in Japan.
(4) Fulfilling obligations and providing contributions toward achieving carbon neutrality
Based on the Sumitomo Chemical Group’s grand design to achieve carbon neutrality, announced in December 2021, from the perspective of its obligations, the Company will advance initiatives to reduce its greenhouse gas (GHG) emissions by 50% by 2030 At the same time, from the perspective of contributions, Sumitomo Chemical will work on developing products and technologies that contribute to reducing GHG emissions and implementing them in society, as well as on technology licensing to promote their global deployment. As part of its contributions, the Company has set a new target of achieving revenues of ¥1.2 trillion by fiscal 2030 from the sale of products designated as Sumika Sustainable Solutions*, more than double the amount achieved in fiscal 2021, and is aiming to achieve sales of ¥700 billion for those products by fiscal 2024, the final year of the new Corporate Business Plan. The Company also plans to invest approximately ¥65 billion in R&D and other efforts toward carbon neutrality during the Plan period.
(5) Improving productivity and strengthening our businesses through digital innovation
Sumitomo Chemical will advance in earnest its DX Strategy 2.0, digital transformation initiatives aimed at enhancing business competitiveness, such as strengthening customer connections and improving the level of customer satisfaction. At the same time, the Company will continue and redouble its DX Strategy 1.0 efforts to improve productivity in R&D, manufacturing and other areas, while also launching DX Strategy 3.0 initiatives to develop new business models by leveraging digital technology. In addition, the Company will increase DX staff in its research and development and manufacturing functions to 330 people, and assign additional 250 DX staff members to its business units and corporate functions in order to improve digital transformation literacy across all departments and levels. Approximately ¥70 billion will be invested in DX during the Plan period.
In addition to these five items, Sumitomo Chemical will also work on (6) Employing, developing and leveraging human resources to achieve sustainable growth and (7) Ensuring full and strict compliance and maintaining safe and stable operations.
2. Financial performance targets
Sumitomo Chemical has set consolidated financial performance targets under the new Corporate Business Plan as follows:
(Billions of yen)
| FY2024 targets | FY2021 forecast | |
| Sales revenue | 3,050.0 | 2,710.0 |
|---|---|---|
| Core operating income | 300.0 | 245.0 |
| Operating income (IFRS) | 285.0 | 225.0 |
|
Net income attributable to owners of the parent |
150.0 | 140.0 |
* Assumptions for FY2024: Naphtha price: ¥50,000/kl
Exchange rate: ¥110/US$
In the medium- to long-term, the Company aims to stably achieve the following targets for its financial indicators:
| Medium- to long-term targets | FY2024 targets | FY2021 forecast | |
| ROE | 10% or higher | 11.7% | 13.1% |
|---|---|---|---|
| ROI | 7% or higher | 7.2% | 5.7% |
| D/E ratio | approx. 0.7 times | 0.7 times | 0.8 times |
| Payout ratio | approx. 30% | approx. 30% | 28% |
* Sumika Sustainable Solutions: An initiative launched in 2016 in which Sumitomo Chemical, based on evaluations by outside experts, designates those Group products and technologies that contribute, throughout their lifecycles, to responding to global warming or reducing environment impact, in order to promote their development and spread. As of March 2022, 57 products and technologies have been designated as Sumika Sustainable Solutions.
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 regarding 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
Sumitomo Chemical Co., Ltd.
Corporate Communications Dept.
https://www.sumitomo-chem.co.jp/english/contact/public/