Noboru Goto, CEO
First of all let me wish you all a very happy new year. I sincerely hope that this would be another year of good health and lots of happiness for all Polyplastics Group employees and their families.
It is the beginning of a new year, and I would like to once again stress to you that human resources are the most fundamental and important business foundation for a company. I would like our company to be a place where each and every group employee, both mentally and physically in good health, can engage in unfettered discussions, enhance each other while respecting others’ autonomy and fully demonstrate their ability individually and as an organization. This is something I think of all the time. We will work harder to nurture our human resources and improve the workplace environment and corporate culture so that you can make the most of your professional and private life and feel the joy and have pride in working as a member of the group.
1. Global situation in 2017
It is undeniable that there is a likelihood of the global situation in 2017 turning out to be a harsh one with twists and turns. Especially, the direction U.S. President-elect Donald Trump will take in policy management and the challenges to the European Union (EU) unity posed by the assault of the rising populist parties in Europe are significant causes of worry related to world politics and economy.
What kind of policy, under the slogan of America First, the next administration of Trump will pursue in reality cannot be predicted at the moment, given the fact that he won the election by promising significant tax cuts, fiscal expansion and anti-immigration measures. I am apprehensive about the widening divide within the U.S. as well as its impact on global politics and economy.
At the same time, EU, which was formed under the philosophy of creating a market economy zone of 500 million people where people, goods and investments go back and forth seamlessly and avoiding relapse into catastrophic warfare, is also facing trials. That is the rise of populist power touting anti-immigrant, anti-globalization and anti-EU slogans. Populism’s influence has been rising around the world, as seen in the U.K.’s vote to exit from EU in June 2016, the rise of the Five Star Movement in Italy that forced Prime Minister Matteo Renzi to step down by calling for voting down the proposed constitutional amendment in voting held in December 2016 and the surge of the Freedom Party of Austria, which, though ultimately lost in the presidential election in December 2016, won almost 50% support by calling for restricting immigration. In 2017, important elections are scheduled in major European countries one after another including the general elections in the Netherland in March, the presidential election of France in April and May and the Bundestag elections in Germany in autumn. It illustrates the present danger of the possibility of far right forces taking the reins of governments in Europe, which cannot be denied. This year the EU member countries have a rocky road ahead, as they are pressed with such internal affairs and the negotiations with the U.K. for its exit from EU, which are expected to start this year. EU continues to smolder as a risk to the global economy also in 2017.
2. Group earnings outlook
In the fiscal year 2016 (ending March 2017), the Group is expected to maintain earnings at levels similar (the first half: a profit increase of 700 million yen; the second half: a decline of 700 million yen) to the previous fiscal year, when it posted record profits, despite the negative impact of the sudden appreciation of the yen. This result was achieved because we were able to expand sales in almost all regions around the world through cooperation of sales, production and engineering divisions, and improve efficiency more than the plan through cost reductions, even as support divisions provided powerful business support. In addition, TAPG, which operates the COC business, and LCPG, which manufactures and markets major LCP monomers, also performed strongly and contributed to the overall earnings of the group. Further, we are expecting operating margin exceeding 10% for three consecutive terms, and here I would like to humbly thank all Group employees for their efforts.
３. Outlook and key tasks for FY2017
Due to factors such as the recent rise in methanol and oil prices driving up the production costs as well as the confusion expected in global politics, economy and finance centered on the U.S. and Europe, which I mentioned at the beginning, FY2017 is again expected to be a tough year. We are currently going ahead with the drafting of the budget for FY2017 as well as the new mid-term business plan starting from FY2017 (2017 – 2019). I will explain the details in the CEO message to be released in March and we are planning to take on the following as key tasks.
1) Build the future foundation by striving together as a company for the development of new businesses.
2) Aim for expansion of the European and American businesses by establishing a business model targeting European and American customers, while consolidating the European management by making TAPG a consolidated subsidiary.
3) Develop the market for high value-added products in China in response to the societal requirements such as high quality and safety reflecting the increasing demand for environmental protection and advancements in technology in the country.
4) Thoroughly follow up the booming markets in India, Vietnam and Philippines and expand into the local markets in other Asian countries including South Korea.
5) Enhance the research and development resources and accelerate the advanced development of high quality, high value-added materials for the future.
6) Improve the cost and quality competitiveness through continuation of safe, steady and high quality plant operations and production technology reforms
7) Bolster the competitive strengths of each business through initiatives such as the smooth transition to PBT new supply system and the developing measures to reinforce the competitiveness of PPS resin.
8) Grow people and organization (nurturing of human resources and building of a easy-to-work and lively workplace environment, which form the business foundation)
Drastic changes to the environment surrounding the business have happened all through the ages, and at times we even experience unbearable pain. Even then, we have overcome numerous difficulties over the years to achieve these splendid results. We might face many difficulties from 2017 also, but I am confident that we will be able to overcome them without fail as long as we have the strong company foundation, superior human resources base and the sound corporate culture that we have built over the years. Let us work together and push forward for the happiness of our employees, satisfaction of our customers and to contribute to the society.
４．To conclude, the potential of our materials and technology to “make people happy”
In the last few years, advanced technologies that could change the world had been commercialized or come close to commercialization through the rapid advances in information and communication technology (ICT). Self-driving cars, charging while driving, virtual reality, augmented reality, 3D printers, drones, cellulose nanofibers, net zero energy houses, support tools for people with disabilities, regenerative medicine, mass customization, elderly protection systems, etc., etc. The list is endless. Use of augmented reality, which became widely known with Pokemon Go, is now not just limited to the gaming field, but expanding into industry, manufacturing and educational systems.
We are in an era which could be termed as a turning point for the world and I feel great happiness and excitement to be able to live and to witness these changes. That may be because the majority of the development and commercialization underway nowadays are not only raising the efficiency of society and business but also realizing a plentiful and convenient to live society by drawing close to the lives of each and every person, while combining the power and goodwill to make people happy. If our materials and technologies also can contribute to cutting-edge technologies that “make people happy,” that would be a wonderful thing. Even in the endeavors that we are currently strengthening, such as the search for new business and expanding the domain of existing business, if we focus on them from the perspective of creating something that would contribute to the building of a rich future society without limiting to business expansion, we would be able to work more happily with more satisfaction.
P-mates editorial team