(Edited from: “To our shareholders” annual report 2009)
Kaneka states that its strategy is aimed at transforming the company into a “New Kaneka”. As a manufacturer of chemical products, Kaneka states that it operates in an environment which has grown “exceedingly challenging”. To keep profitability from worsening it has formulated a new medium-term management plan, ending in fiscal year 2011, to transform Kaneka into a growing company.
The strategy takes a technology oriented approach to achieving substantial growth. It intends to enhance corporate value through operational and personnel advancement. Until now, Kaneka states that it has relied mainly on its own technical developments to create new businesses, nurtured its own set of proprietary businesses and taken a diversified management approach.
However, the rapidly changing economic environment that it now faces dictates the need to transform its business portfolio. Furthermore, creating new businesses is essential to accelerating the company’s growth.
The company recognises that further globalisation is the key to its ability to discover business opportunities in the worldwide marketplace. Consequently, its medium term management plan, covering three years, has three over riding themes.
(1) Enhancing its competitiveness in existing businesses and reconfiguring its business model to be resilient to changes in market prices (transforming the business portfolio).
(2) Basing the development of highly distinctive technologies on market needs and quickly developing these technologies into businesses (transforming research and development).
(3) Training the people who will drive the process of transforming the business portfolio and R&D (transforming human resources).
In line with its business portfolio strategy, it will concentrate resources into the following strategic categories: electronics, functional plastics and life sciences.
Using technology as its key differentiator, it will expand its business in these strategic categories, creating a competitive advantage in specific markets.
Between fiscal years 2011 and 2013, it aims to raise these strategic categories from 35% of net sales to 45%.
In R&D, it aims to reinforce the role of development in its operations. To drive this change, it has established a new business development department. However, rather than relying solely on R&D departments to spur technical development and innovation, it is taking a more holistic technology oriented approach to building the company.
This approach will involve strengthening liaisons among departments and forging alliances with industrial and academic organisations, as well as with other companies. As a result, it will accelerate growth by deploying outside resources.
Transforming R&D in this way will enable Kaneka to create businesses that are closely linked to the marketplace.
Kaneka will transform its business model to ensure competitiveness both technically and in the marketplace, thereby realising its potential in existing businesses. In terms of global development, which has been one of Kaneka’s principal growth strategies, the company will review the management of its US operations and recover its profitability.
To strengthen its business in other regions, it needs to reinforce the supervision and support structure for its overseas operations. As a percentage of net sales, international sales are currently at 37%. The company aims to raise this percentage rapidly to 50%.
To transform its business portfolio in these ways, it will aggressively pursue alliances with outside organisations, as well as merger and acquisition opportunities. It will also endeavour to acquire processing and evaluation technologies to accelerate the commercialisation of these opportunities.
Based on the above strategies, Kaneka is aiming for net sales of Yen600bn and ordinary income of Yen50bn between fiscal years 2011 and 2013.
The company believes that it is operating in a difficult environment, and therefore aims to keep profitability from decreasing and to achieve ongoing growth. On this basis, for fiscal 2009, it forecasts net sales of Yen410bn (up 8.8% from FY 2009), operating profit of Yen13bn (a 71% increase).
“There are currently no signs of a full-scale global economic recovery, but we are focusing all our efforts on putting the brakes on declining profits and turning our performance around to quickly get back on a path of growth through such actions as lowering the break-even point and accelerating the implementation of action plans designed to reform the structure of each business segment,” says president, Kimikazu Sugawara.
In order to do this it will focus on the following medium and long-range management strategies:
(1) The company will continue to invest its management resources intensively in electronics products, life science products and functional plastics as the key strategic fields in which it can capitalise its specialised technologies;
(2) It will focus on areas or items on which, for example, it can expect future growth or have a competitive edge. Furthermore, it will intensively focus corporate resources on core technologies and core businesses;
(3) It will review its business portfolio also from a cash flow standpoint and implement initiatives to strengthen the competitiveness and profitability of each business;
(4) The company will tailor its business portfolio to incorporate the potential growth areas of information and communications, environment and energy, security and safety and health;
(5) It will cultivate and expand its business matrix to encompass business in new domains; and
(6) It will improve the company’s operating base and strengthen integrated business operations in order to achieve business expansion. At the same time, it will also aggressively promote globalisation.
In addition, the company will focus on the following management tasks:
(1) Transform the business structure;
(2) Transform research and development;
(3) Transform human resources;
(4) Enhance corporate soundness;
(5) Strengthen global development; and
(6) Acquire external resources through M&A and alliances.
ICIS Chemical Business magazine has unveiled the ICIS Top 100 Chemical Companies, with rankings based on 2008 sales.
A PDF of the ICIS Top 100 Chemical Companies is available for download on ICIS connect.
See the article and analysis of the ICIS Top 100 on ICIS news.
Financial highlights: Kaneka, year ended 31 March
|
|
2009 |
2008 |
2007 |
2006 |
2005 |
|
Sales (Yen m) |
449,585 |
502,968 |
473,170 |
464,310 |
438,001 |
|
Operating Profit (Yen m) |
7,604 |
35,745 |
36,666 |
-- |
-- |
|
Net Profit (Yen m) |
-1,851 |
18,817 |
18,363 |
24,484 |
24,746 |
|
Total Assets (Yen m) |
418,490 |
452,620 |
467,109 |
453,159 |
397,124 |
|
Number of Employees |
7,321 |
7,498 |
7,430 |
7,306 |
6,649 |
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Kaneka
Company Structure
Kaneka was established in 1949, initially Kaneka’s main products included caustic soda, soap, cosmetics, edible oils and electrical wires. Later the company diversified into polymers, fermentation, biotechnology and electronics, as well as other fields. Business activities now span a broad spectrum of markets ranging from plastics, expandable polystyrene (EPS) resins, chemicals and foodstuffs to pharmaceuticals, medical devices, electrical and electronic materials and synthetic fibres.
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