A chemical company providing new values througggh ... · A chemical company providing new values...

A chemical company providing new valuesthrough innovative technologiesg g

Code: 4114

M h 2012March 2012Investor & Public Relations Dept.

ContentsContents

1 Introduction1. Introduction2. NIPPON SHOKUBAI – Who we are3 Main Business3. Main Business4. New Business5 Development of New Technologies5. Development of New Technologies6. Return Policy

Explanation of acronymsSAP: Superabsorbent PolymersAA: Acrylic AcidAES: Acrylates

Explanation of acronyms

EO: Ethylene OxideEG: Ethylene GlycolNAII: NA Industries, Inc. (USA)NSI: PT.NIPPON SHOKUBAI INDONESIA (Indonesia)

Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved. 2

Age of Functional Chemicals1. Introduction

Age of Functional Chemicals

Japanese Functional Chemicals: Japanese Functional Chemicals:

Hold major share of world marketJapanese companies hold a far larger share of the global

pp

Japanese companies hold a far larger share of the global functional chemicals market than they do the automotive, electronics, and electronic parts markets.

Lead the world in innovationAdvances in functional chemicals brings about innovation at

f t f bl d d t ( t bil dmanufacturers of assembled products (automobiles and electronics)

Support industry and lifestyles worldwideSupport industry and lifestyles worldwideFunctional chemicals are fundamental materials for all manufacturing and constitute a vital part of everyday life.


Nippon Shokubai1. Introduction

Nippon Shokubai

Nippon Shokubai Products and Technology:Nippon Shokubai Products and Technology:pp gypp gyHold major share of world market

Superabsorbent Polymers (SAP): Top share of global marketSuperabsorbent Polymers (SAP): Top share of global market (more than 25%)Acrylic Acid: Nippon Shokubai technology supports approximately half of the world’s productionhalf of the world s production

Lead the world in innovationThe permeability of SAP helps make disposable diapers thinner.p y p p pElectronics and information materials help make displays thinner and enable high definition properties.

Support industry and lifestyles worldwideSupport industry and lifestyles worldwideDemand in a wide range of sectors stabilizes sales performance.High proportion used for manufacturing of daily


necessities, making demand less vulnerable to economic downturn.

Results2. NIPPON SHOKUBAI

- Who we are

Results

FY 3/2011 Record in income Growth reflects demand f

FY 3/2012 New record in income Fully prepared for increase (Date) (Product) (Capacity Increase) (NS Global Capacity)

from emerging markets in Asia and other regions

in demand following Lehman shock due to timely

increase in capacity

(Date) (Product) (Capacity Increase) (NS Global Capacity)Feb. 2012 Ethylene Oxide +70,000 (Kawasaki) 324,000 tons/yearApr. 2012 Acrylic Acid +80,000 (Himeji) 620,000 tons/yearOct. 2012 SAP +60,000 (Himeji) 470,000 tons/year

First half: Price of raw materials surgesSecond half: Demand drops sharply

Major loss from revised inventory valuation

(100 million yen)

300

350

3,000

3,500Ordinary Income Sales

Across-the-board cost cutting while maintaining employment150

200

250

1,500

2,000

2,500

Increase supported by rise in capital investmentUpturn in product market conditions0

50

100

0

500

1,000

Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved.

Upturn in product market conditions

5

002005 2006 2007 2008 2009 2010 2011 (projections)

Raw Materials to Final Product Flowchart Major Products

2. NIPPON SHOKUBAI - Who we are

Raw Materials to Final Product Flowchart -Major Products

Petroleum

Ethylene PropyleneNaphtha

Ethylene Basic chemicals

Acrylic A idoxide

Ethylene glycols

Acrylates

Acid

Carboxylic Superabsorbent Functionalchemicals Polymer for Carboxylic

acid polymers

polymerE&I

materials

ypaints, adhesives, and tackifiersSpecialty

acrylates


Environment& catalysts

Automotive catalysts

Zirconiasheet

Process catalysts

Sales Ratio by Business Segment2. NIPPON SHOKUBAI

- Who we are

Sales Ratio by Business Segment

FY3/2011Basic chemicals Functional chemicalsEnvironment & catalyst

8%

43%

Core business

49%

Core business

Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved.7

Company Outline2. NIPPON SHOKUBAI

- Who we are

Company Outline

Established August 1941Common stock 25,038 million yenCommon stock 25,038 million yen

(As of March 31, 2011)Net sales 288,345 million yen

(Consolidated Statements, FY3/2011)Number of employees 3,576

(Consolidated Statements FY3/2011)(Consolidated Statements, FY3/2011)Stock listings Tokyo Stock Exchange, First Section

Osaka Securities Exchange, First Sectiong ,


History2. NIPPON SHOKUBAI

- Who we are

History

1941 ・Succeeded in first commercial production of19411943 ・Opened Suita Plant

<Technological Innovation> (1) Founding —This year marks 71st

anniversary 1941 Succeeded in first commercial production ofphthalic anhydride in Japan.

1952 ・Succeeded in mass production of maleicanhydride by oxidation of benzol.

C i li d d ti f th l id f

1949 ・Renamed Nippon Shokubai Kagaku Kogyo Co., Ltd.

1959 ・Opened Kawasaki Plant (the present ChidoriPlant of the Kawasaki Plants)

1960

1943 ・Opened Suita Planty

(2)EO 50 years since commercialization1959 ・Commercialized production of ethylene oxide for the first time in Japan with our own technology.

1960 ・Opened Himeji Plant (the present Himeji Plant)

1967 ・Opened Kawasaki Second Plant (the presentUkishima Plant of the Kawasaki Plants)

1988 ・Established NA Industries, Inc. in Tennessee, USA

1970(5) Global expansion begins

(2)EO -50 years since commercializationAdded to strategic products

(3) AA/AES -Core products for 40 yearsUSA.

1991 ・Renamed NIPPON SHOKUBAI Co., Ltd.

1996 ・Established PT. Nisshoku Tripolyta Acrylindo inIndonesia (the present PT. NIPPON SHOKUBAIINDONESIA)

1983 (4) SAP - Primary core products for 30 years

1998 ・Established NIPPON SHOKUBAI ASIA PTE LTD. in Singapore

1999 ・Established NIPPON SHOKUBAI EUROPE N.V. in Belgium

INDONESIA)1987 ・Started production of polymers for concrete

admixture

1997 ・Started production of dioxins decompositioncatalysts

2003 ・Established NISSHOKU CHEMICAL INDUSTRY CO., LTD. in China

catalysts

2000 ・Started production of functional dyes. 2004 ・Established SINGAPORE ACRYLIC PTE LTD. & SINGAPORE GLACIAL ACRYLIC PTE LTD. in

Singapore 2006 ・Started production of acrylic resins for optical

(6) Electronics and information materials business takes root


2008 ・Acquisition of the major shares of NIPPON NYUKAZAI Co., LTD. and SINO-JAPAN CHEMICAL Co., Ltd.

2006 Started production of acrylic resins for optical materials

Management Profile2. NIPPON SHOKUBAI

- Who we are

Management Profile

Masanori Ikeda PresidentMasanori Ikeda PresidentGraduated from Tokyo University, received an MBA from Cornell University.2003: Member of the Board of Directors; 2006: Managing Director; 2009: Senior Managing Director; 2010: Executive Vice President

Led many overseas projects, including NAII. Played an important role in our global expansion.

Primarily engaged in corporate planning. Demonstrated abilities in implementing ERP (integrated enterprise system) and acquiring Nippon Nyukazai, etc. Leveraged extensive experience in general business operations to contribute to the ongoing success of the company.p g g p y

Continuing the present course. Aims to achieve not only the numerical targets of TechnoAmenity 2015, but also the substance.Seeks the full confidence of stakeholders through robust CSR activitiesSeeks the full confidence of stakeholders through robust CSR activities.


Long-term Business Plan TechnoAmenity 20152. NIPPON SHOKUBAI

- Who we are

Long-term Business Plan TechnoAmenity 2015

Slogan: Challenge to the future make dreams come trueSlogan: Challenge to the future make dreams come true

Corporate Philosophy Management Philosophy

Slogan: Challenge to the future, make dreams come true Slogan: Challenge to the future, make dreams come true

Providing affluence and comfort to people and society,

with our unique technology

Based upon a deep respect for humanity Coexisting with society, and working in harmonywith the environment Pursuing innovative technology

with our unique technology Operating on the global stage

A chemical company providing new valuesth h i ti t h l i

A chemical company providing new valuesth h i ti t h l iVision

2010 – 2015 Six-Year Business Plan

through innovative technologiesthrough innovative technologies

Undertake steady global expansion of AA/SAPImprove profitability of current products (Profitability Improvement Committee)Get new businesses (materials for E&I, new energy, batteries) on track

11

( , gy, )

TechnoAmenity 2015 Business Portfolio

2. NIPPON SHOKUBAI - Who we are

TechnoAmenity 2015 Business Portfolio

B i P tf liVision/Target for

FY2025 E&I New Current Health,

Business Portfolio

Materials EnergyCurrent

Business Medical

Make one of the t i f

Fuel cell Improve Medical

Level to attain in

centerpieces of profit generation materials profitability materials

Functional food

materialsSales

¥30 billiSales

¥5 billiProfitability

Improvement

Technology-related ”green” chemistry, environmental protection

FY2015materials¥30 billion ¥5 billion Improvement

committee

Technology related green chemistry, environmental protection and evaluation

Catalyst, organic synthesis, polymer composition and production Now


technologies

Acrylic acid／Superabsorbent polymer

2. Main Business

Acrylic acid／Superabsorbent polymer

PropylenePropylene

Acrylic acid Direct acrylic acid sales

Basic chemicalsAcrylates

F ti lFunctional chemicals

etc….

Superabsorbent polymer


etc….

Global Expansion of SAP2. Main Business

Global Expansion of SAP

Leading Manufacturer Leading Manufacturer WorldwideWorldwide

Superabsorbent

WorldwideWorldwide

Superabsorbent polymer (SAP) *

Major application: Disposable diapers

* P d d l th i i l t i l b i

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* Powdered polymer, the principal raw material being acrylic acid. A single gram of this polymer is able to absorb as much as 1,000 grams of liquid.


Much Hoped-for Application: Preventing Desertification


Much Hoped-for Application: Preventing Desertification

15


Supply and Demand Trends Supply and Demand Trends


pp ypp y

Demand Strong growth expected in line with economic growth in developingcountries

7 to 8% annual growth7 to 8% annual growthGlobal demand: approx. 1.7 million tons (2010 estimate)

ggSupply Emerging manufacturers, besides current majors, are planning to

enter and expand SAP businsess

Reinforcement of Nippon Shokubai FacilitiesOctober 2010 Himeji: 60,000 t/year―In operationJune 2012 America: 60,000 t/year―Build & scrapAugust 2013 Indonesia: 90,000 t/year―ScheduledJuly 2014 China: 30 000 t/year―Scheduled

Progressing as planned

16

July 2014 China: 30,000 t/year Scheduled


Maintain the TopMaintain the Top--Class Market Share and Ensure ProfitabilityClass Market Share and Ensure Profitability


pp yy

The Basis of Nippon Shokubai’s SAP Strength1) R&D strength in products and processes2) Integrated production from raw materials, AA3) Stable supply network based on production

facilities in Japan, US, Europe and China4) Intellectual property strategy to maintain

effectiveness of technology5) Excellent customers with strong growth

Risks and Countermeasures

1) New entrant products in developing countries gathering strength• Differentiation through performance and quality of products• Differentiation through performance and quality of products • General cost reductions through process innovation including AA, production efficiency, and streamlined logistics

• Proper implementation of intellectual property strategy

17

2) Reduced price competitiveness due to strong yen• Increase production at facilities with less risk from strong yen

Global Expansion of AA Major Applications

2. Main Business

Global Expansion of AA Major Applications

Paints (Acrylates) Adhesives and tackifiers

(Acrylates)

Printing ink

(Acrylates)

18

Diapers (AQUALIC CA) Water retaining agent for horticulture (ACRYHOPE)

Car paints

(Specialty acrylates, specialty methacrylates)

Global Expansion of AA2. Main Business

Supply and Demand Trends Supply and Demand Trends

Global Expansion of AA

pp ypp y

5 to 6% annual 5 to 6% annual growthgrowthGlobal demand approx. 4 million tons (2010 estimate)

Easing of supply and demand Easing of supply and demand %% ggCalender year 2010 2011 2012 2013

Demand (A) 3,960 4,150 4,340 4,550

is is expected in the midexpected in the mid--termterm (Kt)

Annual available supply (B) 5,140 5,270 5,850 6,240

Nominal operating rate (A/B) 77% 79% 74% 73%

Reinforcement of Nippon Shokubai Facilities

Growth based on increased demandGrowth based on increased demand

Reinforcement of Nippon Shokubai FacilitiesApril 2010 Himeji: 80,000 t/year－In operationAugust 2013 Himeji: 80,000 t/year－ScheduledAugust 2013 Indonesia: 80,000 t/year－Scheduled

Progressing as planned

19

g y

The majority of Shokubai’s expanded AA facilities are used for internal use for SAP production and external sales to the other SAP producers.

AA/SAP: Global Expansion to End of 20142. Main Business

AA/SAP: Global Expansion to End of 2014AA facilities (Kt/y)

SAP f iliti (Kt/ )

Belgium (Antwerp)

SAP facilities (Kt/y)

60 China (Zhangjiagang)

540 320

60

60 6060

U.S. (Houston)

Singapore (Jurong Island)

Japan (Himeji)40

90140Singapore (Jurong Island)

Indonesia (Cilegon)

90140

Current End of 2014

AA 620 780

Production capacity (Kt/y)

AA 620 780

SAP 470 590

AA/SAP: Our Positioning (End of 2010)

2. Main Business

AA/SAP: Our Positioning (End of 2010)

AA Production Capacity

590Kt/yWorldwide total: Over 5 million tons

Kt/y

SAP Production Capacity

Worldwide total: Over 1.7million tons

1,500

120500

600

Kt/y590Kt/y

(End of 2014)

780Kt/y

Kt/y

160

500

1,000

470

300

400

780Kt/y (End of 2013)

620

0

500 470

0

100

200

0A B Nippon

Shokubai

C D Others0

Nippon

Shokubai

A B C D Others

Nippon Shokubai Estimate

21

Nippon Shokubai Estimate

Ethylene Oxide2. Main Business

Ethylene OxideEthylene

Ethylene oxide Direct ethylene oxide salesEthylene oxide Direct ethylene oxide sales

Ethylene glycolBasic

Chemicals

Ethylene glycol

Ethanolamine

Higher alcohols

FunctionalChemicals

Polymers for concrete admixture

g

22

Chemicalsetc....

Ethylene Oxide Major Application

2. Main Business

Ethylene Oxide Major Application

Fabric detergents Polyester resins Synthetic detergentsFabric detergents(Ethylene oxide, Ethanolamine,

SOFTANOL)

Polyester resins(Ethylene glycol)

Synthetic detergents(SOFTANOL)

PET resins(Ethylene glycol)

Polymers for concrete admixture(AQUALOC)

23

Ethylene Oxide Business

2. Main Business

Ethylene Oxide Business

Establish an Earnings Base That Does Not Depend on the State of the MarketEstablish an Earnings Base That Does Not Depend on the State of the MarketEstablish an Earnings Base That Does Not Depend on the State of the MarketEstablish an Earnings Base That Does Not Depend on the State of the Market

Non-EG ratio: Keep of over 70% (Domestic average [including Nippon Shokubai] 50%)(Domestic average [including Nippon Shokubai] 50%)

EO centralizationExpansion of derivatives

1) Expansion of (meta) acrylic acid special ester1) Expansion of (meta) acrylic acid special esterOctober 2013 Kawasaki Plant (new land acquired in 2007) new 20,000 ton/yfacilities on stream

* Meet the growing demand* Reduction in quantity of EO shipped

2) Expansion of polymer for concrete admixtureApril 2012 Kawasaki Plant (existing premises) 16,000 ton/y facilities scheduled

3) Launch of drying shrinkage reducing agent for concreteJointly developed with 3 construction majors, with commercial production from October 2011

24

Aim for flexible product configuration as a top priority Aim for flexible product configuration as a top priority to improve facility utilizationto improve facility utilization

Electronics & Information Materials4. New Business

Electronics & Information Materials

A K S f RA K S f RAcrylic resin for optical materials “Acryviewa ”

Resin: High performance Film: Shipment start from the beginning of

A Key Source of RevenueA Key Source of Revenue

Resin: High performance Film: Shipment start from the beginning of 2012

Spherical fine particlesSpherical fine particlesResist polymersProduct under development: Encapsulating materials for SiC power


p p g pdevices

25

New Energy Materials4. New Businesses

New Energy Materials

A NextA Next--Generation Core BusinessGeneration Core Business

Materials for fuel cells (zirconia sheets and cells)FY3/201 1 Projected to turn profit with twice the shipment

A NextA Next Generation Core BusinessGeneration Core Business

FY3/201 1 Projected to turn profit with twice the shipment volume of previous fiscal yearFY3/2016 Long-term sales target: 5 billion yenStrength: M ldi d fi i t h l i lti tStrength: Molding and firing technologies cultivate

through catalyst manufacturing

Expansion of production facility

High quality + mass production

Expansion of production facility3 million pieces/year in 2011

Expansion of sales focusing primarily on Bloom Energy (U S )


Expansion of sales focusing primarily on Bloom Energy (U.S.)

26

Battery Materials4. New Business

Battery Materials

Materials for lithium-ion batteriesLithium bis(fluorosulfonyl)imide (LiFSI)

Features: Life extension for lithium-ion batteries ea u esand greatly improved safety

Strong points: Established synthesis technology using original catalysts enabling mass production of high-puritycatalysts, enabling mass production of high-purity products cheaply (first in the world)Ensure production capacity of several hundred tons per year in 2013per year in 2013

FY3/2013 Scheduled for launch FY3/2016 Aim for sales of ¥2 billion

Solid electrolyte polymer for lithium-ion batteries


Aim for early launch27

Acrylic Acid Production from Biomass Resources

5. Development of New Technologies

Acrylic Acid Production from Biomass ResourcesNew method: Glycerine method from biomass resources

OH Glycerine Dehydrate

OH OH

CH2

Acrolein

CH2OH

OAcrylic acid

Developed high-performance

catalysts!Oxidation

OAcrolein OAcrylic acid

Current method: Propylene oxidation

catalysts!

Polymerization

SAP,Adhesives.

Paints

Current method: Propylene oxidation

CH 2Propylene

Oxidation


Paints,etc.C H 3

Oxidation

28

Dividends Basic Approach

6. Return Policy

Dividends, Basic Approach Taking overall account of business expansion and corporate structural Taking overall account of business expansion and corporate structural

E pansion of In estment in Core B sinesses Large Internal Reser es

Reinforcement, and based on forecasts of the trend in consolidated earnings, Reinforcement, and based on forecasts of the trend in consolidated earnings, we are aiming to improve dividend return levels in the medium term we are aiming to improve dividend return levels in the medium term

Expansion of Investment in Core Businesses Large Internal Reserves

FY3/2011 dividendNet Income 21.1 billion yen

FY3/2012 dividend (forecast)Net Income 21.5 billion yeny

22 yen/sharey

22 yen/share

Yen/share Interim End of period Total 2 yen/share increase pOrdinary dividend 9 9 18

Commemorative dividend* 1 1 + 2 4

Total 10 12 22Yen/share Interim End of period Total

Ordinary

vs. to the previous announcement

* 50th anniversary of the Himeji Plant (2 yen) and 70th anniversary of NIPPON SHOKUBAI (2 yen)

%FY3/2005-3/20117-year average

FY3/2007-3/20115-year average

Ordinary dividend 11 11 22

Commemorative dividend - - -

Total 11 11 22

29

Average payout ratio 25.6 28.5Average total rate of

return 40.2 37.7

8 million treasury shares were cancelled.

Notes to Readers

This presentation material (“the Material”) aims to provide readers with referential

Notes to Readers

This presentation material ( the Material ) aims to provide readers with referential

information, not to solicit investment. The Material contains forward-looking

statements, and statements of this nature are based on reasonable judgments in j g

accordance with information currently available. We neither commit to nor guarantee

the contents of the Material. Readers should be aware that actual results and events

might differ substantially from these projections.

IR Contacts:

NIPPON SHOKUBAI CO., LTD. Investor & Public Relations Dept.

Hibiya-Dai Bldg. 1-2-2 Uchisaiwai-cho, Chiyoda-kuTokyo 100-0011 JapanTEL: +81-3-3506-7477FAX: +81-3-3506-7598

30

URL: http://www.shokubai.co.jp

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