A chemical company providing new values

through
g innovative technologies
g

Code: 4114

March
M
h 2012
Investor & Public Relations Dept.

Contents
1. Introduction
1
2. NIPPON SHOKUBAI Who we are
3 Main Business
3.
4. New Business
5 Development of New Technologies
5.
6. Return Policy
Explanation of acronyms
SAP: Superabsorbent Polymers
AA: Acrylic Acid
AES: Acrylates
EO: Ethylene Oxide
EG: Ethylene Glycol
NAII: NA Industries, Inc. (USA)
NSI: [Link] SHOKUBAI INDONESIA (Indonesia)

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

1. Introduction

Age of Functional Chemicals

Japanese
p
Functional Chemicals:
z Hold major share of world market
z Japanese companies hold a far larger share of the global

functional chemicals market than they do the automotive,

electronics, and electronic parts markets.

z Lead the world in innovation

z Advances in functional chemicals brings about innovation at

manufacturers
f t
off assembled
bl d products
d t ((automobiles
t
bil and
d
electronics)

z Support industry and lifestyles worldwide

z Functional chemicals are fundamental materials for all

manufacturing and constitute a vital part of everyday life.

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

1. Introduction

Nippon Shokubai
Nippon
pp Shokubai Products and Technology:
gy
z Hold major share of world market
z Superabsorbent Polymers (SAP): Top share of global market

(more than 25%)

z Acrylic Acid: Nippon Shokubai technology supports approximately
half of the worlds
world s production

z Lead the world in innovation

z The p
permeability
y of SAP helps
p make disposable
p
diapers
p
thinner.
z Electronics and information materials help make displays thinner

and enable high definition properties.

z Support industry and lifestyles worldwide

z Demand in a wide range of sectors stabilizes sales performance.
z High proportion used for manufacturing of daily

necessities, making demand less vulnerable to economic

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

2. NIPPON SHOKUBAI
- Who we are

FY 3/2011
FY 3/2012

Results
Record in income
New record in income

Fully prepared for increase

in demand following
Lehman shock due to timely
increase in capacity
(100 million yen)

(Date)
Feb. 2012
Apr. 2012
Oct. 2012

Ordinary Income

(Product)
Ethylene Oxide
Acrylic Acid
SAP

Growth reflects demand

f
from
emerging markets in
Asia and other regions
(Capacity Increase) (NS Global Capacity)
+70,000 (Kawasaki) 324,000 tons/year
+80,000 (Himeji)
620,000 tons/year
+60,000 (Himeji)
470,000 tons/year

Sales

3,500

350

3,000

300

2,500

250

2,000

200

1,500

150

1,000

100

500

50

0
2005

2006

2007

2008

2009

First half: Price of raw materials surges

Second half: Demand drops sharply
Major loss from revised inventory valuation

Across-the-board cost cutting while

maintaining employment

Increase supported by rise in capital investment

Upturn in product market conditions

2010 2011 (projections)

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

2. NIPPON SHOKUBAI
- Who we are

Raw Materials to Final Product Flowchart -Major

Major Products
Petroleum
Ethylene

Basic chemicals

Ethylene
oxide
Ethylene
glycols

Carboxylic
acid
polymers

Automotive
catalysts

Propylene

Naphtha

Acrylic
A id
Acid
Acrylates

Functional
chemicals
E&I
materials
Process
catalysts

Specialty
acrylates

Polymer
y
for
paints, adhesive
s, and tackifiers

Environment&
catalysts

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

Superabsorbent
polymer

Zirconia
sheet

2. NIPPON SHOKUBAI
- Who we are

Sales Ratio by Business Segment

FY3/2011

Basic chemicals

Functional chemicals

Environment & catalyst

8%
43%
49%
Core business

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

2. NIPPON SHOKUBAI
- Who we are

Established
Common stock
Net sales
Number of employees
Stock listings

Company Outline
August 1941
25,038 million yen
(As of March 31, 2011)
288,345 million yen
(Consolidated Statements, FY3/2011)
3,576
(Consolidated Statements
Statements, FY3/2011)
Tokyo Stock Exchange, First Section
Osaka Securities Exchange,
g , First Section

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

2. NIPPON SHOKUBAI
- Who we are

1941
1943
1949
1959

History

(1) Founding This year marks 71st

anniversary
y
Opened Suita Plant
Renamed Nippon Shokubai Kagaku Kogyo Co., Ltd.
Opened Kawasaki Plant (the present Chidori
Plant of the Kawasaki Plants)

1960

Opened Himeji Plant (the present Himeji Plant)

1967

Opened Kawasaki Second Plant (the present

Ukishima Plant of the Kawasaki Plants)

1988

Established
NAexpansion
Industries, [Link]
in Tennessee,
(5) Global
USA
USA.

1991

Renamed NIPPON SHOKUBAI Co., Ltd.

1996

Established PT. Nisshoku Tripolyta Acrylindo in

Indonesia (the present PT. NIPPON SHOKUBAI
INDONESIA)

1998

Established NIPPON SHOKUBAI ASIA PTE

LTD. in Singapore

1999

Established NIPPON SHOKUBAI EUROPE

N.V. in Belgium

2003

Established NISSHOKU CHEMICAL INDUSTRY

CO., LTD. in China

2004

Established SINGAPORE ACRYLIC PTE LTD. &

SINGAPORE GLACIAL ACRYLIC PTE LTD. in
Singapore

2008

Acquisition of the major shares of NIPPON

NYUKAZAI Co., LTD. and SINO-JAPAN CHEMICAL
Co., Ltd.

<Technological Innovation>
1941

Succeeded
Succeeded in first commercial production of
phthalic anhydride in Japan.

1952

Succeeded in mass production of maleic

anhydride by oxidation of benzol.

1959

(2)EO
-50
50
commercialization
Commercialized
C
i li years
d production
d since
ti off ethylene
th l
oxide
id ffor
the
first timeto
in strategic
Japan with our
own technology.
Added
products

1970

(3) AA/AES -Core products for 40 years

1983

(4) SAP - Primary core products for 30 years

1987

Started production of polymers for concrete

admixture

1997

Started production of dioxins decomposition

catalysts

2000

(6) Electronics
information
Started
production ofand
functional
dyes.

2006

Started
Started production of acrylic resins for optical
materials

business takes root

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

materials

2. NIPPON SHOKUBAI
- Who we are

Management Profile
Masanori Ikeda

President

Graduated 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
p
to contribute to the ongoing
g g success of the company.
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 activities

activities.

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

10

2. NIPPON SHOKUBAI
- Who we are

Long-term Business Plan

Slogan:

TechnoAmenity 2015

Challenge to the future

future, make dreams come true

Corporate Philosophy
Providing affluence and comfort
to people and society,
with our unique technology

Vision

Management Philosophy
z Based upon a deep respect for humanity
z Coexisting with society, and working in harmony
with the environment
z Pursuing innovative technology
z Operating on the global stage

A chemical company providing new values

th
through
h iinnovative
ti ttechnologies
h l i

2010 2015 Six-Year Business Plan

zUndertake steady global expansion of AA/SAP
zImprove profitability of current products (Profitability Improvement Committee)
gy, batteries)) on track
zGet new businesses ((materials for E&I,, new energy,

11

2. NIPPON SHOKUBAI
- Who we are

TechnoAmenity 2015
Vision/Target for
FY2025

Level to attain
in
FY2015

Business Portfolio

B i
Business
P
Portfolio
tf li
E&I
Materials

New
Energy

Current
Business

Health,
Medical

Make one of the

centerpieces
t i
off
profit generation

Fuel cell
materials

Improve
profitability

Medical
materials

Sales
30 billion
billi

Sales
5 billion
billi

Profitability
Improvement
committee

Functional
food
materials

Technology-related
Technology
related green
green chemistry, environmental protection
and evaluation

Now

Catalyst, organic synthesis, polymer composition and production

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

12

2. Main Business

Acrylic acidSuperabsorbent polymer

Propylene

Acrylic acid
Basic chemicals

Functional
F
ti
l
chemicals

Direct acrylic acid sales

Acrylates

Superabsorbent polymer
etc.

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

13

2. Main Business

Global Expansion of SAP

Leading Manufacturer
Worldwide

Superabsorbent
polymer

(SAP) *

Major application: Disposable diapers

*P
Powdered
d d polymer,
l
th
the principal
i i l raw material
t i lb
being
i
acrylic acid. A single gram of this polymer is able to
absorb as much as 1,000 grams of liquid.
14

2. Main Business

Global Expansion of SAP

Much Hoped-for Application: Preventing Desertification

15

2. Main Business

Global Expansion of SAP

Supply
pp y and Demand Trends
zDemand

Strong growth expected in line with economic growth in developing

countries
Global demand: approx. 1.7 million tons (2010 estimate)

7 to 8% annual g
growth
zSupply

Emerging manufacturers, besides current majors, are planning to

enter and expand SAP businsess

Reinforcement of Nippon Shokubai Facilities

October 2010

Himeji: 60,000 t/yearIn operation

June 2012

America: 60,000 t/yearBuild & scrap

August 2013

Indonesia: 90,000 t/yearScheduled

July 2014

China: 30
30,000
000 t/yearScheduled
t/year Scheduled

Progressing as
planned

16

2. Main Business

Global Expansion of SAP

Maintain the TopTop
p-Class Market Share and Ensure Profitability
y
The Basis of Nippon Shokubais SAP Strength
1) R&D strength in products and processes
2) Integrated production from raw materials, AA
3) Stable supply network based on production
facilities in Japan, US, Europe and China
4) Intellectual property strategy to maintain
effectiveness of technology
5) Excellent customers with strong growth
Risks and Countermeasures
1) New entrant products in developing countries gathering strength

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

2) Reduced price competitiveness due to strong yen

Increase production at facilities with less risk from strong yen

17

2. Main Business

Global Expansion of AA Major Applications

Paints (Acrylates)

Diapers (AQUALIC CA)

Adhesives and tackifiers

Printing ink

(Acrylates)

(Acrylates)

Water retaining agent for

horticulture (ACRYHOPE)

Car paints
(Specialty acrylates, specialty methacrylates)

18

2. Main Business

Global Expansion of AA
Supply
pp y and Demand Trends
Global demand approx. 4 million tons (2010 estimate)

5 to 6%
% annual g
growth
Calender year

Demand (A)

Easing of supply and demand

is expected in the mid
mid--term (Kt)
2010

2011

3,960

Annual available supply (B)

Nominal operating rate (A/B)

2012

4,150

5,140
77%

2013

4,340

5,270

4,550

5,850

79%

6,240

74%

73%

Growth based on increased demand

Reinforcement of Nippon Shokubai Facilities
April 2010
August 2013
August
g
2013

Himeji: 80,000 t/yearIn operation

Himeji: 80,000 t/yearScheduled
Indonesia: 80,000 t/yearScheduled
y

Progressing
as planned

The majority of Shokubais expanded AA facilities are used for internal use for SAP production and
external sales to the other SAP producers.
19

2. Main Business

AA/SAP: Global Expansion to End of 2014

AA facilities

(Kt/y)

SAP ffacilities
iliti
(Kt/ )
(Kt/y)
Belgium (Antwerp)

60

China (Zhangjiagang)

540

60

320

Japan (Himeji)

40
Singapore (Jurong Island)

140

60 60
U.S. (Houston)

90

Indonesia (Cilegon)

Production capacity (Kt/y)

Current

End of 2014

AA

620

780

SAP

470

590

2. Main Business

AA/SAP: Our Positioning (End of 2010)

AA Production Capacity

SAP Production Capacity

z Worldwide total: Over 5 million tons

Kt/y

Kt/y

1,500

z Worldwide total: Over 1.7million tons

590Kt/y
(End of 2014)

600
500

780Kt/y

1,000

(End of 2013)

120

400
300

160
500

200

620

470

100
0

0
A

Nippon
Shokubai

Others

Nippon
Shokubai

Others

Nippon Shokubai Estimate

21

2. Main Business

Ethylene Oxide
Ethylene
Ethylene oxide

Direct ethylene oxide sales

Ethylene glycol
Basic
Chemicals

Ethanolamine
Higher
g
alcohols

Functional
Chemicals

Polymers for concrete admixture

etc....
22

2. Main Business

Ethylene Oxide Major Application

Fabric detergents
(Ethylene oxide, Ethanolamine,
SOFTANOL)

PET resins
(Ethylene glycol)

Polyester resins
(Ethylene glycol)

Synthetic detergents
(SOFTANOL)

Polymers for concrete admixture

(AQUALOC)

23

2. Main Business

Ethylene Oxide Business

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

z Non-EG ratio: Keep of over 70%

(Domestic average [including Nippon Shokubai] 50%)

z EO centralization
Expansion of derivatives
1) Expansion of (meta) acrylic acid special ester
October 2013 Kawasaki Plant (new land acquired in 2007) new 20,000 ton/y
facilities on stream
* Meet the growing demand
* Reduction in quantity of EO shipped

2) Expansion of polymer for concrete admixture

April 2012 Kawasaki Plant (existing premises) 16,000 ton/y facilities scheduled

3) Launch of drying shrinkage reducing agent for concrete

Jointly developed with 3 construction majors, with commercial production from
October 2011

Aim for flexible product configuration as a top priority

to improve facility utilization

24

4. New Business

Electronics & Information Materials

A Key
K Source
S
off Revenue
R
z Acrylic resin for optical materials Acryviewa
z Resin: High performance Film: Shipment start from the beginning of

2012

z Spherical fine particles

z Resist polymers
z Product under development:
p
Encapsulating
p
g materials for SiC p
power
devices
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved.

25

4. New Businesses

New Energy Materials

A Next
Next--Generation Core Business
z Materials for fuel cells (zirconia sheets and cells)
z FY3/201 1

Projected to turn profit with twice the shipment

volume of previous fiscal year
z FY3/2016
Long-term sales target: 5 billion yen
z Strength: Molding
M ldi and
d fi
firing
i ttechnologies
h l i cultivate
lti t

through catalyst manufacturing

High quality + mass production

z Expansion of production facility
3 million pieces/year in 2011
z Expansion of sales focusing primarily on Bloom Energy (U
(U.S.)
S)
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved.

26

4. New Business

Battery Materials
z Materials for lithium-ion batteries
Lithium bis(fluorosulfonyl)imide (LiFSI)
z Features:
ea u es

Life extension for lithium-ion batteries

and greatly improved safety

z Strong points:

Established synthesis technology using original

catalysts enabling mass production of high-purity
catalysts,
products cheaply (first in the world)
Ensure production capacity of several hundred tons
per year in 2013

z FY3/2013

Scheduled for launch

z FY3/2016

Aim for sales of 2 billion

z Solid electrolyte polymer for lithium-ion batteries

Aim for early launch
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved.

27

5. Development of
New Technologies

Acrylic Acid Production from Biomass Resources

zNew method: Glycerine method from biomass resources
Glycerine

HO
HO

Dehydrate

OH

Developed highperformance
catalysts!

H2C

H2C
Oxidation

Acrolein

zCurrent method: Propylene oxidation

H 2C

Propylene

CH3

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

OH
O Acrylic acid
Polymerization

SAP,
Adhesives.
Paints
Paints,
etc.
28

6. Return Policy

Dividends Basic Approach

Dividends,
Taking overall account of business expansion and corporate structural
Reinforcement, and based on forecasts of the trend in consolidated earnings,
we are aiming to improve dividend return levels in the medium term

E pansion of In
Expansion
Investment
estment in Core B
Businesses
sinesses

Large Internal Reser

Reserves
es

FY3/2011 dividend

FY3/2012 dividend (forecast)

Net Income 21.1 billion yyen

Net Income 21.5 billion yyen

22 yen/share

22 yen/share

Yen/share
Ordinary
dividend
Commemorative
dividend*

Interim

End of p
period

Total

2 yen/share increase

18

vs. to the previous announcement

1+2

Total

10

12

22

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

FY3/2005-3/2011
7-year average

FY3/2007-3/2011
5-year average

Average payout ratio

25.6

28.5

Average total rate of

return

40.2

37.7

Yen/share

Interim

End of period

Total

Ordinary
dividend

11

11

22

Commemorative
dividend

Total

11

11

22

8 million treasury shares were cancelled.

29

Notes to Readers
This presentation material (the
( the Material)
Material ) aims to provide readers with referential
information, not to solicit investment. The Material contains forward-looking
g
in
statements, and statements of this nature are based on reasonable jjudgments
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-ku

Tokyo 100-0011 Japan
TEL:

+81-3-3506-7477

FAX:

+81-3-3506-7598

URL:

[Link]
30