(Edited from: ‘To our shareholders’ and annual report)
Kuraray is embarking upon a ‘new’ GS-21 medium-term business plan (also known as G-21) that sets out its strategies over the next three years (starting fiscal year, ending March 2007). In the GS-21, it will place considerable importance on concrete action plans that will enable Kuraray to reach commitment targets. Moreover, the plan sets out more ambitious targets, which assume the successful pursuit of new businesses, mergers and acquisitions (M&A), and individual strategic projects.
Previously the company’s M&A initiatives have sought to strengthen the profitability of existing businesses by increasing market share and expanding its operational area by developing downstream businesses. It now believes that it needs to pursue M&A that will supplement management resources for the creation of new businesses as well as midstream and downstream M&A that will accelerate its development activities.
One of its key targets is the IT-related industry, which it says is very fast moving. ‘If we cannot keep up with that pace, we will not deliver results, no matter how much effort or talent we apply. I think it will become ever more important for us to broaden points of contact with the outside to find out where we are lagging behind and where we are making good progress’, says president, Yasuaki Wakui.
Strategies by segment
Chemicals and Resins
Raise profit growth through priority investments underpinned by Kuraray’s proprietary technology, Poval, Eval, and isoprene boasting international competitiveness.
While maintaining competitive advantages based on its global strategies accelerating growth through technological innovation and new product development.
Actively expand new growth fields, such as optical materials.
In the methacrylic resin business, Kuraray will establish a stable earnings structure by launching new products such as high-value-added optical materials as well as reinforcing manufacturing bases in China.
Fibres and Textiles
Establish firm profitability in core materials while strengthening and improving product portfolio.
Kuraray will step up efforts to upgrade technologies, increase production capacity, and invest in innovative processes to consolidate its platform for growth in the Kuralon, Kuralon K-II, and Clarino products.
Respond to market needs.
Reinforce its earnings structure in the mature domestic markets for Kuraflex, Magic Tape, and polyester by developing special products through sophisticated processing technologies.
High-Performance Materials, Medical Products and Others
Actively expand new growth fields through speedy technology innovation for diversified products.
In opto-screens, Genestar, and liquid crystalline polymer film businesses, Kuraray will accelerate technological innovation that reflects customer needs to establish competitive advantages in new growth fields.
Expand by leveraging its strengths as a leading manufacturer of dental materials and activated carbon in the domestic market and developing new products and global businesses.
Implement strict measures to ensure management efficiency in engineering and other related businesses.
In its financial strategy, Kuraray will continue to invest actively, implementing capital expenditure of Yen130bn over three years. Of the Yen100bn for investment in facilities enhancement, it has set aside 40% for growth fields such as optics, automobiles, and energy. Furthermore, it will concentrate investment on the strengthening of its facilities control systems and the securing of safe operations.
With regards to its capital expenditure the company is considering separate strategic investment of Yen200bn for new businesses and M&A in the next three to five years.
Over the three-year period, it will invest Yen50bn in R&D. Previously, it tended to overly disperse resources by investing in wide-ranging peripheral operations and diverse areas. Under GS-21, its strategy is to concentrate resources on the development of highly processed components in such strong-growth fields as optics, automobiles, and energy.
In G-21, including the acquisition of businesses, it undertook capital investments that were higher than net cash and cash equivalents provided by operating activities. Under GS-21, it plans to cover capital needs with net cash and cash equivalents provided by operating activities.
However, it states that it must raise funds externally for new business projects under the GS-21 and strategic investment capital for M&A. Targeting a payout ratio of between 25% and 30%, it aims to enhance the dividends-on-equity ratio through continued dividend increases based on higher return on equity (ROE).
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Financial highlights: Kuraray, year ended 31 March
|
|
2009 |
2008 |
2007 |
2006 |
2005 |
|
Sales (Yen m) |
376,777 |
417,601 |
385,284 |
375,073 |
354,874 |
|
Operating Profit (Yen m) |
29,280 |
48,130 |
40,220 |
38,277 |
33,187 |
|
Net Profit (Yen m) |
12,984 |
25,554 |
22,412 |
21,186 |
18,465 |
|
Total Assets (Yen m) |
471,874 |
490,365 |
508,694 |
481,357 |
454,941 |
|
Number of Employees |
6,861 |
6,770 |
6,812 |
6,842 |
6,919 |
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Kuraray
Company Structure
Kuraray is a Japanese producer of petrochemical intermediates, resins, elastomers, fibres, high performance materials and medical products. It holds strong market positions in polyvinyl alcohol (PVA) resins and films, methacrylic resins, gas barrier resins and styrene elastomers. Kuraray was established in 1926 in Kurashiki City with the objective of commercialising rayon.
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