A Review of Fiscal 2023

The previous Medium-term Business Plan started amidst an uncertain outlook due to COVID-19. In Fiscal 2022, the second year of the previous plan, there were a variety of negative factors, including a decrease in automobile production due to a shortage of semiconductors, disruptions in international logistics, and soaring logistics costs. One factor was the sharp rise in raw material prices, which had a particularly large impact on business performance.
This trend continued in Fiscal 2023, and the conditions surrounding our business were extremely challenging. In the first half of Fiscal 2023, this segment was impacted by inventory adjustments due to a sharp drop in demand for consumer devices such as smartphones, PCs, and home appliances, and stagnant housing demand due to soaring prices in Europe. However, in the second half of the period, inventory adjustments for consumer electronics applications were completed and signs of recovery finally appeared, and we were able to capture demand while collaborating with each of our sites. In the aircraft business, we recovered from business stagnation caused by the COVID-19 pandemic, and were able to establish a profit thanks to the acquisition of new projects not only in North America but also at the newly established European bases and the results of rationalization that we have accumulated so far. Although the business profit target set in the Medium-term Business Plan was not achieved, we were able to realize the results of efforts to transform our business portfolio under difficult business conditions.

Business Characteristics/Strengths

• Technical expertise built up as a pioneer in thermosetting resins
• A seamless value chain for resins, molding compounds and molded products
• A global business framework responding to key markets
• Environmentally-friendly technologies and products such as lignin-modified phenolic resins and biomass- based polymers
• Strong connections with supply chains in key industries such as automotive, electronics, and aircraft, and relationships of trust with customers
• Ability to propose solutions in a cross-business manner through One Sumibe Activities

Business Risks and Opportunities

Business Performance (actual results and Medium-term Business Plan targets)

Fiscal 2024 Business Strategy

01. Strengthen the profitability of existing businesses

• Optimize production sites globally
• Convert conventional factories into smart factories to improve human productivity
• Launch of a new line of phenolic molding compounds at our Nantong Plant in China
• Utilize our state-of-the-art smart factory-related know-how globally

02. Portfolio transformation with high value-added products

• Enhanced areas: Expand into mobility (xEV), aircraft applications, heat dissipation materials for power modules in semiconductor-related applications, liquid epoxy resins, polymers for photosensitive materials, etc. (in that order)
• Offer value proposals to customers based on One Sumibe Activities and promote mutual cooperation and trust

03. Adapt to a circular society

• Promote projects to develop chemical recycling technology for thermosetting resins for use in society, aiming for coexistence with plastics through the realization of a circular society

04. Grow the number of SDG-contributing products and provide them with high functionality

• Utilization of the strengths of the seamless value chain for resins, molding compounds, and molded products
• In the area of semiconductors, we will work to extend the life span of thermal management products and improve their thermal efficiency
• For mobility applications, we will make products lightweight and switch from materials that have a high carbon footprint to thermoset molding compounds
• Development of and creation of supply systems for resins and low-VOC products from non-food plants

Products examples in enhanced areas

Environmentally-friendly Product Examples