Asahi Glass Co. Ltd.
Annual Report 2015

Plain-text annual report

A G C R e p o r t 2 0 1 5 AGC Report 2015 Main Communication Tools Used to Reach Each of Our Stakeholders Financial Information The AGC Group’s Corporate Vision and Business Activities Non-Financial Information (Sustainability Reporting) For Comprehensive Information Financial Review (PDF file only) Reports the AGC Group’s business outline and financial information including consolidated financial statements AGC Report 2015 (This report) For customers (including general consumers) CSR Website www.agc.com/english/csr/ Provides a comprehensive report on the AGC Group’s efforts to fulfill its social responsibilities. Based on the “core” of G41 1 The 4th edition of the GRI Sustainability Reporting Guidelines CSR Information Supplement (PDF file only) Reports on the AGC Group’s non-financial data and its various CSR policies and organizations for promoting CSR-related activities AGC Website www.agc-group.com/ Provides information about the AGC Group more widely, timely and in more detail For shareholders and investors For CSR-related experts (ESG research agencies, etc.) and other stakeholders with an interest in CSR Scope (cid:127) Reporting Period: Fiscal 2014 (Jan.–Dec. 2014) (cid:127) Primary Notation and Report Targets Used in the Report Some information includes content from both fiscal 2013 and 2015 The AGC Group (cid:127) Organizations Covered in the Report: Asahi Glass and its 194 Same as “Organizations Covered in the Report” mentioned at left. consolidated subsidiaries (Group companies in and outside Japan) The AGC Group (Japan) Group companies in Japan including Asahi Glass Co., Ltd. Asahi Glass/the Company Asahi Glass Co. Ltd. (on an unconsolidated basis) Related Information WEB Articles with this mark have related information on the AGC website (www.agc-group.com/). Date of Publication May 2015 (Last date of publication: May 2014) Regarding Future Assumption, Forecasts and Plans Future perspectives described in this report are based on the latest information available to the AGC Group at the time of editing this report. Nevertheless, please note that results and consequences may vary with fluctuations in the business environment. www.agc.com 1-5-1, Marunouchi, Chiyoda-ku, Tokyo, 100-8405, JAPAN Corporate Communications & Investor Relations Office Tel: +81-3-3218-5603 Fax: +81-3-3218-5390 Printed on paper made with wood from forest thinning.“Morino Chonai Kai” (Forest Neighborhood Association) —Supporting sound forest management. All rights reserved. Unauthorized reproduction of this report is a violation of applicable laws. Introduction Since 1907 For more than a century, the AGC Group has been pursuing its mission and meeting its responsibilities as a world-leading glass manufacturer Glass is indispensable for our daily lives and the evolution and growth of industrialized societies. The Asahi Glass Company was established in 1907 for the purpose of producing flat glass domestically in Japan. Since the company successfully mass produced Japan’s first flat glass in 1909, the AGC Group has built on its history spanning over 100 years and acquired the world’s leading market shares for various products, including architectural glass, processed automotive glass, and glass substrates for liquid-crystal displays. Today, the Group continues to pursue its mission and responsibilities as a world-leading glass manufacturer, aiding society’s progress and contributing to people’s quality of life around the world by providing a stable supply of high-quality glass and chemical materials. History of the AGC Group 1907 1909 The Asahi Glass Company founded in Amagasaki, Hyogo Prefecture The first sheet glass successfully manufactured in Japan using a Belgian-type hand-blowing method 1917 1925 1956 First production of soda ash using the ammonium method at Kitakyushu Plant Shoko Glass Co., Ltd. established in China The Indo-Asahi Glass Co., Ltd. established in India First production of automotive glass begun Glass bulbs for television picture tubes manufactured 1963 1964 1965 1966 1972 1975 1981 Asahi Glass Thailand, Co. established in Thailand Production of caustic soda and chlorine using the electrolysis method begun Research center constructed in Yokohama, Japan Manufacture of sheet glass using the float method begun PT Asahimas Flat Glass Tbk established in Indonesia Production of “AsahiGuard™” fluorinated water and oil repellants begun Belgian glassmaker Glaverbel S.A. and Dutch company MaasGlas B.V. acquired 1985 1991 1992 1995 1996 2000 2002 2006 2007 2010 2011 AP Technoglass Co. established in the United States The Blue Planet Prize created to recognize contributions to the environment by individuals and groups Production of glass substrates for thin-film-transistor liquid-crystal displays (TFT- LCD) begun U.S. glassmaker AFG Industries, Inc. acquired Production of automotive glass in China begun Commercial production of PD200, glass substrates for plasma display panels begun Asahi Glass Fine Techno Taiwan Co., Ltd. established The AGC Group Vision “Look Beyond” formulated The Global In-house Company System introduced Corporate governance reforms implemented AGC Glass Hungary Ltd. established Group brand unified as “AGC” Float glass plant operations in Russia begun “UV Verre Premium™” glass for automotive door windows launched AGC Display Glass (Kunshan) Co., Ltd. established to produce TFT-LCD glass substrates in China “Dragontrail™” specialty glass for chemical strengthening launched 2012 2013 2014 2015 Brand licensing rights for the 2014 FIFA World Cup™ acquired Float glass plant operations in Brazil begun PVC Company of Vietnam acquired Technical center for the chemicals business established in Shanghai, China “AGC plus” management policy implemented Towards the Future Going beyond the past 100 years, creating new value for the future Every member of the AGC Group is striving to create new value for generations to come. With this aim, the AGC Group is looking to go past its fields of technical expertise built up over its history, extending beyond industrial boundaries, national borders, and its own organizational frameworks employed in the past. 1 AGC Report 2015 AGC Report 2015 2 Introduction Since 1907 For more than a century, the AGC Group has been pursuing its mission and meeting its responsibilities as a world-leading glass manufacturer Glass is indispensable for our daily lives and the evolution and growth of industrialized societies. The Asahi Glass Company was established in 1907 for the purpose of producing flat glass domestically in Japan. Since the company successfully mass produced Japan’s first flat glass in 1909, the AGC Group has built on its history spanning over 100 years and acquired the world’s leading market shares for various products, including architectural glass, processed automotive glass, and glass substrates for liquid-crystal displays. Today, the Group continues to pursue its mission and responsibilities as a world-leading glass manufacturer, aiding society’s progress and contributing to people’s quality of life around the world by providing a stable supply of high-quality glass and chemical materials. History of the AGC Group 1907 The Asahi Glass Company founded in Amagasaki, Hyogo Prefecture 1909 The first sheet glass successfully manufactured in Japan using a Belgian-type hand-blowing method 1917 First production of soda ash using the ammonium method at Kitakyushu Plant 1925 1956 Shoko Glass Co., Ltd. established in China The Indo-Asahi Glass Co., Ltd. established in India First production of automotive glass begun Glass bulbs for television picture tubes manufactured 1963 1964 1965 1966 Asahi Glass Thailand, Co. established in Thailand Production of caustic soda and chlorine using the electrolysis method begun Research center constructed in Yokohama, Japan Manufacture of sheet glass using the float 1972 PT Asahimas Flat Glass Tbk established in method begun Indonesia 1975 Production of “AsahiGuard™” fluorinated water and oil repellants begun 1981 Belgian glassmaker Glaverbel S.A. and Dutch company MaasGlas B.V. acquired States and groups LCD) begun 1985 AP Technoglass Co. established in the United 1991 The Blue Planet Prize created to recognize contributions to the environment by individuals Production of glass substrates for thin-film-transistor liquid-crystal displays (TFT- 1992 1995 1996 U.S. glassmaker AFG Industries, Inc. acquired Production of automotive glass in China begun Commercial production of PD200, glass substrates for plasma display panels begun 2000 Asahi Glass Fine Techno Taiwan Co., Ltd. 2002 The AGC Group Vision “Look Beyond” The Global In-house Company System established formulated introduced 2006 2007 2010 Corporate governance reforms implemented AGC Glass Hungary Ltd. established Group brand unified as “AGC” Float glass plant operations in Russia begun “UV Verre Premium™” glass for automotive door windows launched 2011 AGC Display Glass (Kunshan) Co., Ltd. established to produce TFT-LCD glass substrates in China “Dragontrail™” specialty glass for chemical strengthening launched 2012 Brand licensing rights for the 2014 FIFA World Cup™ acquired 2013 2014 Float glass plant operations in Brazil begun PVC Company of Vietnam acquired Technical center for the chemicals business established in Shanghai, China 2015 “AGC plus” management policy implemented Towards the Future Going beyond the past 100 years, creating new value for the future Every member of the AGC Group is striving to create new value for generations to come. With this aim, the AGC Group is looking to go past its fields of technical expertise built up over its history, extending beyond industrial boundaries, national borders, and its own organizational frameworks employed in the past. 1 AGC Report 2015 AGC Report 2015 2 New products New technologies New businesses New value creation The AGC Group’s New Challenges Going beyond technological boundaries to create new value In the past, the AGC Group’s technologies tended to evolve independently as it worked to apply glass technologies to develop glass products, chemical technologies to develop chemical materials and ceramic technologies to develop ceramic products. Now, however, the Group is striving to combine these technol- ogies in order to develop products with higher added value and to open up possibilities for the creation of new markets. p.39 Ceramics processing technologies Nanomaterial technologies Fluorine chemistry Inorganic material chemistry Electrochemistry Polymer materials Ceramics technologies Chemical technologies Glass material design Glass forming technologies Glass manufacturing technologies Glass integration technologies Coating technologies Simulation technologies Glass technologies Engineering technologies The AGC Group’s Competitive Advantages Analysis technologies Process engineering Sensing technologies Production technologies Fundamental technologies Diverse technologies Among the AGC Group’s key competitive advan- tages are its glass, chemical and ceramic material technologies, along with a wide spectrum of pro- duction technologies, including analysis, simula- tion, sensing, processing and engineering tech- nologies. Because very few companies in the world have such highly advanced technologies specifically in the fields of glass, chemicals and ceramics, the AGC Group stands apart from other glass manufacturers. BEYOND TECHNOLOGICAL BOUNDARIES Glass, chemicals and ceramics— Creating new value by combining diverse technologies accumulated and refined over many years The AGC Group possesses a wide spectrum of technologies accumulated over its history and carefully crafted by pioneering employees in the past. Based on material technologies and manufacturing technologies used to commercialize and mass produce those materials, the Group has developed superior products ahead of the times in each of its main technical fields of glass, chemicals, and ceramics, including architectural glass, automotive glass, display device glass and fluoropolymer resin. The AGC Group has also established a production network capable of stably supplying its high-quality products, and has acquired strong market shares globally. The diverse technologies underpinning these products are a source of the Group’s competitive advantages and key assets for ensuring a bright future ahead. Aiming to create new value for a new era, the AGC Group is integrating and combining its diverse technologies. In this manner, the Group is searching for innovative new combinations of material and production technologies as it strives to create all-new value. 3 AGC Report 2015 AGC Report 2015 4 The AGC Group’s New Challenges Going beyond technological boundaries to create new value In the past, the AGC Group’s technologies tended to evolve independently as it worked to apply glass technologies to develop glass products, chemical technologies to develop chemical materials and ceramic technologies to develop ceramic products. Now, however, the Group is striving to combine these technol- ogies in order to develop products with higher added value and to open up possibilities for the creation of new markets. p.39 New products New technologies New businesses New value creation Ceramics processing technologies Nanomaterial technologies Fluorine chemistry Inorganic material chemistry Electrochemistry Polymer materials Ceramics technologies Chemical technologies Glass material design Glass forming technologies Glass manufacturing technologies Glass integration technologies Coating technologies Simulation technologies Glass technologies Engineering technologies The AGC Group’s Competitive Advantages Diverse technologies Among the AGC Group’s key competitive advan- tages are its glass, chemical and ceramic material technologies, along with a wide spectrum of pro- duction technologies, including analysis, simula- tion, sensing, processing and engineering tech- nologies. Because very few companies in the world have such highly advanced technologies specifically in the fields of glass, chemicals and ceramics, the AGC Group stands apart from other glass manufacturers. Analysis technologies Process engineering Sensing technologies Production technologies Fundamental technologies BEYOND TECHNOLOGICAL BOUNDARIES Glass, chemicals and ceramics— Creating new value by combining diverse technologies accumulated and refined over many years The AGC Group possesses a wide spectrum of technologies accumulated over its history and carefully crafted by pioneering employees in the past. Based on material technologies and manufacturing technologies used to commercialize and mass produce those materials, the Group has developed superior products ahead of the times in each of its main technical fields of glass, chemicals, and ceramics, including architectural glass, automotive glass, display device glass and fluoropolymer resin. The AGC Group has also established a production network capable of stably supplying its high-quality products, and has acquired strong market shares globally. The diverse technologies underpinning these products are a source of the Group’s competitive advantages and key assets for ensuring a bright future ahead. Aiming to create new value for a new era, the AGC Group is integrating and combining its diverse technologies. In this manner, the Group is searching for innovative new combinations of material and production technologies as it strives to create all-new value. 3 AGC Report 2015 AGC Report 2015 4 Next-generation mobility Next-generation communication Security and safety Heat management Life sciences New energy and new green Realizing smart communities The AGC Group’s New Challenges Going beyond industrial boundaries to create new value The worldwide trend to make things “smarter” is quickening the pace of collaboration between different industries. Accordingly, the AGC Group is exploring ways to expand the customer base of existing products into different industries, as exemplified by the technologies and products originally designed for specific customers. Also, the Group joins consortiums involved in creating smart communities and products. In this way, the Group is taking on the challenge of value cre- ation by going beyond the boundaries of specific industries. The AGC Group’s Competitive Advantages Diversity of customer relationships Among the AGC Group’s key competitive advan- tages are its relationships with customers from a wide range of industries, built up through its four main businesses of glass, electronics, chemicals and ceramics. The Group recognizes that its part- nerships with leading global players in various industries are vital assets for pursuing its growth strategies going forward. Agrichemicals Pharmaceuticals Life sciences Electronics Optical equipment Displays Automobiles Energy Railway Buildings Aircraft Civil engineering Residences Customers’ industries BEYOND INDUSTRIAL BOUNDARIES Construction, automotive, electronics, ICT and life sciences— Creating “smarter” communities and livelihoods beyond industrial boundaries Through business activities in its four specialty areas of glass, electronics, chemicals and ceramics, the AGC Group is seeking to establish and deepen a diverse business network with customers from a wide range of industries, spanning from construction-related industries (e.g. civil engineering and the construction of buildings and residences) to transport machinery industries (e.g. automotive, aircraft and railway), as well as information- and electronics-related industries (e.g. displays and electronic devices), life science-related industries (e.g. pharmaceuticals and agrichemicals), and energy-related industries (e.g. solar power generation and fuel cells). The AGC Group recognizes that its relationships with members from a broad range of industries are vital assets for its growth going forward. In today’s world, we need to create new value that goes beyond the boundaries of specific industries. One way to accomplish this is to make things “smarter.” Creating smart communities, smart mobility, smart household electronic devices and other items through collaboration between different types of industries will accelerate the creation of new value. The AGC Group will help realize smart communities by promoting such collaboration through the connections it has established in a broad range of industries. 5 AGC Report 2015 AGC Report 2015 6 Next-generation mobility Next-generation communication Security and safety Heat management Life sciences New energy and new green The AGC Group’s New Challenges Going beyond industrial boundaries to create new value The worldwide trend to make things “smarter” is quickening the pace of collaboration between different industries. Accordingly, the AGC Group is exploring ways to expand the customer base of existing products into different industries, as exemplified by the technologies and products originally designed for specific customers. Also, the Group joins consortiums involved in creating smart communities and products. In this way, the Group is taking on the challenge of value cre- ation by going beyond the boundaries of specific industries. Realizing smart communities Agrichemicals Pharmaceuticals Life sciences Electronics Optical equipment Displays Automobiles Energy The AGC Group’s Competitive Advantages Diversity of customer relationships Among the AGC Group’s key competitive advan- tages are its relationships with customers from a wide range of industries, built up through its four main businesses of glass, electronics, chemicals and ceramics. The Group recognizes that its part- nerships with leading global players in various industries are vital assets for pursuing its growth strategies going forward. Railway Buildings Aircraft Civil engineering Residences Customers’ industries BEYOND INDUSTRIAL BOUNDARIES Construction, automotive, electronics, ICT and life sciences— Creating “smarter” communities and livelihoods beyond industrial boundaries Through business activities in its four specialty areas of glass, electronics, chemicals and ceramics, the AGC Group is seeking to establish and deepen a diverse business network with customers from a wide range of industries, spanning from construction-related industries (e.g. civil engineering and the construction of buildings and residences) to transport machinery industries (e.g. automotive, aircraft and railway), as well as information- and electronics-related industries (e.g. displays and electronic devices), life science-related industries (e.g. pharmaceuticals and agrichemicals), and energy-related industries (e.g. solar power generation and fuel cells). The AGC Group recognizes that its relationships with members from a broad range of industries are vital assets for its growth going forward. In today’s world, we need to create new value that goes beyond the boundaries of specific industries. One way to accomplish this is to make things “smarter.” Creating smart communities, smart mobility, smart household electronic devices and other items through collaboration between different types of industries will accelerate the creation of new value. The AGC Group will help realize smart communities by promoting such collaboration through the connections it has established in a broad range of industries. 5 AGC Report 2015 AGC Report 2015 6 Europe Middle East Saudi Arabia Japan and Asia Southeast Asia Vietnam North America Central and South America Mexico The AGC Group’s Competitive Advantages Geographical diversity Against the backdrop of economic globalization, one of the AGC Group’s key competitive advan- tages is its far-reaching global operations based in the three regions of Japan and Asia, Europe and the Americas—further extending into more than 30 countries and regions to date. By lever- aging operations that reach into the world’s major markets, a stream of new business oppor- tunities can be realized The AGC Group’s New Challenges Expanding beyond existing business areas In fast-growing regions, including Southeast Asia and the Central and South Americas, the AGC Group plans to carry out capital investment and bolster its production and supply networks in line with growing demand, especially in its glass and chemicals businesses. The Group also intends to create business opportunities in regions where it has not conducted business before, such as the Middle East BEYOND NATIONAL BORDERS Expanding further while deepening regional ties— Allowing the evolution of a truly global business by providing essential value tailored to the needs of each country and region. The AGC Group’s business has expanded globally according to the unique characteristics of its operations based in the three regions of Japan and Asia, Europe, and the Americas. For example, in its architectural glass and automotive glass businesses, the Group has established product development and production networks in each of these three regions to supply products to markets around the world, allowing it to expand its businesses in line with market demand. Likewise, in its electronics business, which is deeply rooted in customers’ industries in East Asia, the Group has integrated its development, production and supply network in Japan, South Korea, China and Taiwan, and worked closely with customers to expand the business. In the chemicals business, which handles caustic soda, raw materials for vinyl chloride polymers, and other basic materials essential for the development of industry and upkeep of social infrastructure, the Group has strengthened its production and supply network in Southeast Asia, where infrastructure is being constructed at a brisk pace. The AGC Group recognizes that these product development, production and supply networks, tailored to fit the unique characteristics of each of its businesses, are key assets for its growth in the future. With the goal of creating value for a new era, the AGC Group is working to expand operations even more deeply rooted in local communities while exploring opportunities for developing new businesses in the Middle East and other promising regions. 7 AGC Report 2015 AGC Report 2015 8 The AGC Group’s Competitive Advantages Geographical diversity Against the backdrop of economic globalization, one of the AGC Group’s key competitive advan- tages is its far-reaching global operations based in the three regions of Japan and Asia, Europe and the Americas—further extending into more than 30 countries and regions to date. By lever- aging operations that reach into the world’s major markets, a stream of new business oppor- tunities can be realized Europe Middle East Saudi Arabia Japan and Asia Southeast Asia Vietnam North America Central and South America Mexico The AGC Group’s New Challenges Expanding beyond existing business areas In fast-growing regions, including Southeast Asia and the Central and South Americas, the AGC Group plans to carry out capital investment and bolster its production and supply networks in line with growing demand, especially in its glass and chemicals businesses. The Group also intends to create business opportunities in regions where it has not conducted business before, such as the Middle East BEYOND NATIONAL BORDERS Expanding further while deepening regional ties— Allowing the evolution of a truly global business by providing essential value tailored to the needs of each country and region. The AGC Group’s business has expanded globally according to the unique characteristics of its operations based in the three regions of Japan and Asia, Europe, and the Americas. For example, in its architectural glass and automotive glass businesses, the Group has established product development and production networks in each of these three regions to supply products to markets around the world, allowing it to expand its businesses in line with market demand. Likewise, in its electronics business, which is deeply rooted in customers’ industries in East Asia, the Group has integrated its development, production and supply network in Japan, South Korea, China and Taiwan, and worked closely with customers to expand the business. In the chemicals business, which handles caustic soda, raw materials for vinyl chloride polymers, and other basic materials essential for the development of industry and upkeep of social infrastructure, the Group has strengthened its production and supply network in Southeast Asia, where infrastructure is being constructed at a brisk pace. The AGC Group recognizes that these product development, production and supply networks, tailored to fit the unique characteristics of each of its businesses, are key assets for its growth in the future. With the goal of creating value for a new era, the AGC Group is working to expand operations even more deeply rooted in local communities while exploring opportunities for developing new businesses in the Middle East and other promising regions. 7 AGC Report 2015 AGC Report 2015 8 AGC Group Vision Our Mission— We, the AGC Group, “Look Beyond” to make the world a brighter place. We will continuously: Anticipate and envision the future, A Have perspectives beyond our own fields of expertise, A Pursue innovations, not becoming complacent with the status quo. Our Mission Our Shared values We will continue to create value worldwide, demonstrating the vast potential of the Group’s entire organization. Our spirit Our Shared Values Innovation & Operational Excellence (cid:127)We will seek innovations in technology, product and services beyond conventional concepts and frameworks. (cid:127)We will create value directed at our current and potential customer needs, accounting for changes in the business environment and, social and market evolution. (cid:127)We will continuously improve all aspects of our operations striving to achieve benchmark performance. Diversity Environment Integrity (cid:127)We will respect individual diversity of varied capabilities and personalities. (cid:127)We will respect cultural diversity of race, ethnicity, religion, language and nationality. (cid:127)We will respect different perspectives and opinions at all times. (cid:127)We will contribute to creation of a sus- tainable society in harmony with nature as a successful and responsible global citizen. (cid:127)We will strive to ensure and further im- prove occupational health and safety in our working environment. (cid:127)We will build open and fair relationships with all of our stakeholders based on the highest ethical standards. (cid:127)We will comply with all applicable laws and regulations. (cid:127)We will fulfill our contractual and legal responsibilities to achieve customer satisfaction and trust. Our Spirit “Never take the easy way out, but confront difficulties.” The founding spirit of Toshiya Iwasaki, who established Asahi Glass Company in September 1907. 9 AGC Report 2015 AGC Report 2015 Table of Contents Introduction Toward the Future Beyond Technological Boundaries Beyond Industrial Boundaries Beyond National Borders AGC Group Vision Message from the President and CEO Special Feature: Interview with the President and CEO The New Management Policy AGC plus Financial and Non-Financial Highlights Overview of the AGC Group Glass Electronics Chemicals Ceramics/Other Applied Glass Materials Business New Business Creation at the AGC Group Corporate Governance CSR Management Risk Management Compliance Intellectual Property Board of Directors, Corporate Auditors, and Executive Officers 1 2 3 5 7 9 11 13 19 21 23 27 31 33 37 39 45 48 49 49 50 51 From the Editors Published annually, the AGC Report covers the AGC Group’s corporate stance and business activities. In this 2015 edition, the AGC Group has reported on the new management policy and explained the Group’s growth strategies in each of its businesses along with its new business develop- ment plans. For details of financial and non-financial results, the AGC Group invites readers to visit our website. AGC Report 2015 10 AGC Group Vision Our Mission— We will continuously: We, the AGC Group, “Look Beyond” to make the world a brighter place. Anticipate and envision the future, A Have perspectives beyond our own fields of expertise, A Pursue innovations, not becoming complacent with the status quo. Our Mission Our Shared values We will continue to create value worldwide, demonstrating the vast potential of the Group’s Our spirit entire organization. Our Shared Values Innovation & Operational Excellence (cid:127)We will seek innovations in technology, product and services beyond conventional concepts and frameworks. (cid:127)We will create value directed at our current and potential customer needs, accounting for changes in the business environment and, social and market evolution. (cid:127)We will continuously improve all aspects of our operations striving to achieve benchmark performance. Diversity Environment Integrity (cid:127)We will respect individual diversity of (cid:127)We will contribute to creation of a sus- (cid:127)We will build open and fair relationships varied capabilities and personalities. (cid:127)We will respect cultural diversity of race, ethnicity, religion, language and citizen. tainable society in harmony with nature as a successful and responsible global with all of our stakeholders based on the highest ethical standards. nationality. (cid:127)We will respect different perspectives and opinions at all times. (cid:127)We will strive to ensure and further im- prove occupational health and safety in our working environment. (cid:127)We will comply with all applicable laws and regulations. (cid:127)We will fulfill our contractual and legal responsibilities to achieve customer satisfaction and trust. Our Spirit “Never take the easy way out, but confront difficulties.” The founding spirit of Toshiya Iwasaki, who established Asahi Glass Company in September 1907. 9 AGC Report 2015 AGC Report 2015 Table of Contents Introduction Toward the Future Beyond Technological Boundaries Beyond Industrial Boundaries Beyond National Borders AGC Group Vision Message from the President and CEO Special Feature: Interview with the President and CEO The New Management Policy AGC plus Financial and Non-Financial Highlights Overview of the AGC Group Glass Electronics Applied Glass Materials Business Chemicals Ceramics/Other New Business Creation at the AGC Group Corporate Governance CSR Management Risk Management Compliance Intellectual Property Board of Directors, Corporate Auditors, and Executive Officers 1 2 3 5 7 9 11 13 19 21 23 27 31 33 37 39 45 48 49 49 50 51 From the Editors Published annually, the AGC Report covers the AGC Group’s corporate stance and business activities. In this 2015 edition, the AGC Group has reported on the new management policy and explained the Group’s growth strategies in each of its businesses along with its new business develop- ment plans. For details of financial and non-financial results, the AGC Group invites readers to visit our website. AGC Report 2015 10 Message from the President and CEO Based on its diversity, the AGC Group strives as a united team to create value that no other company can offer. Ending December 31, 2015, fiscal 2015 is a critical year for including expertise and technologies in diverse fields such the AGC Group, as it is facing a real test of its ability to end as glass, chemicals, and ceramics, and a global network four consecutive years of declining operating profit. In this covering a wide range of industries, from building materials context, I was appointed as President and Chief Executive and automobiles to electronics. Our employees all over Officer on January 1, 2015, and given the responsibility of the world, with their experience and profound understand- leading over 50,000 members of the AGC Group world- ing of these technologies and markets, are another source wide. Recognizing the importance of my new role, I of the group’s strengths. renewed my determination to bring the Group back on the By making the most of the benefits that come with this growth track by harnessing the skills of all of its members. diversity, we are working to deliver solutions to a broad To achieve this, I intend to return to the basics of our spectrum of industries involved in building materials, vehi- business, work to enhance the Group’s competitive advan- cles, displays, electronic devices, and social infrastructure. tages, and inspire its members to take on the challenge of In this way, we are bringing innovations to society that only creating value that no other company can offer. a glass and material manufacturer can offer. To realize this mission, the AGC Group is striving to create new value by The AGC Group has built up various competitive advan- acting on changing trends in society through the lens of tages through business activities spanning over a century, the market, and seeking out new opportunities for helping The AGC Group’s new management policy The AGC Group adds a “plus” by: (cid:127)Providing safety, security and comfort or to society; (cid:127)Creating new value and functions for customers and business partners and building trust with them; (cid:127)Enhancing job satisfaction among employees; and (cid:127)Increasing the Groups’ corporate value for investors. policy. As we work toward these goals, I ask our stakehold- customers and communities overcome challenges. While promoting this approach, the AGC Group is now pursuing the objectives laid out in our new management policy : to provide safety, security and comfort to society, create new value and functions for customers and business partners while building relations of trust, enhance job satisfaction among employees, and increase corporate value for investors. This policy reflects the Group’s commitment to all of its stakeholders, and I will consider and take every step needed to realize the objectives of the ers for their understanding and support. Takuya Shimamura Representative Director, President and Chief Executive Officer Takuya Shimamura Representative Director, President and Chief Executive Officer Apr. 1980 Jan. 2009 Jan. 2010 Jan. 2013 Jan. 2015 Mar. 2015 Joined Asahi Glass Executive Officer and GM of Planning & Coordination Office, Chemicals Company Executive Officer and Chemicals Company President Senior Executive Officer and Electronics Company President President & CEO Representative Director and President & CEO (Incumbent) 11 AGC Report 2015 AGC Report 2015 12 Message from the President and CEO Based on its diversity, the AGC Group strives as a united team to create value that no other company can offer. Ending December 31, 2015, fiscal 2015 is a critical year for the AGC Group, as it is facing a real test of its ability to end four consecutive years of declining operating profit. In this context, I was appointed as President and Chief Executive Officer on January 1, 2015, and given the responsibility of leading over 50,000 members of the AGC Group world- wide. Recognizing the importance of my new role, I renewed my determination to bring the Group back on the growth track by harnessing the skills of all of its members. To achieve this, I intend to return to the basics of our business, work to enhance the Group’s competitive advan- tages, and inspire its members to take on the challenge of creating value that no other company can offer. The AGC Group has built up various competitive advan- tages through business activities spanning over a century, The AGC Group’s new management policy The AGC Group adds a “plus” by: (cid:127)Providing safety, security and comfort or to society; (cid:127)Creating new value and functions for customers and business partners and building trust with them; (cid:127)Enhancing job satisfaction among employees; and (cid:127)Increasing the Groups’ corporate value for investors. including expertise and technologies in diverse fields such as glass, chemicals, and ceramics, and a global network covering a wide range of industries, from building materials and automobiles to electronics. Our employees all over the world, with their experience and profound understand- ing of these technologies and markets, are another source of the group’s strengths. By making the most of the benefits that come with this diversity, we are working to deliver solutions to a broad spectrum of industries involved in building materials, vehi- cles, displays, electronic devices, and social infrastructure. In this way, we are bringing innovations to society that only a glass and material manufacturer can offer. To realize this mission, the AGC Group is striving to create new value by acting on changing trends in society through the lens of the market, and seeking out new opportunities for helping customers and communities overcome challenges. While promoting this approach, the AGC Group is now pursuing the objectives laid out in our new management policy : to provide safety, security and comfort to society, create new value and functions for customers and business partners while building relations of trust, enhance job satisfaction among employees, and increase corporate value for investors. This policy reflects the Group’s commitment to all of its stakeholders, and I will consider and take every step needed to realize the objectives of the policy. As we work toward these goals, I ask our stakehold- ers for their understanding and support. Takuya Shimamura Representative Director, President and Chief Executive Officer Takuya Shimamura Representative Director, President and Chief Executive Officer Apr. 1980 Joined Asahi Glass Jan. 2009 Executive Officer and GM of Planning & Coordination Office, Chemicals Company Jan. 2010 Executive Officer and Chemicals Company President Jan. 2013 Senior Executive Officer and Electronics Company President Jan. 2015 President & CEO Mar. 2015 Representative Director and President & CEO (Incumbent) 11 AGC Report 2015 AGC Report 2015 12 Special Feature Interview with the President and CEO Takuya Shimamura Representative Director, President and Chief Executive Officer The New Management Policy : We will offer “plus” value to stakeholders while bringing the AGC Group back on the growth track. 13 AGC Report 2015 Q1 A1 Could you describe the AGC Group’s performance in fiscal 2014? Despite our efforts to restructure businesses and improve the AGC Group’s financial structure, results were disappointing as operating profit declined for the fourth consecutive year. In fiscal 2014, we worked toward two goals under our medi- um-term management plan “ -2015” : to bring our business back on an upward trend, and to strengthen and generate substantial results from the Group’s growth foundations. Accordingly, we focused on business restruc- turing while trying to improve the Group’s financial struc- ture, including raising productivity group-wide, making projects more efficient, and enhancing the organization of human resources. Operating profit, however, decreased 17.8 billion yen, or 22.2%, compared to the previous fiscal year, amounting to 62.1 billion yen, mainly owing to declining sales prices of LCD glass substrates. Consequently, operating profit decreased for the fourth consecutive year, from fiscal 2011 to fiscal 2014, which is a very disappointing result. Meanwhile, net income attribut- able to the owners of the parent company decreased about 0.2 billion yen, or 1.4%, to 15.9 billion yen. Q2 A2 What was achieved under the medium-term management plan, “ -2015” “ -2015” , and what is your outlook going forward? We carried out investments under “ -2015” that should lead to major financial results from fiscal 2016, bringing us back on the growth track. As a result of these efforts, as well as increased shipments of We undertook investments aimed at building foundations for chemical products and glass products, especially automotive growth in such areas as fast-growing countries, new products, glass, and the depreciation of the yen, net sales in fiscal 2014 and our chemicals business, and expect these initiatives to bring rose 28.3 billion yen, or 2.1%, year on year to 1,348.3 billion yen. about considerable growth in sales and profits from fiscal 2016. Management policy “ Grow Beyond ” New management policy “ ” 1,600.0 Management targets 229.2 1,444.3 1,148.2 1,288.9 1,214.7 1,190.0 154.0 165.7 1,320.0 1,348.3 1,420.0 101.8 79.9 86.7 62.1 62.0 100.0 2010 2011 2012 2013 2014 2015 (Forecast) 2016 2017 for 2017 Net sales ¥1.6 trillion Operating profit More than ¥100 billion ROE At least 5% Debt to equity ratio No more than 0.5 AGC Report 2015 14 dows, which significantly block ultraviolet and infrared rays, and Leoflex™ chemically strengthened specialty glass, a multi-pur- pose product that we promoted as a cover glass for photovol- taic panels. This year, we began supplying HFO-1234yf auto- motive refrigerant, an environmentally friendly product that has a global warming potential (GWP) of no more than 1/1,300 that of conventional refrigerants. In the Group’s Chemicals operations, to keep up with grow- ing demand in Southeast Asia, we increased production capac- ity of caustic soda in Indonesia in 2013 and acquired a polyvinyl chloride company in Vietnam, a new market for the AGC Group. Furthermore, we boosted production capacity of pharmaceuti- cal and agrochemical intermediates and active ingredients, In the Group’s LCD display glass business, after prices fell To achieve this, we rallied the AGC Group’s employees steeply over four consecutive years, they are projected to fall worldwide to move forward in the same direction, side by at a comparably more moderate rate in fiscal 2015. In this side, so the Group can take on challenges as a unified team, business, we intend to step up marketing efforts in China, a drawing on the strengths of its wide range of technologies market that continues to grow, as well as boost productivity and the expertise of its diverse human resources. At the same by converting to more efficient glass furnaces, and imple- time, we renewed our commitment to ensuring fair and ment measures to reduce costs. proper conduct, safety, and compliance as the basic princi- Taking all of these factors into account, we expect the ples of our business activities. decline in consolidated operating profit to end in fiscal 2015, In accordance with this approach under , we and the AGC Group to get back on the growth track from fiscal have determined two key strategies for increasing corpo- 2016 onward. rate value and generating new growth: we will leverage the Group’s diverse resources with a stronger focus on markets to drive up sales, and enhance the Group’s asset perfor- mance by strategically allocating operational resources. During the period of the previous medium-term manage- having carefully considered related trends such as the global ment plan, we made important invest- aging of populations and growing demand for food supplies. ments in fast-growing countries. The company constructed its Under , we improved the Group’s mar- third plant in China, which started operations in February 2015, keting capabilities and reduced costs through various struc- boosting production capacity to meet robust demand from tural reforms, particularly in response to harsh market condi- automobile manufacturers in the Chinese market. In the Group’s tions surrounding the architectural glass business in Europe electronics business in China, we added a new production line and the United States. In Europe, we reduced personnel and at the Shenzhen Plant. Meanwhile, to strengthen operations in lowered production capacity by suspending glass production the growth market of Southeast Asia, we invested in a new float in Italy and Belgium, and in the U.S., we sold off an architectural glass furnace facility in Indonesia in September 2014, and plan to glass fabrication subsidiary. commence mass production there from the third quarter of Owing to these measures, earnings in the glass business fiscal 2016 (see chart below). significantly improved in fiscal 2014 compared to the previous was launched as our new management policy when I was appointed as AGC Group’s CEO. We created the policy with the intention of being a group of companies that constantly offers more value to its stakeholders, namely the We were also successful in developing product applications fiscal year, and we succeeded in making the business profit- communities we operate in, our customers, business partners, The AGC Group’s strengths are its diverse products in three by investing in new products. These included UV Verre able. We also expect its performance to continue improving in employees, shareholders, and investors. That is the kind of domains of materials—glass, chemicals, and ceramics—along Premium™ tempered glass for automotive front door win- fiscal 2015 as a result of structural reforms and other measures. enterprise we want the AGC Group to be. with a wide range of related technologies, expertise, and facili- tions, which we will do by effectively marketing our products. For example, in our automotive glass business, we will pro- mote glass that helps conserve energy and improve comfort, and in our chemical products business, we will offer environ- mentally friendly refrigerants. Our third approach is to secure new markets and applications for new products, technologies and services. We are giving more priority to the first two approaches I mentioned because our priority right now is to return to the growth track. At the same time, in order to grow over the medium and long terms, we are working to create new products and conduct R&D with a view to solve problems confronting customers and societies. Through the measures I have described above, we are aiming has been producing products and technologies that are to achieve several important management targets by fiscal needed by society and that have helped solve problems con- Over a history extending more than a century, the AGC Group ties. The Group also has a diverse customer base and sales As we work to boost sales, we are also constantly aware of 2017: net sales of ¥1.6 trillion, operating profit of ¥100 billion, fronting communities at various times. The Group has been channels that span globally in numerous industries, including enhancing asset performance. Therefore, in an effort to maxi- return on equity of at least 5%, and a debt to equity ratio of no manufacturing products that, although not easily noticeable, building materials, automobiles, and electronics. Handling all mize earnings, we are swiftly channeling operational resources more than 0.5. are indispensable and beneficial. Furthermore, while growing in of this are the Group’s diverse human resources working in into products and businesses that we deem as having poten- There is the possibility, however, that business risks could tandem with the development of society, the AGC Group has every region of the world. By making the most of these intellec- tial for high earnings and growth from among the wide range materialize as a result of future trends in our operating envi- been helping make communities more sustainable through its tual assets, production resources, and human resources while of products and operations positioned in the AGC Group’s ronment. While preparing for such risks, we intend to swiftly business activities. leveraging synergies between each of its businesses, the AGC business portfolio (see chart below). carry out whatever additional initiatives are necessary to Based on this corporate stance, we are working to help solve Group can increase its net sales. Up until now, the Group has been able to manufacture and achieve the management targets above, including further global environmental problems. Toward this end, we have set We have devised three main approaches for expanding supply products by constructing its own production plants in business restructuring, more investment in growth areas, the goal of reducing the AGC Group’s total annual CO2 emis- sales (shown on the chart on page 16). The first is to secure regions where there was demand for those products. With a mergers and acquisitions, and business alliances. sions by six times by 2020 through its energy-saving and ener- new markets and applications for our existing products, tech- view to improve asset performance, however, we plan to move Furthermore, between 2015 and 2017, we will aim to keep gy-creating products, and have stepped up efforts to develop nologies and services. To do this, we plan to proactively culti- beyond this model of self-sufficient in-house production in the capital expenditures from exceeding 400 billion yen, which is products that have less impact on the environment, such as vate markets, particularly in fast-growing countries, by pro- future, shifting toward jointly managed production with the estimated amount of depreciation expenses during that energy-saving glass. We are developing glass and materials that moting product applications and marketing. regional business partners, establishing joint ventures, and period. In consideration of asset efficiency, we plan to chan- have potential to not only solve environmental and energy-re- Our second approach is to offer new products, technolo- other similar measures. This plan will enable the AGC Group to nel capital expenditures into growth areas, with about 35% of lated problems, but also various other issues confronting our gies and services in existing markets and for current applica- more rapidly respond to market changes and boost its sales. the total earmarked for the Group’s glass segment and elec- customers and communities. At the same time, we are focusing tronics segment, respectively, and the remaining 30% for on creating new solutions for helping realize smart communities chemicals segment (see chart below). where people can live in comfort, security and safety (see pages Of course, we will work diligently to return profits to share- 39 to 44 for more details). holders according to our basic policy of maintaining stable Finally, we intend to channel the capabilities of the AGC dividend payments. The company’s dividend payout ratio is Group into a wide array of initiatives intended to accomplish 30%, and we will continue to aim for that level after taking into our management targets by fiscal 2017 and achieve continu- consideration financial results, future investment plans, and ous growth together with stakeholders. other factors. Net salesBillion yenOperating profit20082009Special Feature Interview with the President and CEO Q1 A1 Could you describe the AGC Group’s performance in fiscal 2014? Despite our efforts to restructure businesses and improve the AGC Group’s financial structure, results were disappointing as operating profit declined for the fourth consecutive year. “ -2015” In fiscal 2014, we worked toward two goals under our medi- um-term management plan : to bring our business back on an upward trend, and to strengthen and generate substantial results from the Group’s growth foundations. Accordingly, we focused on business restruc- turing while trying to improve the Group’s financial struc- ture, including raising productivity group-wide, making projects more efficient, and enhancing the organization of human resources. As a result of these efforts, as well as increased shipments of chemical products and glass products, especially automotive glass, and the depreciation of the yen, net sales in fiscal 2014 rose 28.3 billion yen, or 2.1%, year on year to 1,348.3 billion yen. Takuya Shimamura Representative Director, President and Chief Executive Officer Operating profit, however, decreased 17.8 billion yen, or 22.2%, compared to the previous fiscal year, amounting to 62.1 billion yen, mainly owing to declining sales prices of LCD glass substrates. Consequently, operating profit decreased for the fourth consecutive year, from fiscal 2011 to fiscal 2014, which is a very disappointing result. Meanwhile, net income attribut- able to the owners of the parent company decreased about 0.2 billion yen, or 1.4%, to 15.9 billion yen. Q2 What was achieved under the medium-term management plan, , and what is your outlook going forward? “ -2015” “ -2015” A2 We carried out investments under “ -2015” that should lead to major financial results from fiscal 2016, bringing us back on the growth track. We undertook investments aimed at building foundations for growth in such areas as fast-growing countries, new products, and our chemicals business, and expect these initiatives to bring about considerable growth in sales and profits from fiscal 2016. Management policy “ Grow Beyond ” New management policy “ ” The New Management Policy : We will offer “plus” value to stakeholders while bringing the AGC Group back on the growth track. 229.2 1,444.3 1,148.2 1,288.9 1,214.7 165.7 1,190.0 154.0 1,320.0 1,348.3 1,420.0 1,600.0 Management targets for 2017 13 AGC Report 2015 101.8 79.9 86.7 62.1 62.0 100.0 2010 2011 2012 2013 2014 2015 (Forecast) 2016 2017 Net sales ¥1.6 trillion Operating profit More than ¥100 billion ROE At least 5% Debt to equity ratio No more than 0.5 AGC Report 2015 14 dows, which significantly block ultraviolet and infrared rays, and Leoflex™ chemically strengthened specialty glass, a multi-pur- pose product that we promoted as a cover glass for photovol- taic panels. This year, we began supplying HFO-1234yf auto- motive refrigerant, an environmentally friendly product that has a global warming potential (GWP) of no more than 1/1,300 that of conventional refrigerants. In the Group’s Chemicals operations, to keep up with grow- ing demand in Southeast Asia, we increased production capac- ity of caustic soda in Indonesia in 2013 and acquired a polyvinyl chloride company in Vietnam, a new market for the AGC Group. Furthermore, we boosted production capacity of pharmaceuti- cal and agrochemical intermediates and active ingredients, In the Group’s LCD display glass business, after prices fell To achieve this, we rallied the AGC Group’s employees steeply over four consecutive years, they are projected to fall worldwide to move forward in the same direction, side by at a comparably more moderate rate in fiscal 2015. In this side, so the Group can take on challenges as a unified team, business, we intend to step up marketing efforts in China, a drawing on the strengths of its wide range of technologies market that continues to grow, as well as boost productivity and the expertise of its diverse human resources. At the same by converting to more efficient glass furnaces, and imple- time, we renewed our commitment to ensuring fair and ment measures to reduce costs. proper conduct, safety, and compliance as the basic princi- Taking all of these factors into account, we expect the ples of our business activities. decline in consolidated operating profit to end in fiscal 2015, In accordance with this approach under , we and the AGC Group to get back on the growth track from fiscal have determined two key strategies for increasing corpo- 2016 onward. rate value and generating new growth: we will leverage the Group’s diverse resources with a stronger focus on markets to drive up sales, and enhance the Group’s asset perfor- mance by strategically allocating operational resources. During the period of the previous medium-term manage- having carefully considered related trends such as the global ment plan, we made important invest- aging of populations and growing demand for food supplies. ments in fast-growing countries. The company constructed its Under , we improved the Group’s mar- third plant in China, which started operations in February 2015, keting capabilities and reduced costs through various struc- boosting production capacity to meet robust demand from tural reforms, particularly in response to harsh market condi- automobile manufacturers in the Chinese market. In the Group’s tions surrounding the architectural glass business in Europe electronics business in China, we added a new production line and the United States. In Europe, we reduced personnel and at the Shenzhen Plant. Meanwhile, to strengthen operations in lowered production capacity by suspending glass production the growth market of Southeast Asia, we invested in a new float in Italy and Belgium, and in the U.S., we sold off an architectural glass furnace facility in Indonesia in September 2014, and plan to glass fabrication subsidiary. commence mass production there from the third quarter of Owing to these measures, earnings in the glass business fiscal 2016 (see chart below). significantly improved in fiscal 2014 compared to the previous was launched as our new management policy when I was appointed as AGC Group’s CEO. We created the policy with the intention of being a group of companies that constantly offers more value to its stakeholders, namely the We were also successful in developing product applications fiscal year, and we succeeded in making the business profit- communities we operate in, our customers, business partners, The AGC Group’s strengths are its diverse products in three by investing in new products. These included UV Verre able. We also expect its performance to continue improving in employees, shareholders, and investors. That is the kind of domains of materials—glass, chemicals, and ceramics—along Premium™ tempered glass for automotive front door win- fiscal 2015 as a result of structural reforms and other measures. enterprise we want the AGC Group to be. with a wide range of related technologies, expertise, and facili- tions, which we will do by effectively marketing our products. For example, in our automotive glass business, we will pro- mote glass that helps conserve energy and improve comfort, and in our chemical products business, we will offer environ- mentally friendly refrigerants. Our third approach is to secure new markets and applications for new products, technologies and services. We are giving more priority to the first two approaches I mentioned because our priority right now is to return to the growth track. At the same time, in order to grow over the medium and long terms, we are working to create new products and conduct R&D with a view to solve problems confronting customers and societies. Through the measures I have described above, we are aiming has been producing products and technologies that are to achieve several important management targets by fiscal needed by society and that have helped solve problems con- Over a history extending more than a century, the AGC Group ties. The Group also has a diverse customer base and sales As we work to boost sales, we are also constantly aware of 2017: net sales of ¥1.6 trillion, operating profit of ¥100 billion, fronting communities at various times. The Group has been channels that span globally in numerous industries, including enhancing asset performance. Therefore, in an effort to maxi- return on equity of at least 5%, and a debt to equity ratio of no manufacturing products that, although not easily noticeable, building materials, automobiles, and electronics. Handling all mize earnings, we are swiftly channeling operational resources more than 0.5. are indispensable and beneficial. Furthermore, while growing in of this are the Group’s diverse human resources working in into products and businesses that we deem as having poten- There is the possibility, however, that business risks could tandem with the development of society, the AGC Group has every region of the world. By making the most of these intellec- tial for high earnings and growth from among the wide range materialize as a result of future trends in our operating envi- been helping make communities more sustainable through its tual assets, production resources, and human resources while of products and operations positioned in the AGC Group’s ronment. While preparing for such risks, we intend to swiftly business activities. leveraging synergies between each of its businesses, the AGC business portfolio (see chart below). carry out whatever additional initiatives are necessary to Based on this corporate stance, we are working to help solve Group can increase its net sales. Up until now, the Group has been able to manufacture and achieve the management targets above, including further global environmental problems. Toward this end, we have set We have devised three main approaches for expanding supply products by constructing its own production plants in business restructuring, more investment in growth areas, the goal of reducing the AGC Group’s total annual CO2 emis- sales (shown on the chart on page 16). The first is to secure regions where there was demand for those products. With a mergers and acquisitions, and business alliances. sions by six times by 2020 through its energy-saving and ener- new markets and applications for our existing products, tech- view to improve asset performance, however, we plan to move Furthermore, between 2015 and 2017, we will aim to keep gy-creating products, and have stepped up efforts to develop nologies and services. To do this, we plan to proactively culti- beyond this model of self-sufficient in-house production in the capital expenditures from exceeding 400 billion yen, which is products that have less impact on the environment, such as vate markets, particularly in fast-growing countries, by pro- future, shifting toward jointly managed production with the estimated amount of depreciation expenses during that energy-saving glass. We are developing glass and materials that moting product applications and marketing. regional business partners, establishing joint ventures, and period. In consideration of asset efficiency, we plan to chan- have potential to not only solve environmental and energy-re- Our second approach is to offer new products, technolo- other similar measures. This plan will enable the AGC Group to nel capital expenditures into growth areas, with about 35% of lated problems, but also various other issues confronting our gies and services in existing markets and for current applica- more rapidly respond to market changes and boost its sales. the total earmarked for the Group’s glass segment and elec- customers and communities. At the same time, we are focusing tronics segment, respectively, and the remaining 30% for on creating new solutions for helping realize smart communities chemicals segment (see chart below). where people can live in comfort, security and safety (see pages Of course, we will work diligently to return profits to share- 39 to 44 for more details). holders according to our basic policy of maintaining stable Finally, we intend to channel the capabilities of the AGC dividend payments. The company’s dividend payout ratio is Group into a wide array of initiatives intended to accomplish 30%, and we will continue to aim for that level after taking into our management targets by fiscal 2017 and achieve continu- consideration financial results, future investment plans, and ous growth together with stakeholders. other factors. Net salesBillion yenOperating profit20082009Operating profit, however, decreased 17.8 billion yen, or 22.2%, compared to the previous fiscal year, amounting to 62.1 billion yen, mainly owing to declining sales prices of LCD glass substrates. Consequently, operating profit decreased for the fourth consecutive year, from fiscal 2011 to fiscal 2014, which is a very disappointing result. Meanwhile, net income attribut- able to the owners of the parent company decreased about 0.2 billion yen, or 1.4%, to 15.9 billion yen. In fiscal 2014, we worked toward two goals under our medi- um-term management plan : to bring our business back on an upward trend, and to strengthen and generate substantial results from the Group’s growth foundations. Accordingly, we focused on business restruc- turing while trying to improve the Group’s financial struc- ture, including raising productivity group-wide, making projects more efficient, and enhancing the organization of human resources. As a result of these efforts, as well as increased shipments of We undertook investments aimed at building foundations for chemical products and glass products, especially automotive growth in such areas as fast-growing countries, new products, glass, and the depreciation of the yen, net sales in fiscal 2014 and our chemicals business, and expect these initiatives to bring rose 28.3 billion yen, or 2.1%, year on year to 1,348.3 billion yen. about considerable growth in sales and profits from fiscal 2016. Special Feature Main Points of the New Management Policy: Interview with the President and CEO “ -2015” During the period of the previous medium-term manage- we made important invest- ment plan, ments in fast-growing countries. The company constructed its third plant in China, which started operations in February 2015, boosting production capacity to meet robust demand from automobile manufacturers in the Chinese market. In the Group’s electronics business in China, we added a new production line at the Shenzhen Plant. Meanwhile, to strengthen operations in the growth market of Southeast Asia, we invested in a new float glass furnace facility in Indonesia in September 2014, and plan to commence mass production there from the third quarter of fiscal 2016 (see chart below). We were also successful in developing product applications by investing in new products. These included UV Verre Premium™ tempered glass for automotive front door win- dows, which significantly block ultraviolet and infrared rays, and Leoflex™ chemically strengthened specialty glass, a multi-pur- pose product that we promoted as a cover glass for photovol- taic panels. This year, we began supplying HFO-1234yf auto- motive refrigerant, an environmentally friendly product that has a global warming potential (GWP) of no more than 1/1,300 that of conventional refrigerants. In the Group’s Chemicals operations, to keep up with grow- ing demand in Southeast Asia, we increased production capac- ity of caustic soda in Indonesia in 2013 and acquired a polyvinyl chloride company in Vietnam, a new market for the AGC Group. Furthermore, we boosted production capacity of pharmaceuti- cal and agrochemical intermediates and active ingredients, having carefully considered related trends such as the global aging of populations and growing demand for food supplies. Under “ -2015” , we improved the Group’s mar- keting capabilities and reduced costs through various struc- tural reforms, particularly in response to harsh market condi- tions surrounding the architectural glass business in Europe and the United States. In Europe, we reduced personnel and lowered production capacity by suspending glass production in Italy and Belgium, and in the U.S., we sold off an architectural glass fabrication subsidiary. Owing to these measures, earnings in the glass business significantly improved in fiscal 2014 compared to the previous fiscal year, and we succeeded in making the business profit- able. We also expect its performance to continue improving in fiscal 2015 as a result of structural reforms and other measures. Bolstering the Group’s Business Network in Fast-Growing Countries Business segment Country 2010 2011 2012 2013 2014 2015 2016 2017− Approaches for Expanding of Sales Glass Brazil Mexico China Thailand Indonesia Saudi Arabia Electronics China China Chemicals Indonesia Vietnam Others 15 AGC Report 2015 (cid:127)Started commercial production of float glass (cid:127)Started commercial production of auto glass (cid:127)Start commercial production of auto glass (cid:127)Started commercial production of auto glass (cid:127)Started commercial production of thin float glass (cid:127)Increased float production capacity (cid:127)Start commercial production of coating glass (cid:127)Started commercial production in Kunshan (cid:127)Started commercial production in Shenzhen (cid:127)Completed production line increase in Shenzhen (cid:127)Opened a technical center in Shanghai (cid:127)Increased production capacity of caustic soda (cid:127)Double PVC production capacity (cid:127)Acquired Phu My Plastics & Chemicals Co., Ltd. (cid:127)Established the chief representative position for China business in Beijing (cid:127)Set up SE RHQ in Singapore Approach 2 Approach 3 New products and services Offer new products and services in existing markets and for current applications Secure new markets and applications for new products and services AGC Now Approach 1 Existing products Offering existing products and services and services in existing markets and for current applications Secure new markets and applications for existing products and services Existing markets and applications New markets and applications AGC Report 2015 16 In the Group’s LCD display glass business, after prices fell To achieve this, we rallied the AGC Group’s employees steeply over four consecutive years, they are projected to fall worldwide to move forward in the same direction, side by at a comparably more moderate rate in fiscal 2015. In this side, so the Group can take on challenges as a unified team, business, we intend to step up marketing efforts in China, a drawing on the strengths of its wide range of technologies market that continues to grow, as well as boost productivity and the expertise of its diverse human resources. At the same by converting to more efficient glass furnaces, and imple- time, we renewed our commitment to ensuring fair and ment measures to reduce costs. proper conduct, safety, and compliance as the basic princi- Taking all of these factors into account, we expect the ples of our business activities. decline in consolidated operating profit to end in fiscal 2015, In accordance with this approach under , we and the AGC Group to get back on the growth track from fiscal have determined two key strategies for increasing corpo- 2016 onward. Q3 A3 Please tell us about the new management policy, . is intended to bring “plus” value to the AGC Group’s stakeholders. was launched as our new management policy when I was appointed as AGC Group’s CEO. We created the policy with the intention of being a group of companies that constantly offers more value to its stakeholders, namely the rate value and generating new growth: we will leverage the Group’s diverse resources with a stronger focus on markets to drive up sales, and enhance the Group’s asset perfor- mance by strategically allocating operational resources. Q4 A4 How exactly does the AGC Group intend to increase sales and improve its asset performance? We intend to maximize earnings by making the most of the AGC Group’s strengths and utilizing assets from outside the Group. communities we operate in, our customers, business partners, The AGC Group’s strengths are its diverse products in three employees, shareholders, and investors. That is the kind of domains of materials—glass, chemicals, and ceramics—along enterprise we want the AGC Group to be. with a wide range of related technologies, expertise, and facili- tions, which we will do by effectively marketing our products. For example, in our automotive glass business, we will pro- mote glass that helps conserve energy and improve comfort, and in our chemical products business, we will offer environ- mentally friendly refrigerants. Our third approach is to secure new markets and applications for new products, technologies and services. We are giving more priority to the first two approaches I mentioned because our priority right now is to return to the growth track. At the same time, in order to grow over the medium and long terms, we are working to create new products and conduct R&D with a view to solve problems confronting customers and societies. Through the measures I have described above, we are aiming has been producing products and technologies that are to achieve several important management targets by fiscal needed by society and that have helped solve problems con- Over a history extending more than a century, the AGC Group ties. The Group also has a diverse customer base and sales As we work to boost sales, we are also constantly aware of 2017: net sales of ¥1.6 trillion, operating profit of ¥100 billion, fronting communities at various times. The Group has been channels that span globally in numerous industries, including enhancing asset performance. Therefore, in an effort to maxi- return on equity of at least 5%, and a debt to equity ratio of no manufacturing products that, although not easily noticeable, building materials, automobiles, and electronics. Handling all mize earnings, we are swiftly channeling operational resources more than 0.5. are indispensable and beneficial. Furthermore, while growing in of this are the Group’s diverse human resources working in into products and businesses that we deem as having poten- There is the possibility, however, that business risks could tandem with the development of society, the AGC Group has every region of the world. By making the most of these intellec- tial for high earnings and growth from among the wide range materialize as a result of future trends in our operating envi- been helping make communities more sustainable through its tual assets, production resources, and human resources while of products and operations positioned in the AGC Group’s ronment. While preparing for such risks, we intend to swiftly business activities. leveraging synergies between each of its businesses, the AGC business portfolio (see chart below). carry out whatever additional initiatives are necessary to Based on this corporate stance, we are working to help solve Group can increase its net sales. Up until now, the Group has been able to manufacture and achieve the management targets above, including further global environmental problems. Toward this end, we have set We have devised three main approaches for expanding supply products by constructing its own production plants in business restructuring, more investment in growth areas, the goal of reducing the AGC Group’s total annual CO2 emis- sales (shown on the chart on page 16). The first is to secure regions where there was demand for those products. With a mergers and acquisitions, and business alliances. sions by six times by 2020 through its energy-saving and ener- new markets and applications for our existing products, tech- view to improve asset performance, however, we plan to move Furthermore, between 2015 and 2017, we will aim to keep gy-creating products, and have stepped up efforts to develop nologies and services. To do this, we plan to proactively culti- beyond this model of self-sufficient in-house production in the capital expenditures from exceeding 400 billion yen, which is products that have less impact on the environment, such as vate markets, particularly in fast-growing countries, by pro- future, shifting toward jointly managed production with the estimated amount of depreciation expenses during that energy-saving glass. We are developing glass and materials that moting product applications and marketing. regional business partners, establishing joint ventures, and period. In consideration of asset efficiency, we plan to chan- have potential to not only solve environmental and energy-re- Our second approach is to offer new products, technolo- other similar measures. This plan will enable the AGC Group to nel capital expenditures into growth areas, with about 35% of lated problems, but also various other issues confronting our gies and services in existing markets and for current applica- more rapidly respond to market changes and boost its sales. the total earmarked for the Group’s glass segment and elec- customers and communities. At the same time, we are focusing tronics segment, respectively, and the remaining 30% for on creating new solutions for helping realize smart communities chemicals segment (see chart below). where people can live in comfort, security and safety (see pages Of course, we will work diligently to return profits to share- 39 to 44 for more details). holders according to our basic policy of maintaining stable Finally, we intend to channel the capabilities of the AGC dividend payments. The company’s dividend payout ratio is Group into a wide array of initiatives intended to accomplish 30%, and we will continue to aim for that level after taking into our management targets by fiscal 2017 and achieve continu- consideration financial results, future investment plans, and ous growth together with stakeholders. other factors. Operating profit, however, decreased 17.8 billion yen, or 22.2%, compared to the previous fiscal year, amounting to 62.1 billion yen, mainly owing to declining sales prices of LCD glass substrates. Consequently, operating profit decreased for the fourth consecutive year, from fiscal 2011 to fiscal 2014, which is a very disappointing result. Meanwhile, net income attribut- able to the owners of the parent company decreased about 0.2 billion yen, or 1.4%, to 15.9 billion yen. In fiscal 2014, we worked toward two goals under our medi- um-term management plan : to bring our business back on an upward trend, and to strengthen and generate substantial results from the Group’s growth foundations. Accordingly, we focused on business restruc- turing while trying to improve the Group’s financial struc- ture, including raising productivity group-wide, making projects more efficient, and enhancing the organization of human resources. As a result of these efforts, as well as increased shipments of We undertook investments aimed at building foundations for chemical products and glass products, especially automotive growth in such areas as fast-growing countries, new products, glass, and the depreciation of the yen, net sales in fiscal 2014 and our chemicals business, and expect these initiatives to bring rose 28.3 billion yen, or 2.1%, year on year to 1,348.3 billion yen. about considerable growth in sales and profits from fiscal 2016. Special Feature Interview with the President and CEO Main Points of the New Management Policy: dows, which significantly block ultraviolet and infrared rays, and Leoflex™ chemically strengthened specialty glass, a multi-pur- pose product that we promoted as a cover glass for photovol- taic panels. This year, we began supplying HFO-1234yf auto- motive refrigerant, an environmentally friendly product that has a global warming potential (GWP) of no more than 1/1,300 that of conventional refrigerants. In the Group’s Chemicals operations, to keep up with grow- ing demand in Southeast Asia, we increased production capac- ity of caustic soda in Indonesia in 2013 and acquired a polyvinyl chloride company in Vietnam, a new market for the AGC Group. Furthermore, we boosted production capacity of pharmaceuti- cal and agrochemical intermediates and active ingredients, During the period of the previous medium-term manage- having carefully considered related trends such as the global ment plan, “ -2015” we made important invest- aging of populations and growing demand for food supplies. ments in fast-growing countries. The company constructed its Under “ -2015” , we improved the Group’s mar- third plant in China, which started operations in February 2015, keting capabilities and reduced costs through various struc- boosting production capacity to meet robust demand from tural reforms, particularly in response to harsh market condi- automobile manufacturers in the Chinese market. In the Group’s tions surrounding the architectural glass business in Europe electronics business in China, we added a new production line and the United States. In Europe, we reduced personnel and at the Shenzhen Plant. Meanwhile, to strengthen operations in lowered production capacity by suspending glass production the growth market of Southeast Asia, we invested in a new float in Italy and Belgium, and in the U.S., we sold off an architectural glass furnace facility in Indonesia in September 2014, and plan to glass fabrication subsidiary. commence mass production there from the third quarter of Owing to these measures, earnings in the glass business fiscal 2016 (see chart below). significantly improved in fiscal 2014 compared to the previous We were also successful in developing product applications fiscal year, and we succeeded in making the business profit- by investing in new products. These included UV Verre able. We also expect its performance to continue improving in Premium™ tempered glass for automotive front door win- fiscal 2015 as a result of structural reforms and other measures. In the Group’s LCD display glass business, after prices fell steeply over four consecutive years, they are projected to fall at a comparably more moderate rate in fiscal 2015. In this business, we intend to step up marketing efforts in China, a market that continues to grow, as well as boost productivity by converting to more efficient glass furnaces, and imple- ment measures to reduce costs. Taking all of these factors into account, we expect the decline in consolidated operating profit to end in fiscal 2015, and the AGC Group to get back on the growth track from fiscal 2016 onward. Q3 A3 Please tell us about the new management policy, . is intended to bring “plus” value to the AGC Group’s stakeholders. was launched as our new management policy when I was appointed as AGC Group’s CEO. We created the policy with the intention of being a group of companies that constantly offers more value to its stakeholders, namely the communities we operate in, our customers, business partners, employees, shareholders, and investors. That is the kind of enterprise we want the AGC Group to be. To achieve this, we rallied the AGC Group’s employees worldwide to move forward in the same direction, side by side, so the Group can take on challenges as a unified team, drawing on the strengths of its wide range of technologies and the expertise of its diverse human resources. At the same time, we renewed our commitment to ensuring fair and proper conduct, safety, and compliance as the basic princi- ples of our business activities. In accordance with this approach under , we have determined two key strategies for increasing corpo- rate value and generating new growth: we will leverage the Group’s diverse resources with a stronger focus on markets to drive up sales, and enhance the Group’s asset perfor- mance by strategically allocating operational resources. Q4 A4 How exactly does the AGC Group intend to increase sales and improve its asset performance? We intend to maximize earnings by making the most of the AGC Group’s strengths and utilizing assets from outside the Group. The AGC Group’s strengths are its diverse products in three domains of materials—glass, chemicals, and ceramics—along with a wide range of related technologies, expertise, and facili- Bolstering the Group’s Business Network in Fast-Growing Countries Business segment Country 2010 2011 2012 2013 2014 2015 2016 2017− Approaches for Expanding of Sales Approach 2 Approach 3 New products and services Offer new products and services in existing markets and for current applications Secure new markets and applications for new products and services AGC Now Approach 1 Existing products and services Offering existing products and services in existing markets and for current applications Secure new markets and applications for existing products and services Others (cid:127)Established the chief representative position for China business in Beijing (cid:127)Set up SE RHQ in Singapore Existing markets and applications New markets and applications AGC Report 2015 16 Electronics China (cid:127)Started commercial production in Kunshan (cid:127)Started commercial production in Shenzhen (cid:127)Completed production line increase in Shenzhen (cid:127)Started commercial production of float glass (cid:127)Started commercial production of auto glass (cid:127)Start commercial production of auto glass (cid:127)Started commercial production of auto glass (cid:127)Started commercial production of thin float glass (cid:127)Increased float production capacity (cid:127)Start commercial production of coating glass (cid:127)Opened a technical center in Shanghai (cid:127)Increased production capacity of caustic soda (cid:127)Double PVC production capacity (cid:127)Acquired Phu My Plastics & Chemicals Co., Ltd. Glass Brazil Mexico China Thailand Indonesia Saudi Arabia China Vietnam Chemicals Indonesia 15 AGC Report 2015 tions, which we will do by effectively marketing our products. For example, in our automotive glass business, we will pro- mote glass that helps conserve energy and improve comfort, and in our chemical products business, we will offer environ- mentally friendly refrigerants. Our third approach is to secure new markets and applications for new products, technologies and services. We are giving more priority to the first two approaches I mentioned because our priority right now is to return to the growth track. At the same time, in order to grow over the medium and long terms, we are working to create new products and conduct R&D with a view to solve problems confronting customers and societies. Through the measures I have described above, we are aiming has been producing products and technologies that are to achieve several important management targets by fiscal needed by society and that have helped solve problems con- Over a history extending more than a century, the AGC Group ties. The Group also has a diverse customer base and sales As we work to boost sales, we are also constantly aware of 2017: net sales of ¥1.6 trillion, operating profit of ¥100 billion, fronting communities at various times. The Group has been channels that span globally in numerous industries, including enhancing asset performance. Therefore, in an effort to maxi- return on equity of at least 5%, and a debt to equity ratio of no manufacturing products that, although not easily noticeable, building materials, automobiles, and electronics. Handling all mize earnings, we are swiftly channeling operational resources more than 0.5. are indispensable and beneficial. Furthermore, while growing in of this are the Group’s diverse human resources working in into products and businesses that we deem as having poten- There is the possibility, however, that business risks could tandem with the development of society, the AGC Group has every region of the world. By making the most of these intellec- tial for high earnings and growth from among the wide range materialize as a result of future trends in our operating envi- been helping make communities more sustainable through its tual assets, production resources, and human resources while of products and operations positioned in the AGC Group’s ronment. While preparing for such risks, we intend to swiftly business activities. leveraging synergies between each of its businesses, the AGC business portfolio (see chart below). carry out whatever additional initiatives are necessary to Based on this corporate stance, we are working to help solve Group can increase its net sales. Up until now, the Group has been able to manufacture and achieve the management targets above, including further global environmental problems. Toward this end, we have set We have devised three main approaches for expanding supply products by constructing its own production plants in business restructuring, more investment in growth areas, the goal of reducing the AGC Group’s total annual CO2 emis- sales (shown on the chart on page 16). The first is to secure regions where there was demand for those products. With a mergers and acquisitions, and business alliances. sions by six times by 2020 through its energy-saving and ener- new markets and applications for our existing products, tech- view to improve asset performance, however, we plan to move Furthermore, between 2015 and 2017, we will aim to keep gy-creating products, and have stepped up efforts to develop nologies and services. To do this, we plan to proactively culti- beyond this model of self-sufficient in-house production in the capital expenditures from exceeding 400 billion yen, which is products that have less impact on the environment, such as vate markets, particularly in fast-growing countries, by pro- future, shifting toward jointly managed production with the estimated amount of depreciation expenses during that energy-saving glass. We are developing glass and materials that moting product applications and marketing. regional business partners, establishing joint ventures, and period. In consideration of asset efficiency, we plan to chan- have potential to not only solve environmental and energy-re- Our second approach is to offer new products, technolo- other similar measures. This plan will enable the AGC Group to nel capital expenditures into growth areas, with about 35% of lated problems, but also various other issues confronting our gies and services in existing markets and for current applica- more rapidly respond to market changes and boost its sales. the total earmarked for the Group’s glass segment and elec- customers and communities. At the same time, we are focusing tronics segment, respectively, and the remaining 30% for on creating new solutions for helping realize smart communities chemicals segment (see chart below). where people can live in comfort, security and safety (see pages Of course, we will work diligently to return profits to share- 39 to 44 for more details). holders according to our basic policy of maintaining stable Finally, we intend to channel the capabilities of the AGC dividend payments. The company’s dividend payout ratio is Group into a wide array of initiatives intended to accomplish 30%, and we will continue to aim for that level after taking into our management targets by fiscal 2017 and achieve continu- consideration financial results, future investment plans, and ous growth together with stakeholders. other factors. Operating profit, however, decreased 17.8 billion yen, or 22.2%, compared to the previous fiscal year, amounting to 62.1 billion yen, mainly owing to declining sales prices of LCD glass substrates. Consequently, operating profit decreased for the fourth consecutive year, from fiscal 2011 to fiscal 2014, which is a very disappointing result. Meanwhile, net income attribut- able to the owners of the parent company decreased about 0.2 billion yen, or 1.4%, to 15.9 billion yen. In fiscal 2014, we worked toward two goals under our medi- um-term management plan : to bring our business back on an upward trend, and to strengthen and generate substantial results from the Group’s growth foundations. Accordingly, we focused on business restruc- turing while trying to improve the Group’s financial struc- ture, including raising productivity group-wide, making projects more efficient, and enhancing the organization of human resources. As a result of these efforts, as well as increased shipments of We undertook investments aimed at building foundations for chemical products and glass products, especially automotive growth in such areas as fast-growing countries, new products, glass, and the depreciation of the yen, net sales in fiscal 2014 and our chemicals business, and expect these initiatives to bring rose 28.3 billion yen, or 2.1%, year on year to 1,348.3 billion yen. about considerable growth in sales and profits from fiscal 2016. dows, which significantly block ultraviolet and infrared rays, and Leoflex™ chemically strengthened specialty glass, a multi-pur- pose product that we promoted as a cover glass for photovol- taic panels. This year, we began supplying HFO-1234yf auto- motive refrigerant, an environmentally friendly product that has a global warming potential (GWP) of no more than 1/1,300 that of conventional refrigerants. In the Group’s Chemicals operations, to keep up with grow- ing demand in Southeast Asia, we increased production capac- ity of caustic soda in Indonesia in 2013 and acquired a polyvinyl chloride company in Vietnam, a new market for the AGC Group. Furthermore, we boosted production capacity of pharmaceuti- cal and agrochemical intermediates and active ingredients, In the Group’s LCD display glass business, after prices fell To achieve this, we rallied the AGC Group’s employees steeply over four consecutive years, they are projected to fall worldwide to move forward in the same direction, side by at a comparably more moderate rate in fiscal 2015. In this side, so the Group can take on challenges as a unified team, business, we intend to step up marketing efforts in China, a drawing on the strengths of its wide range of technologies market that continues to grow, as well as boost productivity and the expertise of its diverse human resources. At the same by converting to more efficient glass furnaces, and imple- time, we renewed our commitment to ensuring fair and ment measures to reduce costs. proper conduct, safety, and compliance as the basic princi- Taking all of these factors into account, we expect the ples of our business activities. decline in consolidated operating profit to end in fiscal 2015, In accordance with this approach under , we and the AGC Group to get back on the growth track from fiscal have determined two key strategies for increasing corpo- 2016 onward. rate value and generating new growth: we will leverage the Group’s diverse resources with a stronger focus on markets to drive up sales, and enhance the Group’s asset perfor- mance by strategically allocating operational resources. During the period of the previous medium-term manage- having carefully considered related trends such as the global ment plan, we made important invest- aging of populations and growing demand for food supplies. ments in fast-growing countries. The company constructed its Under , we improved the Group’s mar- third plant in China, which started operations in February 2015, keting capabilities and reduced costs through various struc- boosting production capacity to meet robust demand from tural reforms, particularly in response to harsh market condi- automobile manufacturers in the Chinese market. In the Group’s tions surrounding the architectural glass business in Europe electronics business in China, we added a new production line and the United States. In Europe, we reduced personnel and at the Shenzhen Plant. Meanwhile, to strengthen operations in lowered production capacity by suspending glass production the growth market of Southeast Asia, we invested in a new float in Italy and Belgium, and in the U.S., we sold off an architectural glass furnace facility in Indonesia in September 2014, and plan to glass fabrication subsidiary. commence mass production there from the third quarter of Owing to these measures, earnings in the glass business fiscal 2016 (see chart below). significantly improved in fiscal 2014 compared to the previous was launched as our new management policy when I was appointed as AGC Group’s CEO. We created the policy with the intention of being a group of companies that constantly offers more value to its stakeholders, namely the We were also successful in developing product applications fiscal year, and we succeeded in making the business profit- communities we operate in, our customers, business partners, The AGC Group’s strengths are its diverse products in three by investing in new products. These included UV Verre able. We also expect its performance to continue improving in employees, shareholders, and investors. That is the kind of domains of materials—glass, chemicals, and ceramics—along Premium™ tempered glass for automotive front door win- fiscal 2015 as a result of structural reforms and other measures. enterprise we want the AGC Group to be. with a wide range of related technologies, expertise, and facili- Special Feature Main Points of the New Management Policy: Interview with the President and CEO tions, which we will do by effectively marketing our products. For example, in our automotive glass business, we will pro- mote glass that helps conserve energy and improve comfort, and in our chemical products business, we will offer environ- mentally friendly refrigerants. Our third approach is to secure new markets and applications for new products, technologies and services. We are giving more priority to the first two approaches I mentioned because our priority right now is to return to the growth track. At the same time, in order to grow over the medium and long terms, we are working to create new products and conduct R&D with a view to solve problems confronting customers and societies. As we work to boost sales, we are also constantly aware of enhancing asset performance. Therefore, in an effort to maxi- mize earnings, we are swiftly channeling operational resources into products and businesses that we deem as having poten- tial for high earnings and growth from among the wide range of products and operations positioned in the AGC Group’s business portfolio (see chart below). Up until now, the Group has been able to manufacture and supply products by constructing its own production plants in regions where there was demand for those products. With a view to improve asset performance, however, we plan to move beyond this model of self-sufficient in-house production in the future, shifting toward jointly managed production with regional business partners, establishing joint ventures, and other similar measures. This plan will enable the AGC Group to more rapidly respond to market changes and boost its sales. ties. The Group also has a diverse customer base and sales channels that span globally in numerous industries, including building materials, automobiles, and electronics. Handling all of this are the Group’s diverse human resources working in every region of the world. By making the most of these intellec- tual assets, production resources, and human resources while leveraging synergies between each of its businesses, the AGC Group can increase its net sales. We have devised three main approaches for expanding sales (shown on the chart on page 16). The first is to secure new markets and applications for our existing products, tech- nologies and services. To do this, we plan to proactively culti- vate markets, particularly in fast-growing countries, by pro- moting product applications and marketing. Our second approach is to offer new products, technolo- gies and services in existing markets and for current applica- Business Portfolio—Strategic Objectives for Allocating Operational Resources Growth businesses targeted for proactive investment Businesses generating cash flows Businesses needing structural improvements Glass (cid:127)Automotive glass Gain a stronger foothold in the Group’s global top position (cid:127)Architectural glass (fast-growing countries) Proactively utilize resources outside the AGC Group (cid:127)Architectural glass (Developed countries) Continue improving the financial structure and implementing structural reforms Electronics (cid:127)Electronic materials Channel operational resources into growth fields (cid:127)Glass for chemical strengthening Offer products to a broader range of markets (cid:127)Ultra-thin glass Chemicals (cid:127)Chlor-alkali (Outside Japan) Secure a position in the high-growth Southeast Asia market (cid:127)Fluorochemicals Capitalize on growing global demand for highly functional materials (cid:127)Life science Focus on growing pharmaceutical and agrochemical markets (cid:127)LCD glass Reduce costs and shift production capacity to China — — (cid:127)Chlor-alkali (Japan) Q5 A5 Please explain how your numerical targets will indicate that the Group has returned to the growth path. And could you tell us how management plans to achieve those targets? We will prepare for business risks and carry out additional initiatives whenever necessary. Q6 A6 What do you believe is important for realizing a sustainable society? We are focusing our efforts on creating new solutions that help make communities “smarter.” Over a history extending more than a century, the AGC Group Through the measures I have described above, we are aiming has been producing products and technologies that are to achieve several important management targets by fiscal needed by society and that have helped solve problems con- 2017: net sales of ¥1.6 trillion, operating profit of ¥100 billion, fronting communities at various times. The Group has been return on equity of at least 5%, and a debt to equity ratio of no manufacturing products that, although not easily noticeable, more than 0.5. are indispensable and beneficial. Furthermore, while growing in There is the possibility, however, that business risks could tandem with the development of society, the AGC Group has materialize as a result of future trends in our operating envi- been helping make communities more sustainable through its ronment. While preparing for such risks, we intend to swiftly business activities. carry out whatever additional initiatives are necessary to Based on this corporate stance, we are working to help solve achieve the management targets above, including further global environmental problems. Toward this end, we have set business restructuring, more investment in growth areas, the goal of reducing the AGC Group’s total annual CO2 emis- mergers and acquisitions, and business alliances. sions by six times by 2020 through its energy-saving and ener- Furthermore, between 2015 and 2017, we will aim to keep gy-creating products, and have stepped up efforts to develop capital expenditures from exceeding 400 billion yen, which is products that have less impact on the environment, such as the estimated amount of depreciation expenses during that energy-saving glass. We are developing glass and materials that period. In consideration of asset efficiency, we plan to chan- have potential to not only solve environmental and energy-re- nel capital expenditures into growth areas, with about 35% of lated problems, but also various other issues confronting our the total earmarked for the Group’s glass segment and elec- customers and communities. At the same time, we are focusing tronics segment, respectively, and the remaining 30% for on creating new solutions for helping realize smart communities chemicals segment (see chart below). where people can live in comfort, security and safety (see pages Of course, we will work diligently to return profits to share- 39 to 44 for more details). holders according to our basic policy of maintaining stable Finally, we intend to channel the capabilities of the AGC dividend payments. The company’s dividend payout ratio is Group into a wide array of initiatives intended to accomplish 30%, and we will continue to aim for that level after taking into our management targets by fiscal 2017 and achieve continu- consideration financial results, future investment plans, and ous growth together with stakeholders. other factors. Breakdown of Planned Capital Expenditures by Business Segment 2012–2014 2015–2017 (Forecast) Chemicals 21% Glass 43% Chemicals 30% Glass 35% Total ¥423 billion Total ¥400 billion Electronics 36% Electronics 35% 17 AGC Report 2015 AGC Report 2015 18 Operating profit, however, decreased 17.8 billion yen, or 22.2%, compared to the previous fiscal year, amounting to 62.1 billion yen, mainly owing to declining sales prices of LCD glass substrates. Consequently, operating profit decreased for the fourth consecutive year, from fiscal 2011 to fiscal 2014, which is a very disappointing result. Meanwhile, net income attribut- able to the owners of the parent company decreased about 0.2 billion yen, or 1.4%, to 15.9 billion yen. In fiscal 2014, we worked toward two goals under our medi- um-term management plan : to bring our business back on an upward trend, and to strengthen and generate substantial results from the Group’s growth foundations. Accordingly, we focused on business restruc- turing while trying to improve the Group’s financial struc- ture, including raising productivity group-wide, making projects more efficient, and enhancing the organization of human resources. As a result of these efforts, as well as increased shipments of We undertook investments aimed at building foundations for chemical products and glass products, especially automotive growth in such areas as fast-growing countries, new products, glass, and the depreciation of the yen, net sales in fiscal 2014 and our chemicals business, and expect these initiatives to bring rose 28.3 billion yen, or 2.1%, year on year to 1,348.3 billion yen. about considerable growth in sales and profits from fiscal 2016. dows, which significantly block ultraviolet and infrared rays, and Leoflex™ chemically strengthened specialty glass, a multi-pur- pose product that we promoted as a cover glass for photovol- taic panels. This year, we began supplying HFO-1234yf auto- motive refrigerant, an environmentally friendly product that has a global warming potential (GWP) of no more than 1/1,300 that of conventional refrigerants. In the Group’s Chemicals operations, to keep up with grow- ing demand in Southeast Asia, we increased production capac- ity of caustic soda in Indonesia in 2013 and acquired a polyvinyl chloride company in Vietnam, a new market for the AGC Group. Furthermore, we boosted production capacity of pharmaceuti- cal and agrochemical intermediates and active ingredients, In the Group’s LCD display glass business, after prices fell To achieve this, we rallied the AGC Group’s employees steeply over four consecutive years, they are projected to fall worldwide to move forward in the same direction, side by at a comparably more moderate rate in fiscal 2015. In this side, so the Group can take on challenges as a unified team, business, we intend to step up marketing efforts in China, a drawing on the strengths of its wide range of technologies market that continues to grow, as well as boost productivity and the expertise of its diverse human resources. At the same by converting to more efficient glass furnaces, and imple- time, we renewed our commitment to ensuring fair and ment measures to reduce costs. proper conduct, safety, and compliance as the basic princi- Taking all of these factors into account, we expect the ples of our business activities. decline in consolidated operating profit to end in fiscal 2015, In accordance with this approach under , we and the AGC Group to get back on the growth track from fiscal have determined two key strategies for increasing corpo- 2016 onward. rate value and generating new growth: we will leverage the Group’s diverse resources with a stronger focus on markets to drive up sales, and enhance the Group’s asset perfor- mance by strategically allocating operational resources. During the period of the previous medium-term manage- having carefully considered related trends such as the global ment plan, we made important invest- aging of populations and growing demand for food supplies. ments in fast-growing countries. The company constructed its Under , we improved the Group’s mar- third plant in China, which started operations in February 2015, keting capabilities and reduced costs through various struc- boosting production capacity to meet robust demand from tural reforms, particularly in response to harsh market condi- automobile manufacturers in the Chinese market. In the Group’s tions surrounding the architectural glass business in Europe electronics business in China, we added a new production line and the United States. In Europe, we reduced personnel and at the Shenzhen Plant. Meanwhile, to strengthen operations in lowered production capacity by suspending glass production the growth market of Southeast Asia, we invested in a new float in Italy and Belgium, and in the U.S., we sold off an architectural glass furnace facility in Indonesia in September 2014, and plan to glass fabrication subsidiary. commence mass production there from the third quarter of Owing to these measures, earnings in the glass business fiscal 2016 (see chart below). significantly improved in fiscal 2014 compared to the previous was launched as our new management policy when I was appointed as AGC Group’s CEO. We created the policy with the intention of being a group of companies that constantly offers more value to its stakeholders, namely the We were also successful in developing product applications fiscal year, and we succeeded in making the business profit- communities we operate in, our customers, business partners, The AGC Group’s strengths are its diverse products in three by investing in new products. These included UV Verre able. We also expect its performance to continue improving in employees, shareholders, and investors. That is the kind of domains of materials—glass, chemicals, and ceramics—along Premium™ tempered glass for automotive front door win- fiscal 2015 as a result of structural reforms and other measures. enterprise we want the AGC Group to be. with a wide range of related technologies, expertise, and facili- Special Feature Interview with the President and CEO Main Points of the New Management Policy: tions, which we will do by effectively marketing our products. For example, in our automotive glass business, we will pro- mote glass that helps conserve energy and improve comfort, and in our chemical products business, we will offer environ- mentally friendly refrigerants. Our third approach is to secure new markets and applications for new products, technologies and services. We are giving more priority to the first two approaches I mentioned because our priority right now is to return to the growth track. At the same time, in order to grow over the medium and long terms, we are working to create new products and conduct R&D with a view to solve problems confronting customers and societies. ties. The Group also has a diverse customer base and sales As we work to boost sales, we are also constantly aware of channels that span globally in numerous industries, including enhancing asset performance. Therefore, in an effort to maxi- building materials, automobiles, and electronics. Handling all mize earnings, we are swiftly channeling operational resources of this are the Group’s diverse human resources working in into products and businesses that we deem as having poten- every region of the world. By making the most of these intellec- tial for high earnings and growth from among the wide range tual assets, production resources, and human resources while of products and operations positioned in the AGC Group’s leveraging synergies between each of its businesses, the AGC business portfolio (see chart below). Group can increase its net sales. Up until now, the Group has been able to manufacture and We have devised three main approaches for expanding supply products by constructing its own production plants in sales (shown on the chart on page 16). The first is to secure regions where there was demand for those products. With a new markets and applications for our existing products, tech- view to improve asset performance, however, we plan to move nologies and services. To do this, we plan to proactively culti- beyond this model of self-sufficient in-house production in the vate markets, particularly in fast-growing countries, by pro- future, shifting toward jointly managed production with moting product applications and marketing. regional business partners, establishing joint ventures, and Our second approach is to offer new products, technolo- other similar measures. This plan will enable the AGC Group to gies and services in existing markets and for current applica- more rapidly respond to market changes and boost its sales. Business Portfolio—Strategic Objectives for Allocating Operational Resources Growth businesses targeted for proactive investment Businesses generating cash flows Businesses needing structural improvements Glass (cid:127)Automotive glass Gain a stronger foothold in the Group’s global top position Proactively utilize resources outside the AGC Group (cid:127)Architectural glass (fast-growing countries) (cid:127)Architectural glass (Developed countries) Continue improving the financial structure and implementing structural reforms (cid:127)Electronic materials Channel operational resources into growth fields Electronics (cid:127)Glass for chemical strengthening Offer products to a broader range of markets (cid:127)Ultra-thin glass (cid:127)LCD glass Reduce costs and shift production capacity to China — Chemicals Capitalize on growing global demand for highly functional — (cid:127)Chlor-alkali (Japan) (cid:127)Chlor-alkali (Outside Japan) Secure a position in the high-growth Southeast Asia market (cid:127)Fluorochemicals materials (cid:127)Life science Focus on growing pharmaceutical and agrochemical markets Q6 A6 What do you believe is important for realizing a sustainable society? We are focusing our efforts on creating new solutions that help make communities “smarter.” Over a history extending more than a century, the AGC Group has been producing products and technologies that are needed by society and that have helped solve problems con- fronting communities at various times. The Group has been manufacturing products that, although not easily noticeable, are indispensable and beneficial. Furthermore, while growing in tandem with the development of society, the AGC Group has been helping make communities more sustainable through its business activities. Based on this corporate stance, we are working to help solve global environmental problems. Toward this end, we have set the goal of reducing the AGC Group’s total annual CO2 emis- sions by six times by 2020 through its energy-saving and ener- gy-creating products, and have stepped up efforts to develop products that have less impact on the environment, such as energy-saving glass. We are developing glass and materials that have potential to not only solve environmental and energy-re- lated problems, but also various other issues confronting our customers and communities. At the same time, we are focusing on creating new solutions for helping realize smart communities where people can live in comfort, security and safety (see pages 39 to 44 for more details). Finally, we intend to channel the capabilities of the AGC Group into a wide array of initiatives intended to accomplish our management targets by fiscal 2017 and achieve continu- ous growth together with stakeholders. Q5 Please explain how your numerical targets will indicate that the Group has returned to the growth path. And could you tell us how management plans to achieve those targets? A5 We will prepare for business risks and carry out additional initiatives whenever necessary. Through the measures I have described above, we are aiming to achieve several important management targets by fiscal 2017: net sales of ¥1.6 trillion, operating profit of ¥100 billion, return on equity of at least 5%, and a debt to equity ratio of no more than 0.5. There is the possibility, however, that business risks could materialize as a result of future trends in our operating envi- ronment. While preparing for such risks, we intend to swiftly carry out whatever additional initiatives are necessary to achieve the management targets above, including further business restructuring, more investment in growth areas, mergers and acquisitions, and business alliances. Furthermore, between 2015 and 2017, we will aim to keep capital expenditures from exceeding 400 billion yen, which is the estimated amount of depreciation expenses during that period. In consideration of asset efficiency, we plan to chan- nel capital expenditures into growth areas, with about 35% of the total earmarked for the Group’s glass segment and elec- tronics segment, respectively, and the remaining 30% for chemicals segment (see chart below). Of course, we will work diligently to return profits to share- holders according to our basic policy of maintaining stable dividend payments. The company’s dividend payout ratio is 30%, and we will continue to aim for that level after taking into consideration financial results, future investment plans, and other factors. Breakdown of Planned Capital Expenditures by Business Segment 2012–2014 2015–2017 (Forecast) Chemicals 21% Glass 43% Chemicals 30% Glass 35% Total ¥423 billion Total ¥400 billion Electronics 36% Electronics 35% 17 AGC Report 2015 AGC Report 2015 18 Financial and Non-Financial Highlights Organizations Covered in the Report: Asahi Glass Co., Ltd. and its consolidated subsidiaries Reporting Period: Consolidated fiscal year ending December 31 All numeric data (except non-financial data) is based on International Financial Reporting Standards (IFRS) Financial Data Net Sales (Billion yen) 1,600 1,320.0 1,348.3 1,190.0 1,200 800 400 0 2012 2013 2014 (Year) Assets (Billion yen) 2,500 2,120.6 2,077.3 2,000 1,916.4 1,500 1,000 500 Operating Profit (Billion yen) 120 101.8 79.9 62.1 2012 2013 2014 (Year) 1,180.5 1,145.1 960.7 90 60 30 0 Capital (Billion yen) 1,600 1,200 800 400 Net Income Attributable to Owners of the Parent Net income (Billion yen) 100 5.8 Return on Equity (ROE) ROE (%) 6 75 50 25 0 4 2 48.4 1.6 16.1 1.4 15.9 2012 2013 2014 (Year) 0 Interest-Bearing Debt Interest-Bearing Debt (Billion yen) 900 0.56 Debt to Equity (D/E) Ratio Debt to Equity (D/E) Ratio (Multiple) 0.6 0.50 575.0 538.6 0.42 499.3 0.4 0.2 600 300 0 2012 2013 2014 (Year) 0 2012 2013 2014 (Year) 0 2012 2013 2014 (Year) 0 0 2012 2013 2014 (Year) 0 2012 2013 2014 (Year) 2012 2013 2014 (Year) Capital Expenditures Depreciation Costs R&D Costs (Billion yen) 200 166.3 150 100 50 0 138.5 118.2 2012 2013 2014 (Year) (Billion yen) 160 (Billion yen) 60 135.8 137.2 117.9 2012 2013 2014 (Year) 120 80 40 0 45 30 15 0 47.1 46.9 44.8 2012 2013 2014 (Year) (Note) Please refer to page 21 for financial data by segment, and to the Annual Securities Report (Japanese only) or Financial Review booklet (English only) for 4 Sales by region calculated before elimination 5 Due to rounding, the entire group value does not match the total sum for all regions. more detailed financial data. 19 AGC Report 2015 Non-Financial Data Human resources and occupational safety data Number of employees Number of fatal accidents1 Environment data Total energy consumption (PJ)2 Greenhouse gas emissions (1,000 tons-CO2) Total waste generated (1,000 tons) Total waste disposed (1,000 tons) Total water intake (million m3)3 2012 2013 49,961 51,448 3 2 150 10,100 650 25 57 147 9,870 664 22 62 2014 51,114 0 150 10,000 675 23 376 Year-on-year change −334 −2 3 130 11 1 — (Note) Please refer to the separate CSR Information Supplement and our CSR website for more detailed non-financial data. 1 Number of AGC Group employees 2 1 PJ (petajoule) = 1015J (joules) 3 2012 and 2013 numbers are for AGC Group (Japan), whereas 2014 numbers are for AGC Group as a whole. Net Sales (Japan/Asia) Net Sales (Europe) Net Sales (The Americas) (Billion yen) (Billion yen) 911.1 956.9 939.8 313.0 291.4 229.0 139.9 111.8 83.6 Data by Region (Billion yen) 1,200 900 600 300 400 300 200 100 160 120 80 40 0 Sales Ratio4 Employees Ratio Total Energy Consumption Greenhouse Gas Emissions The Americas The Americas The Americas Ratio Ratio5 The Americas 10.0% 139.9 billion yen 7.8% 4,000 8.5% 13 PJ 2014 1,392.8 billion yen 2014 51,114 2014 150 PJ Europe 22.5% 313.0 Japan/Asia 67.5% 939.8 billion yen billion yen Europe 28.5% 14,563 Japan/Asia 63.7% 32,551 Europe 21.3% 32 PJ Japan/Asia 70.2% 105 PJ Europe 24.4% 2,450 thousand tons-CO2 Japan/Asia 68.1% 6,840 thousand tons-CO2 7.5% 754 thousand tons-CO2 2014 10,000 thousand tons-CO2 AGC Report 2015 20 Financial and Non-Financial Highlights Organizations Covered in the Report: Asahi Glass Co., Ltd. and its consolidated subsidiaries Reporting Period: Consolidated fiscal year ending December 31 All numeric data (except non-financial data) is based on International Financial Reporting Standards (IFRS) Financial Data Net Sales (Billion yen) 1,600 1,320.0 1,348.3 1,190.0 1,200 Operating Profit (Billion yen) 120 101.8 79.9 62.1 Net Income Attributable to Owners of the Parent Return on Equity (ROE) Net income (Billion yen) 100 5.8 ROE (%) 6 48.4 1.4 1.6 16.1 15.9 Interest-Bearing Debt Debt to Equity Interest-Bearing Debt (Billion yen) 900 0.56 (D/E) Ratio Debt to Equity (D/E) Ratio (Multiple) 0.50 575.0 538.6 0.42 499.3 4 2 0.6 0.4 0.2 75 50 25 0 600 300 60 45 30 15 0 0 2012 2013 2014 (Year) 2012 2013 2014 (Year) 2012 2013 2014 (Year) 0 Assets (Billion yen) 2,500 2,120.6 2,077.3 2,000 1,916.4 Capital (Billion yen) 1,600 1,180.5 1,145.1 960.7 Capital Expenditures Depreciation Costs R&D Costs (Billion yen) 200 166.3 138.5 118.2 (Billion yen) 160 (Billion yen) 135.8 137.2 117.9 47.1 46.9 44.8 2012 2013 2014 (Year) 2012 2013 2014 (Year) 2012 2013 2014 (Year) more detailed financial data. 19 AGC Report 2015 90 60 30 0 1,200 800 400 120 80 40 0 800 400 1,500 1,000 500 150 100 50 0 Non-Financial Data Human resources and occupational safety data Number of employees Number of fatal accidents1 Environment data Total energy consumption (PJ)2 Greenhouse gas emissions (1,000 tons-CO2) Total waste generated (1,000 tons) Total waste disposed (1,000 tons) Total water intake (million m3)3 2012 2013 49,961 51,448 3 2 150 10,100 650 25 57 147 9,870 664 22 62 2014 51,114 0 150 10,000 675 23 376 Year-on-year change −334 −2 3 130 11 1 — (Note) Please refer to the separate CSR Information Supplement and our CSR website for more detailed non-financial data. 1 Number of AGC Group employees 2 1 PJ (petajoule) = 1015J (joules) 3 2012 and 2013 numbers are for AGC Group (Japan), whereas 2014 numbers are for AGC Group as a whole. Data by Region Net Sales (Japan/Asia) Net Sales (Europe) Net Sales (The Americas) 0 2012 2013 2014 (Year) 0 2012 2013 2014 (Year) 0 2012 2013 2014 (Year) 0 0 2012 2013 2014 (Year) 0 2012 2013 2014 (Year) 911.1 956.9 939.8 900 600 300 313.0 291.4 229.0 300 200 100 120 80 40 0 (Billion yen) 1,200 (Billion yen) 400 (Billion yen) 160 139.9 111.8 83.6 2012 2013 2014 (Year) Sales Ratio4 Employees Ratio Total Energy Consumption Ratio Greenhouse Gas Emissions Ratio5 The Americas 10.0% 139.9 billion yen The Americas 7.8% 4,000 The Americas 8.5% 13 PJ 2014 1,392.8 billion yen 2014 51,114 2014 150 PJ The Americas 7.5% 754 thousand tons-CO2 2014 10,000 thousand tons-CO2 Europe 22.5% 313.0 billion yen Japan/Asia 67.5% 939.8 billion yen Europe 28.5% 14,563 Japan/Asia 63.7% 32,551 Europe 21.3% 32 PJ Japan/Asia 70.2% 105 PJ Europe 24.4% 2,450 thousand tons-CO2 Japan/Asia 68.1% 6,840 thousand tons-CO2 (Note) Please refer to page 21 for financial data by segment, and to the Annual Securities Report (Japanese only) or Financial Review booklet (English only) for 4 Sales by region calculated before elimination 5 Due to rounding, the entire group value does not match the total sum for all regions. AGC Report 2015 20 Overview of the AGC Group Outline by Business Segment Ratio1 Operations Segment Glass Sales Trends1 (Billion yen) Main Products 664.2 562.1 53% 709.0 Flat glass (cid:127)Float glass (cid:127)Low-emissivity (Low-E) glass (cid:127)Double glazing glass for solar control/heat-insulation (cid:127)Safety glass (cid:127)Decorative glass (cid:127)Glass for solar power systems Automotive glass (cid:127)Tempered automotive glass (cid:127)Laminated automotive glass Corporate Data As of the end of December 2014 Name Head Office Founded September 8, 1907 Incorporated June 1, 1950 Capital 90,873 million yen Asahi Glass Co., Ltd. (Global brand: AGC) Outstanding stock 1,186,705,905 shares 1-5-1, Marunouchi, Chiyoda-ku, Tokyo 100-8405 JAPAN Employees 51,114 (consolidated), 6,132 (non-consolidated) Consolidated Group companies 194 (156 overseas) Outline by Regional Segments Regional Segment Ratio1/Sales1 and Operating Profit Main Products Europe Employees 14,563 Japan/Asia Employees 32,551 The Americas (cid:127)Architectural glass (cid:127)Automotive glass (cid:127)Chemicals (cid:127)Architectural glass (cid:127)Automotive glass (cid:127)Display glass (cid:127)Electronic materials (cid:127)Chemicals (cid:127)Ceramics (cid:127)Architectural glass (cid:127)Automotive glass (cid:127)Electronic materials (cid:127)Chemicals Percentage of sales by region 23% Sales Operating profit 313 –3.8 billion yen billion yen Percentage of sales by region 67% Sales Operating profit 939.8 103.6 billion yen billion yen Percentage of sales by region 10% Sales Operating profit 133.9 –4.9 billion yen billion yen Electronics Chemicals Ceramics/ Other 2012 2013 2014 (Year) 341.4 334.7 292.9 Display (cid:127)Glass substrates for TFT-LCDs (cid:127)Specialty glass for display applications (cid:127)Glass substrates for display devices (cid:127)Display-related materials Electronics materials and parts (cid:127)Tone correction filters for digital cameras (cid:127)CMP slurry (cid:127)Synthetic quartz glass (cid:127)Glass frit and paste (cid:127)Glass molded lenses 2012 2013 2014 (Year) Etc. 314.7 288.0 254.1 Chlor-alkali & urethane (cid:127)Raw materials for vinyl chloride monomer and polymer (cid:127)Caustic soda (cid:127)Urethane materials Fluorine & specialty chemicals (cid:127)Fluoropolymers/films (cid:127)Fluorinated water and oil repellents (cid:127)Pharmaceutical and agrochemical intermediates and active ingredients Iodine-related products 2012 2013 2014 (Year) Etc. 33.1 32.3 31.6 Ceramics (cid:127)Various refractory materials (cid:127)Fine ceramics (cid:127)Sputtering targets Logistics/Engineering 22% 23% 2% 1 All numeric data is based on International Financial Reporting Standards (IFRS). The figures given for each business are sales to external customers. 1 All numeric data is based on International Financial Reporting Standards (IFRS). The figures given for each business are sales to external customers. 21 AGC Report 2015 AGC Report 2015 22 2012 2013 2014 (Year) Employees 4,000 Name Head Office Founded Consolidated Group companies 194 (156 overseas) Incorporated June 1, 1950 Capital 90,873 million yen Corporate Data As of the end of December 2014 Asahi Glass Co., Ltd. (Global brand: AGC) Outstanding stock 1,186,705,905 shares 1-5-1, Marunouchi, Chiyoda-ku, Tokyo 100-8405 JAPAN Employees September 8, 1907 51,114 (consolidated), 6,132 (non-consolidated) Overview of the AGC Group Outline by Business Segment Operations Segment Ratio1 Sales Trends1 (Billion yen) Main Products Glass 709.0 Flat glass (cid:127)Float glass 664.2 562.1 (cid:127)Low-emissivity (Low-E) glass (cid:127)Double glazing glass for solar control/heat-insulation (cid:127)Safety glass (cid:127)Decorative glass (cid:127)Glass for solar power systems Automotive glass (cid:127)Tempered automotive glass (cid:127)Laminated automotive glass 2012 2013 2014 (Year) 341.4 334.7 Display (cid:127)Glass substrates for TFT-LCDs 292.9 (cid:127)Specialty glass for display applications (cid:127)Glass substrates for display devices (cid:127)Display-related materials Electronics materials and parts (cid:127)Tone correction filters for digital cameras (cid:127)CMP slurry (cid:127)Synthetic quartz glass (cid:127)Glass frit and paste (cid:127)Glass molded lenses 2012 2013 2014 (Year) Etc. Chlor-alkali & urethane (cid:127)Raw materials for vinyl chloride monomer 314.7 288.0 254.1 and polymer (cid:127)Caustic soda (cid:127)Urethane materials Fluorine & specialty chemicals (cid:127)Fluoropolymers/films (cid:127)Fluorinated water and oil repellents (cid:127)Pharmaceutical and agrochemical intermediates and active ingredients Iodine-related products 2012 2013 2014 (Year) Etc. 33.1 32.3 31.6 Ceramics (cid:127)Various refractory materials (cid:127)Fine ceramics (cid:127)Sputtering targets Logistics/Engineering 53% 22% 23% 2% Electronics Chemicals Ceramics/ Other Outline by Regional Segments Regional Segment Ratio1/Sales1 and Operating Profit Europe Percentage of sales by region 23% Sales Operating profit 313 –3.8 billion yen billion yen Employees 14,563 Japan/Asia Employees 32,551 The Americas Percentage of sales by region 67% Sales Operating profit 939.8 103.6 billion yen billion yen Percentage of sales by region 10% Sales Operating profit 133.9 –4.9 billion yen billion yen Main Products (cid:127)Architectural glass (cid:127)Automotive glass (cid:127)Chemicals (cid:127)Architectural glass (cid:127)Automotive glass (cid:127)Display glass (cid:127)Electronic materials (cid:127)Chemicals (cid:127)Ceramics (cid:127)Architectural glass (cid:127)Automotive glass (cid:127)Electronic materials (cid:127)Chemicals 1 All numeric data is based on International Financial Reporting Standards (IFRS). The figures given for each business are sales to external customers. 1 All numeric data is based on International Financial Reporting Standards (IFRS). The figures given for each business are sales to external customers. 21 AGC Report 2015 AGC Report 2015 22 2012 2013 2014 (Year) Employees 4,000 Business Outline The AGC Group is engaged in the glass business with a focus on flat glass and automotive glass, and maintains a leading global share in both areas. Its flat glass product lineup consists of float flat glass, fabricated glass for architectural use, decorative glass, glass for solar power systems and other products tailored to the needs of each region. The Group is also committed to the development and sale of glass products that provide comfort and reduced environmental impact, such as products with heat insulation, shielding and other energy efficiency functions, and anti-condensation and anti-reflective properties. In the automotive glass business, the AGC Group makes use of its global mar- keting networks and cutting-edge technologies to pursue values such as safety, design, comfort and environmental performance. It provides high value-added products, including UV cut glass, infrared cut glass and glass antennas. Summary of Fiscal 2014 Shipments of architectural glass increased from the previous period in all regions. Although sales prices were down in Eastern Europe and remained at a lower level, the trend was positive on the whole. Also affected by the depreciation of the Japanese yen, the sales of architectural glass increased year on year. Shipments of automotive glass were affected by a decline in the number of auto production in some regions, but on the whole, the trend was positive, and shipments increased year on year. In addition, the weak yen helped to increase sales as compared to the previous period. As a result, sales in the glass business in 2014 increased to 712.7 billion yen, up 45.5 billion yen (6.8%) from the previous period. In terms of operating profit, in addi- tion to increased sales from architectural glass and automotive glass, structural reforms in the architectural glass business, including the optimization of production systems in Russia and Europe and the transfer of the North American fabricated glass business for commercial buildings, resulted in an improvement of 13.6 billion yen for a total of 600 million yen. Low emissivity (Low-E) double glazing unit Vitro Color Glass™ and Lacobel™ for interior wall cladding Glass We provide diverse products to meet regional needs around the world as a leading flat glass and automotive glass manufacturer. Europe Belgium AGC Glass Europe S.A. AGC Glass Europe Sales S.A. AGC Automotive Europe S.A. AGC Automotive Belgium S.A. AGC Flat Glass Nederland B.V. AGC Glass UK Ltd. Russia France Italy Netherland U.K. Czech Republic AGC Flat Glass Czech a.s., clen AGC Group AGC Automotive Czech a.s. OJSC AGC Bor Glassworks AGC Flat Glass Klin LLC AGC France SAS AGC Flat Glass Italia S.r.l AGC Automotive Italia S.r.l AGC Flat Glass Iberica S.A. AGC Glass Germany GmbH Interpane Glas Industrie AG AGC Glass Hungary Ltd. AGC Gdansk Sp. z o.o. AGC Otomotiv Adapazari Üretim Sanayi Ve Ticaret Anonim Sirketi Hungary Poland Turkey Spain Germany 23 AGC Report 2015 Japan The Americas AGC Glass Products Co., Ltd. AGC Glass Kenzai Co., Ltd. AGC Okinawa Glass Kenzai Co., Ltd. AGC Amenitech Co., Ltd. Ryugasaki Glass Co., Ltd. AGC Fabritech Co., Ltd. AGC Automotive AMC Co., Ltd. AGC Automotive Window Systems Co., Ltd. Autoglass Co., Ltd. U.S.A. AGC Flat Glass North America, Inc. AGC Soda Corporation AGC Automotive Americas Co. AGC Automotive Americas R&D, Inc. Canada AGC Flat Glass North America, Ltd. AGC Automotive Canada, Inc. Mexico AGC Automotive Mexico S. de R.L. de C.V. AGC Automotive Glass Mexico S.A. de C.V. AGC Glass Brazil, Inc. Brazil Asia Thailand AGC Flat Glass (Thailand) Public Co., Ltd. AGC Automotive (Thailand) Co., Ltd. Indonesia PT Asahimas Flat Glass Tbk. Philippines AGC Flat Glass Philippines Inc. China AGC Automotive Philippines Inc. AGC Flat Glass (Dalian) Co., Ltd. AGC Flat Glass (Suzhou) Co., Ltd. AGC Flat Glass Protech (Shenzhen) Co., Ltd. AGC Flat Glass (Hong Kong) Co., Ltd. AGC Automotive China Co., Ltd. AGC Automotive Foshan Co., Ltd. Beijing Kuayian Car Glass Sales & Service Co., Ltd. Sales Trends1 (Billion yen) 800 709.0 664.2 562.1 Trends in Operating Profit (Billion yen) 0.6 –0.7 “UV Verre Premium™” series for automotive glass 600 400 200 0 5 0 –5 –10 –15 (Note) As of December 2014 1 Sales to external customers. 2012 2013 2014 (Year) 2012 2014 (Year) -13.1 2013 Clearsight Ordinary float glass Clearsight™ Low reflection glass that minimizes background reflections on glass AGC Report 2015 24 Business Outline The AGC Group is engaged in the glass business with a focus on flat glass and automotive glass, and maintains a leading global share in both areas. Its flat glass product lineup consists of float flat glass, fabricated glass for architectural use, decorative glass, glass for solar power systems and other products tailored to the needs of each region. The Group is also committed to the development and sale of glass products that provide comfort and reduced environmental impact, such as products with heat insulation, shielding and other energy efficiency functions, and anti-condensation and anti-reflective properties. In the automotive glass business, the AGC Group makes use of its global mar- keting networks and cutting-edge technologies to pursue values such as safety, design, comfort and environmental performance. It provides high value-added products, including UV cut glass, infrared cut glass and glass antennas. Summary of Fiscal 2014 Shipments of architectural glass increased from the previous period in all regions. Although sales prices were down in Eastern Europe and remained at a lower level, the trend was positive on the whole. Also affected by the depreciation of the Japanese yen, the sales of architectural glass increased year on year. Shipments of automotive glass were affected by a decline in the number of auto production in some regions, but on the whole, the trend was positive, and shipments increased year on year. In addition, the weak yen helped to increase sales as compared to the previous period. As a result, sales in the glass business in 2014 increased to 712.7 billion yen, up 45.5 billion yen (6.8%) from the previous period. In terms of operating profit, in addi- tion to increased sales from architectural glass and automotive glass, structural reforms in the architectural glass business, including the optimization of production systems in Russia and Europe and the transfer of the North American fabricated glass business for commercial buildings, resulted in an improvement of 13.6 billion yen for a total of 600 million yen. Low emissivity (Low-E) double glazing unit Vitro Color Glass™ and Lacobel™ for interior wall cladding 23 AGC Report 2015 (Note) As of December 2014 1 Sales to external customers. Sales Trends1 (Billion yen) 800 709.0 664.2 600 400 200 0 562.1 2012 2013 2014 (Year) Trends in Operating Profit (Billion yen) “UV Verre Premium™” series for automotive glass 5 0 –5 –10 –15 0.6 –0.7 -13.1 2013 2012 2014 (Year) Clearsight Ordinary float glass Clearsight™ Low reflection glass that minimizes background reflections on glass AGC Report 2015 24 Glass We provide diverse products to meet regional needs around the world as a leading flat glass and automotive glass manufacturer. Europe Japan The Americas Belgium AGC Glass Europe S.A. AGC Glass Europe Sales S.A. AGC Automotive Europe S.A. AGC Automotive Belgium S.A. Netherland AGC Flat Glass Nederland B.V. U.K. AGC Glass UK Ltd. AGC Glass Products Co., Ltd. AGC Glass Kenzai Co., Ltd. AGC Okinawa Glass Kenzai Co., Ltd. AGC Amenitech Co., Ltd. Ryugasaki Glass Co., Ltd. AGC Fabritech Co., Ltd. Czech Republic AGC Flat Glass Czech a.s., clen AGC Group AGC Automotive AMC Co., Ltd. AGC Automotive Czech a.s. AGC Automotive Window Systems Co., Ltd. Russia OJSC AGC Bor Glassworks Autoglass Co., Ltd. U.S.A. AGC Flat Glass North America, Inc. AGC Soda Corporation AGC Automotive Americas Co. AGC Automotive Americas R&D, Inc. Canada AGC Flat Glass North America, Ltd. AGC Automotive Canada, Inc. Mexico AGC Automotive Mexico S. de R.L. de C.V. AGC Automotive Glass Mexico S.A. de C.V. Brazil AGC Glass Brazil, Inc. France Italy AGC Flat Glass Klin LLC AGC France SAS AGC Flat Glass Italia S.r.l AGC Automotive Italia S.r.l Spain AGC Flat Glass Iberica S.A. Germany AGC Glass Germany GmbH Interpane Glas Industrie AG Hungary AGC Glass Hungary Ltd. Poland Turkey AGC Gdansk Sp. z o.o. AGC Otomotiv Adapazari Üretim Sanayi Ve Ticaret Anonim Sirketi Asia Thailand AGC Flat Glass (Thailand) Public Co., Ltd. AGC Automotive (Thailand) Co., Ltd. Indonesia PT Asahimas Flat Glass Tbk. Philippines AGC Flat Glass Philippines Inc. AGC Automotive Philippines Inc. China AGC Flat Glass (Dalian) Co., Ltd. AGC Flat Glass (Suzhou) Co., Ltd. AGC Flat Glass Protech (Shenzhen) Co., Ltd. AGC Flat Glass (Hong Kong) Co., Ltd. AGC Automotive China Co., Ltd. AGC Automotive Foshan Co., Ltd. Beijing Kuayian Car Glass Sales & Service Co., Ltd. Glass Glass Company President Message: Growth Strategy We are working to improve our earning capacity by focusing on the optimization of our global production system and on adding greater value to products. Sales Expansion Orientation Business Goals Architectural glass: Provide products that correspond to needs in all countries and regions while improving profitability through better asset efficiency Automotive glass: Further reinforce our position as the global market leader New products and services Existing products and services Approach 2 (Example) Architectural glass: Products that pursue environmental performance and comfort Automotive glass: Products with high added value such as safety, comfort and environmental performance Approach 3 Secure new markets and applications for new products and services AGC Now Products and services: Architectural glass, automotive glass, industrial glass Markets: Japan, Asia, Europe, the Americas Approach 1 (Example) Architectural glass: Southeast Asia, Middle East Automotive glass: Respond to automobile manufacturers’ globalization Yoshiaki Tamura Glass Company President Existing markets and applications New markets and applications Building Optimal Production Systems and Business Models Tailored to Regions and Expanding the Architectural Glass Business in Growth Markets Solidifying the World’s No.1 Automotive Glass Market Position through Robust R&D Capability and Global R&D Development and Production Systems The functions and performance sought from architectural glass products differ by climate, structural considerations and lifestyle culture. Also, the structure of construction industries and materi- als supply chains also differs from country to country. To accom- modate these differences, it is necessary to build optimal busi- ness models for each country and region around the world. To improve future earnings capacity, we will set a focus on developing and expanding business in growth markets, including those in Southeast Asia and the Middle East. And while doing so, we will continue strength-building and structural reform initia- tives. For example, instead of building production facilities all by ourselves, we will make use of joint ventures and build rational and effective production and sales frameworks adapted to local market characteristics. Specifically, we are planning to reinforce our float glass production in Indonesia, and also we are working to disseminate highly energy-efficient Low-E double glazing glass in Vietnam and Singapore. In addi- tion, we have established a joint venture coating company with Saudi Arabia’s Obeikan Co., and will begin business in the Middle East market. Skyscraper district in Indonesia (Concept photo) In the automotive glass business, we strive to maintain and solid- ify our 30% share in the automotive glass industry—a leading market position globally. To this end, we are working to differen- tiate ourselves from other companies by enhancing our R&D capacity to develop high value-added products that support the evolution of cars and to strengthen product development and production systems on a global scale. With regard to the development of high value-added products, we have released various high-performance products to the market. For example, UV Verre Premium Cool on™ cuts ultraviolet and infrared rays, making car interiors more comfortable and con- tributing to a reduced environmental load by offering greater air conditioner efficiency. Also, WONDERLITE™ is equipped with a light-control function in addition to UV and IR protection. In the future, we will continue to focus on the technological develop- ment of automotive glass with an eye to furthering the evolution of automobiles through environmental performance and the pur- suit of safety and comfort. In addition, in response to the globalization of auto manufac- turers’ product development and production systems, we have strengthened our R&D and production systems in Brazil, China and Mexico. Through these initiatives, we are working toward an operat- ing profit ratio of 5% or more for its glass business in fiscal 2017. Approach 1 Existing Products to New Markets Joint Venture Established in Saudi Arabia, Architectural Glass Business Initiated in the Middle East Market In recent years, the architectural glass market in the Middle East has continued to grow at an annual rate of approximately 4%. In July 2014, AGC Glass Europe (headquartered in Belgium, hereafter “AGEU”), came to a mutual agreement with the Saudi Arabian glass manufacturer Obeikan Glass Company (hereafter “Obeikan”) for the establishment of a joint architectural glass coat- ing business venture. A processing line for architectural glass coat- ing is currently under construction inside the Obeikan plant, which is located in Saudi Arabia’s Yanbu City, and production is sched- uled to begin in early 2016. While using the synergies generated by AGEU, which is highly skilled in coating technologies vital to the manufacture of high-performance glass, and Obeikan, which has the largest float facilities in the Middle East and an overwhelming presence in the local glass industry, the new company will increase its presence in the Middle East’s architectural glass market and steadily respond to the area’s vigorous demand. Managers from both companies who attended the signing ceremony Approach 2 New Products to Existing Markets AGC‘s WONDERLITE™ Selected for Use in Largest-ever Light Control Glass Roofs on European Luxury Cars Panoramic glass roofs equipped with WONDERLITE™ technol- mode. Through effective integration of its light control and spe- ogy change their color from transparent to dark blue just by cial coating technologies, the product provides drivers and pas- pressing a button. sengers with an optimal driving environment and contributes The light-control technology was developed by an R&D directly to reducing the need for air-conditioning, thus lowering team in Japan, while a development team in Europe applied fuel consumption. Normal mode Light-shielding mode the technology in large-size glass roofs for luxury automobiles. WONDERLITE™ has been available as an option on luxury cars, on the European and North American markets since Septem- ber 2014. Covering an area three times larger than the conventional prod- ucts, the large-sized light control glass roof affords a unique open-air feeling whatever the outside conditions, and dramatically increases comfort inside the car. WONDERLITE™ has been applied with a special coating technology for solar control, which filters out sunburn-causing ultraviolet rays and warming infrared rays even in transparent Light-control glass WONDERLITE™ Daimler copyright all rights reserved. Daimler copyright all rights reserved. 25 AGC Report 2015 AGC Report 2015 26 Glass Glass Company President Message: Growth Strategy We are working to improve our earning capacity by focusing on the optimization of our global production system and on adding greater value to products. Sales Expansion Orientation Business Goals Architectural glass: Provide products that correspond to needs in all countries and regions while improving profitability through better asset efficiency Automotive glass: market leader Further reinforce our position as the global New products and services Existing products and services Approach 2 (Example) Architectural glass: Products that pursue environmental performance and comfort Automotive glass: Products with high added value such as safety, comfort and environmental performance Approach 3 Secure new markets and applications for new products and services AGC Now Products and services: Architectural glass, automotive glass, industrial glass Markets: Japan, Asia, Europe, the Americas Approach 1 (Example) Architectural glass: Southeast Asia, Middle East Automotive glass: Respond to automobile manufacturers’ globalization Yoshiaki Tamura Glass Company President Existing markets and applications New markets and applications Building Optimal Production Systems and Business Models Solidifying the World’s No.1 Automotive Glass Market Tailored to Regions and Expanding the Architectural Glass Position through Robust R&D Capability and Global R&D Business in Growth Markets Development and Production Systems The functions and performance sought from architectural glass In the automotive glass business, we strive to maintain and solid- products differ by climate, structural considerations and lifestyle ify our 30% share in the automotive glass industry—a leading culture. Also, the structure of construction industries and materi- market position globally. To this end, we are working to differen- als supply chains also differs from country to country. To accom- tiate ourselves from other companies by enhancing our R&D modate these differences, it is necessary to build optimal busi- capacity to develop high value-added products that support the ness models for each country and region around the world. evolution of cars and to strengthen product development and To improve future earnings capacity, we will set a focus on production systems on a global scale. developing and expanding business in growth markets, including With regard to the development of high value-added products, those in Southeast Asia and the Middle East. And while doing so, we have released various high-performance products to the we will continue strength-building and structural reform initia- market. For example, UV Verre Premium Cool on™ cuts ultraviolet tives. For example, instead of building production facilities all by and infrared rays, making car interiors more comfortable and con- ourselves, we will make use of joint ventures and build rational tributing to a reduced environmental load by offering greater air and effective production and sales frameworks adapted to local conditioner efficiency. Also, WONDERLITE™ is equipped with a market characteristics. Specifically, we are planning to reinforce light-control function in addition to UV and IR protection. In the our float glass production in Indonesia, and also we are working future, we will continue to focus on the technological develop- to disseminate highly energy-efficient Low-E double glazing glass ment of automotive glass with an eye to furthering the evolution in Vietnam and Singapore. In addi- tion, we have established a joint venture coating company with Saudi Arabia’s Obeikan Co., and will begin business in the Middle East market. 25 AGC Report 2015 of automobiles through environmental performance and the pur- suit of safety and comfort. In addition, in response to the globalization of auto manufac- turers’ product development and production systems, we have strengthened our R&D and production systems in Brazil, China and Mexico. Skyscraper district in Indonesia (Concept photo) Through these initiatives, we are working toward an operat- ing profit ratio of 5% or more for its glass business in fiscal 2017. Approach 1 Existing Products to New Markets Joint Venture Established in Saudi Arabia, Architectural Glass Business Initiated in the Middle East Market In recent years, the architectural glass market in the Middle East has continued to grow at an annual rate of approximately 4%. In July 2014, AGC Glass Europe (headquartered in Belgium, hereafter “AGEU”), came to a mutual agreement with the Saudi Arabian glass manufacturer Obeikan Glass Company (hereafter “Obeikan”) for the establishment of a joint architectural glass coat- ing business venture. A processing line for architectural glass coat- ing is currently under construction inside the Obeikan plant, which is located in Saudi Arabia’s Yanbu City, and production is sched- uled to begin in early 2016. While using the synergies generated by AGEU, which is highly skilled in coating technologies vital to the manufacture of high-performance glass, and Obeikan, which has the largest float facilities in the Middle East and an overwhelming presence in the local glass industry, the new company will increase its presence in the Middle East’s architectural glass market and steadily respond to the area’s vigorous demand. Managers from both companies who attended the signing ceremony Approach 2 New Products to Existing Markets AGC‘s WONDERLITE™ Selected for Use in Largest-ever Light Control Glass Roofs on European Luxury Cars Panoramic glass roofs equipped with WONDERLITE™ technol- ogy change their color from transparent to dark blue just by pressing a button. The light-control technology was developed by an R&D team in Japan, while a development team in Europe applied the technology in large-size glass roofs for luxury automobiles. WONDERLITE™ has been available as an option on luxury cars, on the European and North American markets since Septem- ber 2014. Covering an area three times larger than the conventional prod- ucts, the large-sized light control glass roof affords a unique open-air feeling whatever the outside conditions, and dramatically increases comfort inside the car. WONDERLITE™ has been applied with a special coating technology for solar control, which filters out sunburn-causing ultraviolet rays and warming infrared rays even in transparent mode. Through effective integration of its light control and spe- cial coating technologies, the product provides drivers and pas- sengers with an optimal driving environment and contributes directly to reducing the need for air-conditioning, thus lowering fuel consumption. Normal mode Light-shielding mode Light-control glass WONDERLITE™ Daimler copyright all rights reserved. Daimler copyright all rights reserved. AGC Report 2015 26 Business Outline In the electronics business, the AGC Group offers high value-added products that support the evolution of display devices and electronic equipment in the fields of display and electronic components. In the display business, the AGC Group boasts a leading market share for TFT-LCD glass substrates. By leveraging the Group’s unique manufacturing methods and advanced production techniques, the AGC Group strives to increase its global competitiveness with a focus on the research and develop- ment of materials for next-generation image display devices. In the field of electronic components, the AGC Group contributes to the evo- lution of electronic devices with a lineup of synthetic silica glass, high purity silicon carbide and other semiconductor process components, tone correction filters for smartphones and digital cameras and glass substrates for hard discs. Summary of Fiscal 2014 While shipments of LCD glass substrates and specialty glass for display applica- tions increased year on year, sales prices fell in comparison for the period. Plasma display panel-related products were affected due to production suspensions by major customers, resulting in a large reduction of shipments. Shipments of elec- tronics components increased from the previous period, along with optoelec- tronics materials and semiconductor related products. As a result, sales in the Electronics business for this period were 297.7 billion yen, down 48.3 billion yen (14.0%) from the previous period. Due to the decline in sales prices of glass substrates for liquid crystal displays and the decreased prof- itability of some overseas subsidiaries as a result of the weak yen, operating prof- its were 36.2 billion yen, down 37.9 billion yen (51.1%) from the previous period. Sales Trends1 (Billion yen) 400 341.4 334.7 292.9 Trends in Operating Profit (Billion yen) 100 84.4 74.1 300 200 100 0 75 50 25 0 36.2 “Dragontrail™ X” specialty glass for chemical strengthening Ultra-low thermal shrinkage glass substrate AN Wizus™ Tone correction filters for digital cameras Electronics Leveraging unique manufacturing methods and production technology, we will continue to offer high value-added products and support the evolution of the display and electronics industries. Japan AGC Display Glass Yonezawa Co., Ltd. AGC Electronics Co., Ltd. AGC Techno Glass Co., Ltd. AGC Micro Glass Co., Ltd. AGC Polycarbonate Co., Ltd. Optical Coatings Japan Co., Ltd. The Americas U.S.A. AGC Electronics America, Inc. Asia Thailand AGC Techno Glass (Thailand) Co., Ltd. AGC Micro Glass (Thailand) Co., Ltd. Indonesia PT IWAKI Glass Indonesia Taiwan China Korea PT Cahayatiara Mustika Scientific Indonesia AGC Display Glass Taiwan Co., Ltd. AGC Electronics Taiwan Co., Ltd. AGC Glass Substrate (Hong Kong) Co., Ltd. AGC Glass Substrate (Guangdong) Co., Ltd. AGC Display Glass (Kunshan) Co., Ltd. AGC Display Glass (Shenzhen) Co., Ltd. Hanwook Techno Glass Co., Ltd. Asahi Glass Fine Techno Korea Co., Ltd. Asahi PD Glass Korea Co., Ltd. AGC Display Glass Ochang Co., Ltd. 27 AGC Report 2015 (Note) As of December 2014 1 Sales to external customers. 2012 2013 2014 (Year) 2012 2013 2014 (Year) Ultra-thin flat glass SPOOL™ AGC Report 2015 28 Business Outline In the electronics business, the AGC Group offers high value-added products that support the evolution of display devices and electronic equipment in the fields of display and electronic components. In the display business, the AGC Group boasts a leading market share for TFT-LCD glass substrates. By leveraging the Group’s unique manufacturing methods and advanced production techniques, the AGC Group strives to increase its global competitiveness with a focus on the research and develop- ment of materials for next-generation image display devices. In the field of electronic components, the AGC Group contributes to the evo- lution of electronic devices with a lineup of synthetic silica glass, high purity silicon carbide and other semiconductor process components, tone correction filters for smartphones and digital cameras and glass substrates for hard discs. Summary of Fiscal 2014 While shipments of LCD glass substrates and specialty glass for display applica- tions increased year on year, sales prices fell in comparison for the period. Plasma display panel-related products were affected due to production suspensions by major customers, resulting in a large reduction of shipments. Shipments of elec- tronics components increased from the previous period, along with optoelec- tronics materials and semiconductor related products. As a result, sales in the Electronics business for this period were 297.7 billion yen, down 48.3 billion yen (14.0%) from the previous period. Due to the decline in sales prices of glass substrates for liquid crystal displays and the decreased prof- itability of some overseas subsidiaries as a result of the weak yen, operating prof- its were 36.2 billion yen, down 37.9 billion yen (51.1%) from the previous period. “Dragontrail™ X” specialty glass for chemical strengthening Ultra-low thermal shrinkage glass substrate AN Wizus™ Sales Trends1 (Billion yen) 400 Trends in Operating Profit (Billion yen) 100 Tone correction filters for digital cameras Electronics Leveraging unique manufacturing methods and production technology, we will continue to offer high value-added products and support the evolution of the display and electronics industries. Asia Japan The Americas Thailand AGC Techno Glass (Thailand) Co., Ltd. AGC Display Glass Yonezawa Co., Ltd. U.S.A. AGC Electronics America, Inc. AGC Electronics Co., Ltd. AGC Techno Glass Co., Ltd. AGC Micro Glass Co., Ltd. AGC Polycarbonate Co., Ltd. Optical Coatings Japan Co., Ltd. AGC Micro Glass (Thailand) Co., Ltd. Indonesia PT IWAKI Glass Indonesia PT Cahayatiara Mustika Scientific Indonesia Taiwan AGC Display Glass Taiwan Co., Ltd. AGC Electronics Taiwan Co., Ltd. China AGC Glass Substrate (Hong Kong) Co., Ltd. AGC Glass Substrate (Guangdong) Co., Ltd. AGC Display Glass (Kunshan) Co., Ltd. AGC Display Glass (Shenzhen) Co., Ltd. Korea Hanwook Techno Glass Co., Ltd. Asahi Glass Fine Techno Korea Co., Ltd. Asahi PD Glass Korea Co., Ltd. AGC Display Glass Ochang Co., Ltd. 27 AGC Report 2015 (Note) As of December 2014 1 Sales to external customers. 341.4 334.7 292.9 2012 2013 2014 (Year) 300 200 100 0 75 50 25 0 84.4 74.1 36.2 2012 2013 2014 (Year) Ultra-thin flat glass SPOOL™ AGC Report 2015 28 Electronics The Electronics Company President Message: Growth Strategy Through the development and sales of high value-added products that make use of our technological predominance, we are working to expand business in growth markets and growth fields. Sales Expansion Orientation Business Goals Display: Promote cost reductions, secure earnings level Electronic materials: Concentrate management resources in growth fields New products and services Existing products and services Approach 2 (Example) Display glass: Ultra-thin glass carrier technology Electronic materials: Electronic components used in smartphones and digital cameras Approach 3 Secure new markets and applications for new products and services AGC Now Products and services: Display glass, electronic components Markets: Japan, Asia Approach 1 (Example) Display glass: China Electronic materials: China Yoshinori Kobayashi Electronics Company President Existing markets and applications New markets and applications Focusing on the Mobile Display Field and the Chinese Market while Improving Productivity and Reducing Costs Reinforcing Growth Territories including Tone Correction Filters for Digital Cameras and Semiconductor Process Components The global glass market for LCD panels for televisions has been driven by the vigorous demand of the Chinese market in recent years, and is showing growth that exceeds the growth of global GDP. The market for glass for panels used in mobile devices is also continuing to grow at a rate of approximately 20% per year. Under these conditions, in the display business, we are focusing on the field of mobile device displays, a field which continues to show high growth, in addition to promoting cost reduction and improved profitability by converting to highly productive high-effi- ciency furnaces. Mobile devices and high-resolution 4K televisions require glass for higher definition LCD panels. The AGC Group has pursued float processes that can be used to efficiently produce high-quality glass substrates. We will leverage the Group’s predom- inance in this field, focusing on the development and sales of ultra-low thermal contraction glass and other high value-added products. In addition, we aim to strengthen our presence in the ever-growing Chinese market by reinforcing local production and responding to increasing demand in the country. Glass substrates for TFT-LCDs In the electronic materials business, we aim to expand profits by concentrating management resources in fields in which future growth is anticipated, such as the tone correction filters and semi- conductor process components used in digital cameras and smartphone cameras. Given their short history compared to lenses and other optical components, tone correction filters in particular are a product with much room for technological development. We are working towards new innovation in this field while promoting cooperation and joint development with the electronics manufacturers that work on the final products. Through these efforts, we aim to maintain an operating profit ratio of 10% or more for its electronics business in fiscal 2017. A digital camera equipped with a tone correction filter (concept photo) A smartphone equipped with a high-resolution panel (concept photo) such as an increase in panel contrast. 29 AGC Report 2015 AGC Report 2015 30 Approach 1 Existing Products to New Markets Realizing an End-to-End Production System for TFT-LCD Glass Substrates in China Demand for TFT-LCD panels is favorable and steady, centered on panels for use in TVs and mobile devices, and in the future, an annual market growth rate of over 5% is anticipated. In particular, the Chinese market is predicted to account for most of the in- crease in demand, and it was necessary to establish a system that consistently supplies large glass substrates domestically in China. In response to increasing demand in China, the AGC Group is establishing product supply systems in the country. The Group first built processing bases for large glass substrates in Kunshan City, Jiangsu Province and Shenzhen City, Guangdong Province. Then, in order to reinforce stable supply systems to meet further growing demand in the market, the Group has decided to build a glass manufacturing furnace in Huizhou, Guangdong Province for the purpose of setting up an integrated production system in China. The new company will be established in mid-2015, with oper- ation scheduled to begin between the end of 2016 and the be- ginning of 2017. The signing ceremony for the memorandum regarding investment with the Huizhou Zhongkai High-tech Industrial Development Zone Approach 2 New Products to Existing Markets Release of AN Wizus™, Glass Substrate with the World’s Lowest Level of Thermal Shrinkage—Contributing to Improved Quality and Manufacturing Productivity for High-Resolution LCD Panels In recent years, the use of high-resolution panels in smartphones affect the quality and manufacturing productivity of the panels. and tablets has been increasing. During the manufacturing pro- Accordingly, glass substrates used in high-resolution LCD panels cess for high-resolution LCD panels, glass substrates expand and need to have a low thermal shrinkage. shrink when exposed to heat, and such expansion and shrinkage The AGC Group’s glass manufacturing method, called the float process, has a long cooling period, and it can minimize thermal shrinkage of glass substrates. The Group has been offering high quality glass substrates for displays that have one of the lowest thermal shrinkages in the industry. The newly developed AN Wizus™ has an improved glass com- position, and the percentage of thermal shrinkage is only one fifth that of the conventional product (AN100). The AGC Group, with its float glass technology, successfully achieved the lowest thermal contraction in the world. AN Wizus™ offers superior tensile strength and does not bend easily. This and other special characteristics contribute to the im- provement of quality and productivity in high-resolution panels, Electronics Business Goals Display: Promote cost reductions, secure earnings level Electronic materials: Concentrate management resources in growth fields New products and services Existing products and services Approach 2 (Example) Display glass: Ultra-thin glass carrier technology Electronic materials: Electronic components used in smartphones and digital cameras Approach 3 Secure new markets and applications for new products and services AGC Now Products and services: Display glass, electronic components Markets: Japan, Asia Approach 1 (Example) Display glass: China Electronic materials: China Yoshinori Kobayashi Electronics Company President Existing markets and applications New markets and applications Focusing on the Mobile Display Field and the Chinese Market Reinforcing Growth Territories including Tone Correction Filters while Improving Productivity and Reducing Costs for Digital Cameras and Semiconductor Process Components The global glass market for LCD panels for televisions has been In the electronic materials business, we aim to expand profits by driven by the vigorous demand of the Chinese market in recent concentrating management resources in fields in which future years, and is showing growth that exceeds the growth of global growth is anticipated, such as the tone correction filters and semi- GDP. The market for glass for panels used in mobile devices is also conductor process components used in digital cameras and continuing to grow at a rate of approximately 20% per year. smartphone cameras. Under these conditions, in the display business, we are focusing Given their short history compared to lenses and other optical on the field of mobile device displays, a field which continues to components, tone correction filters in particular are a product show high growth, in addition to promoting cost reduction and with much room for technological development. We are working improved profitability by converting to highly productive high-effi- towards new innovation in this field while promoting cooperation ciency furnaces. Mobile devices and high-resolution 4K televisions and joint development with the electronics manufacturers that require glass for higher definition LCD panels. The AGC Group has work on the final products. pursued float processes that can be used to efficiently produce Through these efforts, we aim to maintain an operating profit high-quality glass substrates. We will leverage the Group’s predom- ratio of 10% or more for its electronics business in fiscal 2017. inance in this field, focusing on the development and sales of ultra-low thermal contraction glass and other high value-added products. In addition, we aim to strengthen our presence in the ever-growing Chinese market by reinforcing local production and responding to increasing demand The Electronics Company President Message: Growth Strategy Through the development and sales of high value-added products that make use of our technological predominance, we are working to expand business in growth markets and growth fields. Sales Expansion Orientation Approach 1 Existing Products to New Markets Realizing an End-to-End Production System for TFT-LCD Glass Substrates in China Demand for TFT-LCD panels is favorable and steady, centered on panels for use in TVs and mobile devices, and in the future, an annual market growth rate of over 5% is anticipated. In particular, the Chinese market is predicted to account for most of the in- crease in demand, and it was necessary to establish a system that consistently supplies large glass substrates domestically in China. In response to increasing demand in China, the AGC Group is establishing product supply systems in the country. The Group first built processing bases for large glass substrates in Kunshan City, Jiangsu Province and Shenzhen City, Guangdong Province. Then, in order to reinforce stable supply systems to meet further growing demand in the market, the Group has decided to build a glass manufacturing furnace in Huizhou, Guangdong Province for the purpose of setting up an integrated production system in China. The new company will be established in mid-2015, with oper- ation scheduled to begin between the end of 2016 and the be- ginning of 2017. The signing ceremony for the memorandum regarding investment with the Huizhou Zhongkai High-tech Industrial Development Zone Approach 2 New Products to Existing Markets Release of AN Wizus™, Glass Substrate with the World’s Lowest Level of Thermal Shrinkage—Contributing to Improved Quality and Manufacturing Productivity for High-Resolution LCD Panels In recent years, the use of high-resolution panels in smartphones and tablets has been increasing. During the manufacturing pro- cess for high-resolution LCD panels, glass substrates expand and shrink when exposed to heat, and such expansion and shrinkage in the country. Glass substrates for TFT-LCDs A digital camera equipped with a tone correction filter (concept photo) A smartphone equipped with a high-resolution panel (concept photo) affect the quality and manufacturing productivity of the panels. Accordingly, glass substrates used in high-resolution LCD panels need to have a low thermal shrinkage. The AGC Group’s glass manufacturing method, called the float process, has a long cooling period, and it can minimize thermal shrinkage of glass substrates. The Group has been offering high quality glass substrates for displays that have one of the lowest thermal shrinkages in the industry. The newly developed AN Wizus™ has an improved glass com- position, and the percentage of thermal shrinkage is only one fifth that of the conventional product (AN100). The AGC Group, with its float glass technology, successfully achieved the lowest thermal contraction in the world. AN Wizus™ offers superior tensile strength and does not bend easily. This and other special characteristics contribute to the im- provement of quality and productivity in high-resolution panels, such as an increase in panel contrast. 29 AGC Report 2015 AGC Report 2015 30 Applied Glass Materials Business Using unique technologies to provide glass for Electronics and solar power systems Versatile Development of Chemically Strengthened Specialty Glass The AGC Group is proactively promoting the expansion of uses for the Dragontrail™ series and Leoflex™, proposing new possibilities for glass to customers. Applied Glass Materials General Division was established in January 2015. This new division is designed to integrate and grow the business that had been divided between the Glass Company and the Electronics Company, and to explore and launch new business from all the business domains of the AGC Group. With these initiatives, the AGC Group will open up the new possibilities of glass with a unique and diverse product lineup, including cover glass for electronic devices such as smart- phones and tablet devices, and glass substrates for solar cells. Dragontrail™ 3 point-bending test Dragontrail™ 3 point-bending test Major Products Specialty Glass for Chemical Strengthening “Dragontrail™” series Leoflex™ Cover glass for smartphones and tablet devices Chemically strengthened specialty glass, developed for versatile use in architecture, solar cells and more Glass Substrates for Touch Panels TCO Substrates for Photovoltaic Devices Touch panel glass substrates for smartphones and tablet devices TCO substrates for thin film photovoltaic devices. The unique surface texture disperses incoming light, trapping it inside a silicon layer 31 AGC Report 2015 AGC Report 2015 32 Display Field Dragontrail™ Used in a Wide Array of Touch Panels from Smartphones to Personal Computers Renowned for its superior strength, scratch resistance, and stable supply, the Dragontrail™ series has been adopted by world-lead- ing brands—as well as those in fast-growing countries—as cover glass in smartphones, tablet devices and notebooks. Automotive Field Realizing more Comfortable and Reliable Instrument Operability with Touch Panels Instruments in vehicles are expected to increasingly feature touch panel operations in the future, and technologies are being devel- oped to integrate the operations of various equipment such as car stereos and air conditioners. The high strength, scratch resistant, and anti-reflective Dragontrail™ is now being adopted as a cover glass for such console panels. PV Power Generation Field Easing Installation Requirements by Drastically Reducing Solar Panel Weight By using Leoflex™ for the cover glass, the weight of solar panels can be reduced by half compared to previous models. This makes it possi- ble for solar panels to be effectively utilized in spaces where installa- tion is difficult due to weight restrictions. Residential Field Developing Lighter, More Compact Glass with Improved Energy-Saving Performance Utilizing the characteristics of Leoflex™, the AGC Group is working to develop a lightweight, easy-to-handle, energy-efficient triple-glazed window with markedly enhanced insulation performance. Railway Field Making Train Travel more Pleasant with Energy-Efficient, Light-Modulating Windows Leoflex™ light-control double-glazed units have been adopted for use as window panes in express trains, resulting in energy efficiency and a glass weight reduction of 20% or more as compared to con- ventional glass. Applied Glass Materials Business Applied Glass Materials General Division was established in January 2015. This new division is designed to integrate and grow the business that had been divided between the Glass Company and the Electronics Company, and to explore and launch new business from all the business domains of the AGC Group. With these initiatives, the AGC Group will open up the new possibilities of glass with a unique and diverse product lineup, including cover glass for electronic devices such as smart- phones and tablet devices, and glass substrates for solar cells. Dragontrail™ 3 point-bending test Dragontrail™ 3 point-bending test Major Products Specialty Glass for Chemical Strengthening “Dragontrail™” series Leoflex™ Cover glass for smartphones and tablet devices Chemically strengthened specialty glass, developed for versatile use in architecture, solar cells and more Glass Substrates for Touch Panels TCO Substrates for Photovoltaic Devices Using unique technologies to provide glass for Electronics and solar power systems Versatile Development of Chemically Strengthened Specialty Glass The AGC Group is proactively promoting the expansion of uses for the Dragontrail™ series and Leoflex™, proposing new possibilities for glass to customers. Display Field Dragontrail™ Used in a Wide Array of Touch Panels from Smartphones to Personal Computers Renowned for its superior strength, scratch resistance, and stable supply, the Dragontrail™ series has been adopted by world-lead- ing brands—as well as those in fast-growing countries—as cover glass in smartphones, tablet devices and notebooks. Automotive Field Realizing more Comfortable and Reliable Instrument Operability with Touch Panels Instruments in vehicles are expected to increasingly feature touch panel operations in the future, and technologies are being devel- oped to integrate the operations of various equipment such as car stereos and air conditioners. The high strength, scratch resistant, and anti-reflective Dragontrail™ is now being adopted as a cover glass for such console panels. PV Power Generation Field Easing Installation Requirements by Drastically Reducing Solar Panel Weight By using Leoflex™ for the cover glass, the weight of solar panels can be reduced by half compared to previous models. This makes it possi- ble for solar panels to be effectively utilized in spaces where installa- tion is difficult due to weight restrictions. Residential Field Developing Lighter, More Compact Glass with Improved Energy-Saving Performance Utilizing the characteristics of Leoflex™, the AGC Group is working to develop a lightweight, easy-to-handle, energy-efficient triple-glazed window with markedly enhanced insulation performance. Railway Field Making Train Travel more Pleasant with Energy-Efficient, Light-Modulating Windows Leoflex™ light-control double-glazed units have been adopted for use as window panes in express trains, resulting in energy efficiency and a glass weight reduction of 20% or more as compared to con- ventional glass. Touch panel glass substrates for smartphones and tablet devices TCO substrates for thin film photovoltaic devices. The unique surface texture disperses incoming light, trapping it inside a silicon layer 31 AGC Report 2015 AGC Report 2015 32 Business Outline Under the principle of “Chemistry for a Blue Planet,” the AGC Group’s chemicals business keeps its environmental impact to a minimum by making complete use of the by-products created in chemical reactions, while continuing to provide a wide variety of products that are useful to society in areas ranging from basic chemicals to functional chemicals. The AGC Group is also working on the recovering and recycling of chlorofluorocarbons and other ozone-depleting substances and the development of environmentally friendly products. In the field of chlor-alkali and urethane, the Group manufactures caustic soda, sodium bicarbonate and other highly versatile basic chemical products that are vital to daily life and various industries. Urethane-related products are used in thermal-in- sulating materials, car seats and other products that bring comfort to our lives. In the field of fluorine/specialty chemicals, the AGC Group boasts the world’s top-class technologies. The Group manufactures and supplies high-perfor- mance products with extremely high heat resistance, chemical resistance and weather resistance. In particular, the Group’s fluorinated resins (Fluon® ETFE) enjoy a global top-class share. The AGC Group also supplies a wide range of high-performance products in vari- ous global industries: fluorinated resins and fluorinated elastomers in the automotive and aircraft industries; fluoropolymer films and fluoropolymer resin for coating in the architecture field; and multifunctional materials for the electronics and display field. Summary of Fiscal 2014 Shipments of chlor-alkali and urethane products in the Japan and Asia region were strong, resulting in increased sales in comparison to the previous period. For fluorine and specialty products, shipments of fluorinated resins and of phar- maceutical and agrochemical intermediates and active ingredients were strong, leading to increased year-on-year sales. As a result, sales in the Chemicals business for the current period were 317.2 billion yen, up 26.6 billion yen (9.1%) from the previous period, while operating profits were 24.1 billion yen, up 6.4 billion yen (35.8%) from the previous period. Sales Trends1 (Billion yen) 400 314.7 288.0 254.1 Trends in Operating Profit (Billion yen) 24.1 16.8 17.7 300 200 100 0 30 20 10 0 “Fluon® ETFE FILM” Fluoropolymer film “Lumiflon™” highly weather-resistant fluoropolymer resin for coatings Tafluprost pharmaceutical and agrochemical intermediates and active ingredients * A glaucoma and ocular hypertension therapeutic agent jointly developed with Santen Pharmaceutical Co., Ltd. Chemicals We offer a diverse variety of products, from basic chemicals to fluorine-based high-performance chemicals. Our products help create an affluent, safe and secure society and promote environmental conservation. Europe U.K. AGC Chemicals Europe, Ltd. The Americas U.S.A. AGC Chemicals Americas, Inc. Woodward Iodine Corporation Japan Ise Chemicals Corporation Keiyo Monomer Co., Ltd. AGC Si-Tech Co., Ltd. AGC Engineering Co., Ltd. AGC Seimi Chemical Co., Ltd. AGC Coat-Tech Co., Ltd. AGC Polymer Material Co., Ltd. AGC Green-Tech Co., Ltd. AGC Wakasa Chemicals Co., Ltd. AGC Matex Co., Ltd. AGC Filtech Co., Ltd. Hokkaido Soda Co., Ltd. Kashima Chemical Co., Ltd. Asia Thailand AGC Chemicals (Thailand) Co., Ltd. AGC Matex (Thailand) Co., Ltd. Indonesia PT Asahimas Chemical China Vietnam AGC Chemicals Asia Pacific Pte. Ltd. Phu My Plastics and Chemicals Co.,Ltd. 33 AGC Report 2015 (Note) As of December 2014 1 Sales to external customers. 2012 2013 2014 (Year) 2012 2013 2014 (Year) AsahiGuard™ E Series: Fluorinated water and oil AsahiGuard™ E Series: Fluorinated water and oil repellents repellents AGC Report 2015 34 Business Outline Under the principle of “Chemistry for a Blue Planet,” the AGC Group’s chemicals business keeps its environmental impact to a minimum by making complete use of the by-products created in chemical reactions, while continuing to provide a wide variety of products that are useful to society in areas ranging from basic chemicals to functional chemicals. The AGC Group is also working on the recovering and recycling of chlorofluorocarbons and other ozone-depleting substances and the development of environmentally friendly products. In the field of chlor-alkali and urethane, the Group manufactures caustic soda, sodium bicarbonate and other highly versatile basic chemical products that are vital to daily life and various industries. Urethane-related products are used in thermal-in- sulating materials, car seats and other products that bring comfort to our lives. In the field of fluorine/specialty chemicals, the AGC Group boasts the world’s top-class technologies. The Group manufactures and supplies high-perfor- mance products with extremely high heat resistance, chemical resistance and weather resistance. In particular, the Group’s fluorinated resins (Fluon® ETFE) enjoy a global top-class share. The AGC Group also supplies a wide range of high-performance products in vari- ous global industries: fluorinated resins and fluorinated elastomers in the automotive and aircraft industries; fluoropolymer films and fluoropolymer resin for coating in the architecture field; and multifunctional materials for the electronics and display field. Summary of Fiscal 2014 Shipments of chlor-alkali and urethane products in the Japan and Asia region were strong, resulting in increased sales in comparison to the previous period. For fluorine and specialty products, shipments of fluorinated resins and of phar- maceutical and agrochemical intermediates and active ingredients were strong, leading to increased year-on-year sales. As a result, sales in the Chemicals business for the current period were 317.2 billion yen, up 26.6 billion yen (9.1%) from the previous period, while operating profits were 24.1 billion yen, up 6.4 billion yen (35.8%) from the previous period. “Fluon® ETFE FILM” Fluoropolymer film “Lumiflon™” highly weather-resistant fluoropolymer resin for coatings Sales Trends1 (Billion yen) 400 Trends in Operating Profit (Billion yen) 30 Tafluprost pharmaceutical and agrochemical intermediates and active ingredients * A glaucoma and ocular hypertension therapeutic agent jointly developed with Santen Pharmaceutical Co., Ltd. 33 AGC Report 2015 (Note) As of December 2014 1 Sales to external customers. 300 200 100 0 314.7 288.0 254.1 2012 2013 2014 (Year) 20 10 0 24.1 16.8 17.7 2012 2013 2014 (Year) AsahiGuard™ E Series: Fluorinated water and oil AsahiGuard™ E Series: Fluorinated water and oil repellents repellents AGC Report 2015 34 Chemicals We offer a diverse variety of products, from basic chemicals to fluorine-based high-performance chemicals. Our products help create an affluent, safe and secure society and promote environmental conservation. Europe U.K. AGC Chemicals Europe, Ltd. The Americas U.S.A. AGC Chemicals Americas, Inc. Woodward Iodine Corporation Japan Ise Chemicals Corporation Keiyo Monomer Co., Ltd. AGC Si-Tech Co., Ltd. AGC Engineering Co., Ltd. AGC Seimi Chemical Co., Ltd. AGC Coat-Tech Co., Ltd. AGC Polymer Material Co., Ltd. AGC Green-Tech Co., Ltd. AGC Wakasa Chemicals Co., Ltd. AGC Matex Co., Ltd. AGC Filtech Co., Ltd. Hokkaido Soda Co., Ltd. Kashima Chemical Co., Ltd. Asia Thailand AGC Chemicals (Thailand) Co., Ltd. AGC Matex (Thailand) Co., Ltd. Indonesia PT Asahimas Chemical China AGC Chemicals Asia Pacific Pte. Ltd. Vietnam Phu My Plastics and Chemicals Co.,Ltd. Chemicals The Chemicals Company President Message: Growth Strategy We will work to achieve solid growth while increasing our market predominance through proactive investment in growth fields and growth markets. Sales Expansion Orientation Business Goals Chlor-alkali and urethane: Capture demand from the Southeast Asian market Fluorine and specialty: Secure increased global demand New products and services Approach 2 (Example) High-performance fluorine chemicals: HFO-1234yf AMOLEA™ Approach 3 Secure new markets and applications for new products and services Existing products and services AGC Now Products and services: Chlor-alkali and orethane, fluorine and specialty Markets: Japan, Asia, Europe, the Americas Approach 1 (Example) Chlor-alkali: Expand supply to Indonesia, Vietnam and the rest of Southeast Asia The Phu My Plastics and Chemicals plant, the latest new production base after Thailand and Indonesia Masao Nemoto Chemicals Company President Existing markets and applications New markets and applications Reinforcing Local Production and Sales Systems in Response to Expanding Demand in the Southeast Asian Market Exploring Markets for High-Performance Fluorine Chemicals by Strengthening Technical Support on a Global Scale As Indonesia, Thailand and other ASEAN countries continue to grow, demand for chlor-alkali products is expected to continue expanding. The AGC Group began local production and sales of chlor-alkali in Thailand in 1964, and in Indonesia in 1986, and estab- lished its presence as the manufacturer with the top market share of caustic soda in Southeast Asia. In order to respond to the growing demand across the entire Southeast Asian market in recent years, we are enhancing the capacity of our electrolysis facility in Indonesia, and in 2014 we acquired a leading Vietnamese vinyl chloride resin manufacturer as a subsidiary. We will continue achiev- ing steady growth by proactively investing in growth fields and growth markets. Capacity enhancement scheduled at PT Asahimas Chemical in Indonesia 35 AGC Report 2015 High-performance fluorine chemicals are highly weather resis- tant, long lasting and have many other excellent properties. Consequently, demand for such products is growing globally, par- ticularly in the automotive, electronics and construction industries, and for use in agricultural greenhouses. Global demand is antici- pated to grow further, including in environment-related fields. In order to firmly connect this increasing demand to business growth, we are expanding our technical support functions in an effort to cultivate new applications for high-performance fluo- rine chemicals and promoting sales. In addition to opening a technical center in China in 2014, we are planning to set up tech- nical centers in other countries and regions in 2015. Technical centers provide technical services, applied development and analytical work tailored to regions’ needs in order to explore new markets in the region. As a promising product field, we are focusing on the develop- ment of substitute refrigerants that have a lower environmental load and greatly contribute to prevent- ing global warming and the destruc- tion of the ozone layer. Through these initiatives, we aim to achieve an operating profit ratio of 10% or more for its Chemicals busi- ness in fiscal 2017. Newly constructed technical center in China Approach 1 Existing Products to New Markets Acquisition of Vietnamese Vinyl Chloride Company in Preparation for Expanding Chlor-Alkali Business in Southeast Asia Vietnam is a market with great room for growth—over half of its chloride (PVC) market in Southeast Asia, after Indonesia and population of approximately 90 million is under thirty—and it is Thailand, and the demand for PVC that accompanies the country’s anticipated to see continued stable economic growth at a rate of economic development is expected to keep the annual growth of over 5% annually. The country has the third largest polyvinyl approximately 5%. In addition, increased demand for other chlor-alkali products, such as caustic soda and hydrochloric acid, is anticipated along with the expansion of the heavy chemical industry in Vietnam. In order to develop business in this promising market, in 2014 the AGC Group acquired 78% of the stock of Phu My Plastics and Chemicals Company Ltd. (hereafter PMPC), a PVC manufacturer. PMPC has an over 30% share in the PVC resin market in the country, and the AGC Group’s business development in Vietnam made a full-fledged start. By establishing a new production and sales base in Vietnam in addition to enhancing the production capacity in Indonesia, the AGC Group will work to expand its Southeast Asian chlor-alkali business even further. Approach 2 New Products to Existing Markets HFO-1234yf and AMOLEA™: Low-Environmental Impact Refrigerants with Reduced Influence on Climate Change Hydrofluorocarbons (HFC) are used as refrigerants in air condi- tioners and cars. However, since their global warming potential (GWP) is high, their use is being increasingly restricted in Japan, Europe, North America, and the rest of the world. The AGC Group is the world’s first company to establish the production technology for the next-generation automotive refrigerant HFO-1234yf, one that has an extremely low environmental load with a GWP that’s equal to or less than 1/1,300 the GWP of conven- tional products1. In January 2014, the AGC Group announced that it would supply the product to the US company Honeywell. In addi- tion, in March 2014, the Group developed AMOLEA™, a new refrig- erant for air conditioners whose performance is the same as con- ventional products2, but whose GWP has been lowered to approxi- mately 1/6. Commercial production is expected to begin in 2016. 1 As compared to the automotive refrigerant HFC-134a 2 As compared to HFC-410A Automotive refrigerants: Comparison3 Approx.1/1,300 HFO–1234yf Conventional refrigerant Automotive refrigerant HFC–134a 3 When the GWP of HFC-134a is 1 Air Conditioner Refrigerants: Comparison4 Approx.1/6 Conventional refrigerant HFC-410A Substitute refrigerant HFC-32 Approx. 1/2 Approx. 1/3 4 When the GWP of HFC-410A is 1 AGC Report 2015 36 Chemicals The Chemicals Company President Message: Growth Strategy We will work to achieve solid growth while increasing our market predominance through proactive investment in growth fields and growth markets. Sales Expansion Orientation Business Goals Chlor-alkali and urethane: Capture demand from the Southeast Asian market Fluorine and specialty: Secure increased global demand New products and services Approach 2 (Example) High-performance fluorine chemicals: HFO-1234yf AMOLEA™ Approach 3 Secure new markets and applications for new products and services Approach 1 Existing Products to New Markets Acquisition of Vietnamese Vinyl Chloride Company in Preparation for Expanding Chlor-Alkali Business in Southeast Asia Vietnam is a market with great room for growth—over half of its population of approximately 90 million is under thirty—and it is anticipated to see continued stable economic growth at a rate of over 5% annually. The country has the third largest polyvinyl Existing products and services AGC Now Products and services: Chlor-alkali and orethane, fluorine and specialty Markets: Japan, Asia, Europe, the Americas Approach 1 (Example) Chlor-alkali: Expand supply to Indonesia, Vietnam and the rest of Southeast Asia The Phu My Plastics and Chemicals plant, the latest new production base after Thailand and Indonesia chloride (PVC) market in Southeast Asia, after Indonesia and Thailand, and the demand for PVC that accompanies the country’s economic development is expected to keep the annual growth of approximately 5%. In addition, increased demand for other chlor-alkali products, such as caustic soda and hydrochloric acid, is anticipated along with the expansion of the heavy chemical industry in Vietnam. In order to develop business in this promising market, in 2014 the AGC Group acquired 78% of the stock of Phu My Plastics and Chemicals Company Ltd. (hereafter PMPC), a PVC manufacturer. PMPC has an over 30% share in the PVC resin market in the country, and the AGC Group’s business development in Vietnam made a full-fledged start. By establishing a new production and sales base in Vietnam in addition to enhancing the production capacity in Indonesia, the AGC Group will work to expand its Southeast Asian chlor-alkali business even further. Masao Nemoto Chemicals Company President Existing markets and applications New markets and applications Reinforcing Local Production and Sales Systems in Response Exploring Markets for High-Performance Fluorine Chemicals to Expanding Demand in the Southeast Asian Market by Strengthening Technical Support on a Global Scale As Indonesia, Thailand and other ASEAN countries continue to High-performance fluorine chemicals are highly weather resis- grow, demand for chlor-alkali products is expected to continue tant, long lasting and have many other excellent properties. expanding. The AGC Group began local production and sales of Consequently, demand for such products is growing globally, par- chlor-alkali in Thailand in 1964, and in Indonesia in 1986, and estab- ticularly in the automotive, electronics and construction industries, lished its presence as the manufacturer with the top market share of and for use in agricultural greenhouses. Global demand is antici- caustic soda in Southeast Asia. In order to respond to the growing pated to grow further, including in environment-related fields. demand across the entire Southeast Asian market in recent years, In order to firmly connect this increasing demand to business we are enhancing the capacity of our electrolysis facility in growth, we are expanding our technical support functions in an Indonesia, and in 2014 we acquired a leading Vietnamese vinyl effort to cultivate new applications for high-performance fluo- chloride resin manufacturer as a subsidiary. We will continue achiev- rine chemicals and promoting sales. In addition to opening a ing steady growth by proactively investing in growth fields and technical center in China in 2014, we are planning to set up tech- growth markets. nical centers in other countries and regions in 2015. Technical centers provide technical services, applied development and analytical work tailored to regions’ needs in order to explore new markets in the region. As a promising product field, we are focusing on the develop- ment of substitute refrigerants that have a lower environmental load and greatly contribute to prevent- ing global warming and the destruc- tion of the ozone layer. Through these initiatives, we aim to achieve an operating profit ratio of 10% or more for its Chemicals busi- Capacity enhancement scheduled at PT Asahimas Chemical in Indonesia ness in fiscal 2017. Newly constructed technical center in China Approach 2 New Products to Existing Markets HFO-1234yf and AMOLEA™: Low-Environmental Impact Refrigerants with Reduced Influence on Climate Change Hydrofluorocarbons (HFC) are used as refrigerants in air condi- tioners and cars. However, since their global warming potential (GWP) is high, their use is being increasingly restricted in Japan, Europe, North America, and the rest of the world. The AGC Group is the world’s first company to establish the production technology for the next-generation automotive refrigerant HFO-1234yf, one that has an extremely low environmental load with a GWP that’s equal to or less than 1/1,300 the GWP of conven- tional products1. In January 2014, the AGC Group announced that it would supply the product to the US company Honeywell. In addi- tion, in March 2014, the Group developed AMOLEA™, a new refrig- erant for air conditioners whose performance is the same as con- ventional products2, but whose GWP has been lowered to approxi- mately 1/6. Commercial production is expected to begin in 2016. 1 As compared to the automotive refrigerant HFC-134a 2 As compared to HFC-410A Automotive refrigerants: Comparison3 Approx.1/1,300 HFO–1234yf Conventional refrigerant Automotive refrigerant HFC–134a 3 When the GWP of HFC-134a is 1 Air Conditioner Refrigerants: Comparison4 Approx.1/6 Conventional refrigerant HFC-410A Approx. 1/3 4 When the GWP of HFC-410A is 1 Substitute refrigerant HFC-32 Approx. 1/2 35 AGC Report 2015 AGC Report 2015 36 Business Outline The Ceramics business began in 1916 with the production of high temperature resistant bricks for glass furnaces. At present, AGC Ceramics Co. Ltd. has adopted the visions “Glass Ceramics Innovation” and “Green Ceramics Innovation” and is working to create new innovations in the fields of Glass Engineering and Environ- Sales Trends1 (Billion yen) 32.3 33.1 31.6 mental Energy. In the field of Glass Engineering, AGC Ceramics provides high-durability, high-performance fused cast bricks that prolong the life of glass furnaces and contribute to energy efficiency and CO2 reduction in glass production process- es, and solutions that make use of these bricks. In the field of Environmental Energy, in addition to bonded refractory bricks (both burned and unburned) used at domestic and foreign cement plants, the company provides castable refractories that contribute to making industrial furnac- es more energy efficient and reducing their environmental load. In addition, AGC Ceramics is focusing on the development of products and technologies that are easy on the environment, such as high-temperature fine ceramic fans and sputter- ing targets for energy-saving glass. 40 30 20 10 0 2012 2013 2014 (Year) 1 Total amount for ceramics/other; sales to external customers. Ceramics/Other Utilizing ceramics technologies cultivated over many years, we offer a variety of products and solutions that contribute to innovation in glass production processes and environmental conservation. For the Environment Ceramics Japan AGC Ceramics Co., Ltd. AGC Plibrico Co., Ltd. Other Japan AGC Research Institute, Inc. AGC Insurance Management Co., Ltd. AGC Finance Co., Ltd. AGC Logistics Co., Ltd. AGC Technology Solutions Co., Ltd. Tokai Kogyo Co., Ltd. Asia Singapore AGC Ceramics Singapore Pte. Ltd. China Zibo Asahi Glass Alumina Materials Co., Ltd. AGC Ceramics (Yixing) Co., Ltd. AGC Plibrico (Dailian) Industries Co., Ltd. Asia Thailand Singapore AGC Asia Pacific Pte., Ltd. AGC Technology Solutions (Thailand) Co., Ltd. Europe Belgium AGC Europe S.A. China AGC Singapore Services Pte. Ltd. AGC (China) Holdings Co., Ltd. AGC Shanghai Co., Ltd. AGC Technology Solutions (Kunshan) Co., LTD. The Americas U.S.A. AGC America, Inc. AGC Capital, Inc. A diverse lineup of castable refractories A diverse lineup of castable refractories Tough Coore™ Ceramic Pigment for Heat Shielding Pavement Surfaces Alleviates Heat Island Phenomenon Until now, the method used to counter the heat island phenomenon was to cover the entire surface of the road with a heat-shielding coat, thereby reducing accumulated ground-level heat. However, the harsh conditions created by cars wear away the heat-shielding material. Under these conditions, Tough Coore™’s extraordinary hardness offers superior anti-abra- sive performance with heat-shielding pavement surfaces. In addition, the anti-skid color aggregate Tough Bahn™ has been widely used for purposes of traffic safety and facilitating smoother traffic flow, and in recent years, the use of the product as a road surface material for bicycle lanes is also increasing. Middle two lanes: Tough Coore™ is used for heat shielding of road-surface as a heat island effect countermeasure Left lane: Tough Bahn™ is an anti-skid surface coat for clear demarcation of bus lanes Castable Refractories for Industrial Furnaces: Free Design, Flexible Construction Castable refractories are used in all types of industrial furnaces, including incinerators and alumi- num smelting furnaces. Because construction methods can be chosen depending on the object being constructed, complicated shapes and thin-walled objects are also possible. AGC Ceram- ics supports the operation of industrial furnaces with a product group that features a wide vari- ety of special features, such as abrasion resistance, corrosion resistance and high heat insulation. High Thermal Insulating Ceramic Refractory THERMOTECT™ THERMOTECT™ is a ceramics furnace material offering high thermal insulation and resistance. Developed with our proprietary raw material technologies, it is usable at high temperature ranges up to 1,600ºC. It also shows long-term insulation performance under high temperatures, realizing cost-reduction due to energy efficiency. In addition, as it includes no materials of environmental concern, it contributes to the improvement and safety of on-site work environments. 37 AGC Report 2015 AGC Report 2015 38 (Note) As of December 2014 THERMOTECT™ Business Outline The Ceramics business began in 1916 with the production of high temperature resistant bricks for glass furnaces. At present, AGC Ceramics Co. Ltd. has adopted the visions “Glass Ceramics Innovation” and “Green Ceramics Innovation” and is working to create new innovations in the fields of Glass Engineering and Environ- mental Energy. In the field of Glass Engineering, AGC Ceramics provides high-durability, high-performance fused cast bricks that prolong the life of glass furnaces and contribute to energy efficiency and CO2 reduction in glass production process- es, and solutions that make use of these bricks. In the field of Environmental Energy, in addition to bonded refractory bricks (both burned and unburned) used at domestic and foreign cement plants, the company provides castable refractories that contribute to making industrial furnac- es more energy efficient and reducing their environmental load. In addition, AGC Ceramics is focusing on the development of products and technologies that are easy on the environment, such as high-temperature fine ceramic fans and sputter- ing targets for energy-saving glass. Sales Trends1 (Billion yen) 40 32.3 33.1 31.6 30 20 10 0 2012 2013 2014 (Year) 1 Total amount for ceramics/other; sales to external customers. Ceramics/Other Utilizing ceramics technologies cultivated over many years, we offer a variety of products and solutions that contribute to innovation in glass production processes and environmental conservation. For the Environment Asia Singapore AGC Ceramics Singapore Pte. Ltd. China Zibo Asahi Glass Alumina Materials Co., Ltd. AGC Ceramics (Yixing) Co., Ltd. AGC Plibrico (Dailian) Industries Co., Ltd. Ceramics Japan AGC Ceramics Co., Ltd. AGC Plibrico Co., Ltd. Other Japan AGC Research Institute, Inc. AGC Insurance Management Co., Ltd. AGC Finance Co., Ltd. AGC Logistics Co., Ltd. AGC Technology Solutions Co., Ltd. Tokai Kogyo Co., Ltd. Asia Europe Thailand AGC Technology Solutions (Thailand) Co., Ltd. Belgium AGC Europe S.A. Singapore AGC Asia Pacific Pte., Ltd. AGC Singapore Services Pte. Ltd. China AGC (China) Holdings Co., Ltd. AGC Shanghai Co., Ltd. AGC Technology Solutions (Kunshan) Co., LTD. The Americas U.S.A. AGC America, Inc. AGC Capital, Inc. A diverse lineup of castable refractories A diverse lineup of castable refractories Tough Coore™ Ceramic Pigment for Heat Shielding Pavement Surfaces Alleviates Heat Island Phenomenon Until now, the method used to counter the heat island phenomenon was to cover the entire surface of the road with a heat-shielding coat, thereby reducing accumulated ground-level heat. However, the harsh conditions created by cars wear away the heat-shielding material. Under these conditions, Tough Coore™’s extraordinary hardness offers superior anti-abra- sive performance with heat-shielding pavement surfaces. In addition, the anti-skid color aggregate Tough Bahn™ has been widely used for purposes of traffic safety and facilitating smoother traffic flow, and in recent years, the use of the product as a road surface material for bicycle lanes is also increasing. Middle two lanes: Tough Coore™ is used for heat shielding of road-surface as a heat island effect countermeasure Left lane: Tough Bahn™ is an anti-skid surface coat for clear demarcation of bus lanes Castable Refractories for Industrial Furnaces: Free Design, Flexible Construction Castable refractories are used in all types of industrial furnaces, including incinerators and alumi- num smelting furnaces. Because construction methods can be chosen depending on the object being constructed, complicated shapes and thin-walled objects are also possible. AGC Ceram- ics supports the operation of industrial furnaces with a product group that features a wide vari- ety of special features, such as abrasion resistance, corrosion resistance and high heat insulation. High Thermal Insulating Ceramic Refractory THERMOTECT™ THERMOTECT™ is a ceramics furnace material offering high thermal insulation and resistance. Developed with our proprietary raw material technologies, it is usable at high temperature ranges up to 1,600ºC. It also shows long-term insulation performance under high temperatures, realizing cost-reduction due to energy efficiency. In addition, as it includes no materials of environmental concern, it contributes to the improvement and safety of on-site work environments. 37 AGC Report 2015 AGC Report 2015 38 (Note) As of December 2014 THERMOTECT™ New Business Creation at the AGC Group We aim to create new businesses that open up the future of the AGC Group. For the AGC Group to achieve growth over the medium and long terms, it must continue to create new value that brings benefits to society as a materi- als manufacturer. In this regard, Yoshinori Hirai, Senior Executive Officer and GM of Technology General Division, explained how enhancing technologies can open up new possibilities, and discussed his approach to developing new businesses that will drive the AGC Group forward in the future. Yoshinori Hirai Senior Executive Officer and GM of Technology General Division materials technologies in the fields of glass, chemicals, electronics, and ceram- ics, and production technologies includ- ing simulation, analysis, and equipment technologies. By interconnecting these technologies, we create a wide range of expert capabilities from which we offer customers optimum solutions for their needs. This is the AGC Group’s approach to short- and medium-term R&D. Step 1 Step 2 Analyze social trends and assess technical potential Analyze suitability as a company business, and assess business Technology outlook Perspective 1 Expansivity and growth potential of technology and market potential Business outlook Perspective 1 Suitability for an AGC Group business Perspective 2 Potential to sustainably generate profits Key areas Next-generation mobility Heat management (heat insulation, shielding and exchange) Next-generation communication (signage, etc.) Life science Security and safety New energy and new green Leveraging Materials and Production Technologies to Offer Business Solutions Setting Long-term R&D Projects by Analyzing Technological and Business Trends The AGC Group conducts R&D with a short-, medium- or long-term outlook. For short- For long-term research and development, the AGC Group examines social and tech- and medium-term R&D, we aim to bolster the competitiveness of our existing busi- nological trends projected over the next 10 to 20 years and formulates a technology nesses. As an example of this, we have overhauled production processes and roadmap called Technology Outlook, an analysis of what kinds of products and tech- upgraded process technologies. These technical innovations enabled us to reduce nologies will be in high demand in the future. To respond to such demand, we create costs and have already led to major results, especially in our display business. a business roadmap—called Business Outlook—after taking into consideration the Another important approach is product and technology development that aims at suitability of new businesses for the AGC Group, and whether they would be able to 1) securing new markets for our existing products, and 2) offering new products in sustainably generate profits. Through this process of research and analysis, we have existing markets—as described in our new management policy . An exam- set smart community related markets as an important topic for our R&D projects to ple of the first approach is Dragontrail. We have been marketing this specialty glass for pursue, and we are proactively pursuing technological and business development chemical strengthening mainly in the display-related market, and we are now expand- covering the short, medium and long terms in six areas: next-generation mobility, ing its use in new markets, like the automotive market. As an example of our second heat management, next-generation communication, life sciences, security and approach, we are promoting the UV Verre Premium series to the automotive market as safety, and new energy and new green (see pages 43 to 44 for more details). new high-value-added products. The AGC Group’s R&D is underpinned by an approach that connects product What is common to both of these approaches is that they are based on solu- development with the market. Needs are constantly changing in the marketplace tions-oriented businesses based on the competitive advantages of the AGC Group’s today, so unless we constantly take a market-oriented outlook to development, we technologies. The AGC’s Group’s technological expertise extends into various fields: will not be able to create the businesses and products that our customers want. The AGC Group’s Business Development Process: Following the Technology Outlook and Business Outlook To develop our businesses, we place importance on a technology road- map that considers global trends related to energy, natural resources and population from a long-term per- spective, and a business roadmap based on analyses of the suitability of businesses for the AGC Group and the feasibility of commercialization. The AGC Group’s Core Technologies Social Value The Evolution of Next-Generation Mobility Materials technologies Production technologies Pursuing R&D while analyzing needs arising from the evolution of mobility Glass integration technologies Glass material technologies Coating technologies Fundamental technologies Simulation technologies Analysis technologies Sensing technologies Fluorine and other chemistry technologies Ceramic material technologies Process engineering Equipment technologies Value offered by the AGC Group Various AGC Group products are used in vehicles, including glass antennae and glass that blocks ultraviolet and infrared rays. In the future, vehicles and public transportation infrastructure are expected to undergo three drastic changes: progress in environmentally friendly vehicles, particularly electric and fuel cell vehicles; advancements in transportation systems, such as auto- matic driving systems; and the trend toward a so-called Internet of Things. The AGC Group is assessing and analyzing the needs being generated by this evolution of next-generation mobility, and carrying out meticulous research and development on products and technologies that can help create smart communities in which people can lead fulfilling lives in comfort and safety. Evolution of environmentally friendly vehicles (Electric and fuel cell vehicles) Evolution of transportation systems (Driver support systems and automatic driving systems) Evolution of IoT (Development of telematics) 39 AGC Report 2015 AGC Report 2015 40 New Business Creation at the AGC Group We aim to create new businesses that open up the future of the AGC Group. For the AGC Group to achieve growth over the medium and long terms, it must continue to create new value that brings benefits to society as a materi- als manufacturer. In this regard, Yoshinori Hirai, Senior Executive Officer and GM of Technology General Division, explained how enhancing technologies can open up new possibilities, and discussed his approach to developing new businesses that will drive the AGC Group forward in the future. Yoshinori Hirai Senior Executive Officer and GM of Technology General Division materials technologies in the fields of glass, chemicals, electronics, and ceram- ics, and production technologies includ- ing simulation, analysis, and equipment technologies. By interconnecting these technologies, we create a wide range of expert capabilities from which we offer customers optimum solutions for their needs. This is the AGC Group’s approach to short- and medium-term R&D. Step 1 Step 2 Key areas Analyze social trends and assess technical potential Technology outlook Perspective 1 Expansivity and growth potential of technology and market Analyze suitability as a company business, and assess business potential Business outlook Perspective 1 Suitability for an AGC Group business Perspective 2 Potential to sustainably generate profits Next-generation mobility Heat management (heat insulation, shielding and exchange) Next-generation communication (signage, etc.) Life science Security and safety New energy and new green Leveraging Materials and Production Technologies to Offer Business Solutions Setting Long-term R&D Projects by Analyzing Technological and Business Trends The AGC Group conducts R&D with a short-, medium- or long-term outlook. For short- For long-term research and development, the AGC Group examines social and tech- and medium-term R&D, we aim to bolster the competitiveness of our existing busi- nological trends projected over the next 10 to 20 years and formulates a technology nesses. As an example of this, we have overhauled production processes and roadmap called Technology Outlook, an analysis of what kinds of products and tech- upgraded process technologies. These technical innovations enabled us to reduce nologies will be in high demand in the future. To respond to such demand, we create costs and have already led to major results, especially in our display business. a business roadmap—called Business Outlook—after taking into consideration the Another important approach is product and technology development that aims at suitability of new businesses for the AGC Group, and whether they would be able to 1) securing new markets for our existing products, and 2) offering new products in sustainably generate profits. Through this process of research and analysis, we have existing markets—as described in our new management policy . An exam- set smart community related markets as an important topic for our R&D projects to ple of the first approach is Dragontrail. We have been marketing this specialty glass for pursue, and we are proactively pursuing technological and business development chemical strengthening mainly in the display-related market, and we are now expand- covering the short, medium and long terms in six areas: next-generation mobility, ing its use in new markets, like the automotive market. As an example of our second heat management, next-generation communication, life sciences, security and approach, we are promoting the UV Verre Premium series to the automotive market as safety, and new energy and new green (see pages 43 to 44 for more details). new high-value-added products. The AGC Group’s R&D is underpinned by an approach that connects product What is common to both of these approaches is that they are based on solu- development with the market. Needs are constantly changing in the marketplace tions-oriented businesses based on the competitive advantages of the AGC Group’s today, so unless we constantly take a market-oriented outlook to development, we technologies. The AGC’s Group’s technological expertise extends into various fields: will not be able to create the businesses and products that our customers want. The AGC Group’s Business Development Process: Following the Technology Outlook and Business Outlook To develop our businesses, we place importance on a technology road- map that considers global trends related to energy, natural resources and population from a long-term per- spective, and a business roadmap based on analyses of the suitability of businesses for the AGC Group and the feasibility of commercialization. The AGC Group’s Core Technologies Social Value The Evolution of Next-Generation Mobility Materials technologies Production technologies Pursuing R&D while analyzing needs arising from the evolution of mobility Glass integration technologies Glass material technologies Coating technologies Fundamental technologies Simulation technologies Analysis Sensing technologies technologies Fluorine and other chemistry technologies Ceramic material technologies Process engineering Equipment technologies Value offered by the AGC Group Various AGC Group products are used in vehicles, including glass antennae and glass that blocks ultraviolet and infrared rays. In the future, vehicles and public transportation infrastructure are expected to undergo three drastic changes: progress in environmentally friendly vehicles, particularly electric and fuel cell vehicles; advancements in transportation systems, such as auto- matic driving systems; and the trend toward a so-called Internet of Things. The AGC Group is assessing and analyzing the needs being generated by this evolution of next-generation mobility, and carrying out meticulous research and development on products and technologies that can help create smart communities in which people can lead fulfilling lives in comfort and safety. Evolution of environmentally friendly vehicles (Electric and fuel cell vehicles) Evolution of transportation systems (Driver support systems and automatic driving systems) Evolution of IoT (Development of telematics) 39 AGC Report 2015 AGC Report 2015 40 New Business Creation at the AGC Group Taking Advantage of Open Innovation to Renew Technologies and Create New Markets The AGC Group is actively promoting open innovation as a means of conducting R&D. By working together with a wide spectrum of experts from outside the Group, we are gaining access to a more substantial range of technologies. Through such efforts, we work to accelerate technical innovations and possibilities for new market creation, and shorten product development lead times. In our short- and medium-term development projects, we are pursuing joint devel- opment and business partnerships that enable us to mutually complement technolo- gies, products and services. On the other hand, our long-term projects cover a wide A worksite carrying out GTNET activities in the Silicon Valley, U.S.A. array of technologies related to smart communities and social infrastructure. We are collaborating with companies and research institutions through the participation in Social Value Tackling Problems Associated with Energy and Climate Change Reducing CO2 emissions through energy-saving and energy-creating products People around the world are taking greater interest in clean energy and environ- mental problems, especially climate change. In this context, the AGC Group is working to reduce its CO2 emissions through environmental products, and cre- ated an environmental slogan to reflect these efforts in 2014. To help solve the environmental problems faced by societies, the Group is providing all kinds of energy-saving and energy-creating products, including Low-E double glazing glass, glass for solar power panels, low-environmental-load refrigerants, and road surface heat-shielding materials designed to alleviate the heat island effect. 1 The AGC Group’s estimated annual CO2 emissions in 2020 CO2 emissions CO2 reduction in 20201 Approx. through energy-saving and energy-creating 13,000,000 tons products2 Six-fold reduction Approx. 80,000,000 tons 2 The amount of CO2 reduction if the energy-saving and energy-creating products manufactured in 2020 are used to the end of their useful lives. national projects and other collaborative initiatives. In Japan, the AGC Group has already participated in 10 national projects overseen by the Ministry of Education, Culture, Sports, Science and Technology and the Ministry of Economy, Trade and Creating a Work Environment that Encourages Innovation and Promotes Cross-Divisional and International Exchanges Industry. Outside Japan, we are working to step up our open innovation activities The main force driving the AGC Group’s R&D activities is the skills and capabilities of its through activities such as information collection via local venture funds and investing in expert personnel. To make the most of our human assets, we are using the Skill Map influential venture companies in the U.S. database of individual employees. The specialized capabilities of AGC Group employ- In addition, the Group is also carrying out its own Global Technology Networking ees are recorded in the database, allowing management to see what skills have been (GTNET) activities in order to monitor trends in cutting-edge markets and to stay acquired by employees in specific divisions and companies of the Group so they can abreast of the latest technical information. The network activities cover three regions effectively appoint personnel and facilitate communication. worldwide— Southeast Asia, Europe, and North America—with respective worksites For example, when undertaking a new project, project managers can assemble in Singapore, Belgium and Germany, and the Silicon Valley, which is home to many leading electronics and IT firms as well as R&D centers of automakers. In this capacity, we have been working to conduct research and make proposals regarding technologi- cal trends and environmental and safety regulations locally. In Singapore, for instance, we are participating in a green building consortium organized by the Singapore Economic Development Board, through which we are using energy-saving glass and optimal teams by quickly and accurately determining which employees have the necessary skills, and which countries and divisions they work in. In addition, by iden- tifying employees with common skills existing outside of a company or depart- other products to help realize environmentally friendly buildings in collaboration with ment, it is possible to build a cross-divi- Skill E the government and other companies. Global Technology Networking (GTNET) Europe (Belgium and Germany) Conducting technical assessments and market development Japan Planning, running, and managing GTNET activities North America (Silicon Valley) Conducting technical assessments and market development while forging ties with leading-edge companies Southeast Asia (Singapore) Conducting market surveys of energy-sav- ing products for fast-growing countries, and promoting widespread adoption of energy-saving products by showcasing the AGC Group’s technologies 41 AGC Report 2015 AGC Report 2015 42 sional network beyond departmental and Skill D Skill C national borders. Skill Map data are also used to orga- nize cross-divisional international net- works of employees with the same skills, Division E Division D Division C Skill B Division B Skill A Division A allowing opportunities for information sharing among employees who would not oth- Skill Map: erwise be able to come into contact because they work in different divisions and group companies. Members of cross-divisional networks can apply their mutual skills and know-how to tackle whatever issues arise, helping them find solutions and even ideas for new technologies. The use of these networks has also prompted network members with different skills from R&D, sales, and other departments to collaborate in refining proposals for new products. The source of innovation is diversity. That is to say, innovations are generated by an environment in which diverse personalities and values meet head on. With this in mind, we are promoting diverse workplaces through cross-divisional employee exchanges and collaboration as it continues to encourage the creation of new innovations. Function 1 Ensuring future optimal human resources (Strategic recruitment and training) Function 2 Human resources search and “right person in the right place” personnel allocation Function 3 Exchange of ideas between employees across divisions and countries (Cross-divisional network activity) A Unique Personnel Database The AGC Group’s Skill Map is a tool for registering the AGC Group employ- ees according to their specialized skills. The database is used for orga- nizing project teams, appointing per- sonnel, and setting up cross-divi- sional and international exchanges between employees. New Business Creation at the AGC Group A worksite carrying out GTNET activities in the Silicon Valley, U.S.A. Taking Advantage of Open Innovation to Renew Technologies and Create New Markets The AGC Group is actively promoting open innovation as a means of conducting R&D. By working together with a wide spectrum of experts from outside the Group, we are gaining access to a more substantial range of technologies. Through such efforts, we work to accelerate technical innovations and possibilities for new market creation, and shorten product development lead times. In our short- and medium-term development projects, we are pursuing joint devel- opment and business partnerships that enable us to mutually complement technolo- gies, products and services. On the other hand, our long-term projects cover a wide array of technologies related to smart communities and social infrastructure. We are collaborating with companies and research institutions through the participation in national projects and other collaborative initiatives. In Japan, the AGC Group has already participated in 10 national projects overseen by the Ministry of Education, Culture, Sports, Science and Technology and the Ministry of Economy, Trade and in Singapore, Belgium and Germany, and the Silicon Valley, which is home to many leading electronics and IT firms as well as R&D centers of automakers. In this capacity, we have been working to conduct research and make proposals regarding technologi- cal trends and environmental and safety regulations locally. In Singapore, for instance, we are participating in a green building consortium organized by the Singapore Economic Development Board, through which we are using energy-saving glass and the government and other companies. Social Value Tackling Problems Associated with Energy and Climate Change Reducing CO2 emissions through energy-saving and energy-creating products People around the world are taking greater interest in clean energy and environ- mental problems, especially climate change. In this context, the AGC Group is working to reduce its CO2 emissions through environmental products, and cre- ated an environmental slogan to reflect these efforts in 2014. To help solve the environmental problems faced by societies, the Group is providing all kinds of energy-saving and energy-creating products, including Low-E double glazing glass, glass for solar power panels, low-environmental-load refrigerants, and road surface heat-shielding materials designed to alleviate the heat island effect. CO2 emissions in 20201 Approx. 13,000,000 tons CO2 reduction through energy-saving and energy-creating products2 Six-fold reduction Approx. 80,000,000 tons 1 The AGC Group’s estimated annual CO2 emissions in 2020 2 The amount of CO2 reduction if the energy-saving and energy-creating products manufactured in 2020 are used to the end of their useful lives. Creating a Work Environment that Encourages Innovation and Promotes Cross-Divisional and International Exchanges Industry. Outside Japan, we are working to step up our open innovation activities The main force driving the AGC Group’s R&D activities is the skills and capabilities of its through activities such as information collection via local venture funds and investing in expert personnel. To make the most of our human assets, we are using the Skill Map influential venture companies in the U.S. database of individual employees. The specialized capabilities of AGC Group employ- In addition, the Group is also carrying out its own Global Technology Networking ees are recorded in the database, allowing management to see what skills have been (GTNET) activities in order to monitor trends in cutting-edge markets and to stay acquired by employees in specific divisions and companies of the Group so they can abreast of the latest technical information. The network activities cover three regions effectively appoint personnel and facilitate communication. worldwide— Southeast Asia, Europe, and North America—with respective worksites For example, when undertaking a new project, project managers can assemble optimal teams by quickly and accurately determining which employees have the necessary skills, and which countries and divisions they work in. In addition, by iden- tifying employees with common skills existing outside of a company or depart- other products to help realize environmentally friendly buildings in collaboration with ment, it is possible to build a cross-divi- Skill E sional network beyond departmental and Skill D Skill C national borders. Skill Map data are also used to orga- nize cross-divisional international net- works of employees with the same skills, Division E Division D Division C Skill B Division B Skill A Division A allowing opportunities for information sharing among employees who would not oth- erwise be able to come into contact because they work in different divisions and group companies. Members of cross-divisional networks can apply their mutual skills and know-how to tackle whatever issues arise, helping them find solutions and even ideas for new technologies. The use of these networks has also prompted network members with different skills from R&D, sales, and other departments to collaborate in refining proposals for new products. The source of innovation is diversity. That is to say, innovations are generated by an environment in which diverse personalities and values meet head on. With this in mind, we are promoting diverse workplaces through cross-divisional employee exchanges and collaboration as it continues to encourage the creation of new innovations. Global Technology Networking (GTNET) Europe (Belgium and Germany) Conducting technical assessments and market development Southeast Asia (Singapore) Conducting market surveys of energy-sav- ing products for fast-growing countries, and promoting widespread adoption of energy-saving products by showcasing the AGC Group’s technologies Japan Planning, running, and managing GTNET activities North America (Silicon Valley) Conducting technical assessments and market development while forging ties with leading-edge companies Function 1 Ensuring future optimal human resources (Strategic recruitment and training) Function 2 Human resources search and “right person in the right place” personnel allocation Function 3 Exchange of ideas between employees across divisions and countries (Cross-divisional network activity) Skill Map: A Unique Personnel Database The AGC Group’s Skill Map is a tool for registering the AGC Group employ- ees according to their specialized skills. The database is used for orga- nizing project teams, appointing per- sonnel, and setting up cross-divi- sional and international exchanges between employees. 41 AGC Report 2015 AGC Report 2015 42 New Business Creation at the AGC Group In Focus The Potential of Smart Communities Society is ever changing and evolving. In order to provide needed solutions and to achieve further growth, the AGC Group is developing new business areas. Naoki Sugimoto GM of Business Development Office The AGC Group is focusing on cultivating the “smart commu- technologies that we have cultivated in these business areas nity”-related market as a new business area in which it can are all on the cutting edge globally, and at the same time, I am leverage its technologies, human resources and other man- convinced that, if combined, they will be able to create inno- agement resources to the utmost. vative materials found nowhere in the world. Smart communities are communities in which people and In order to realize this, it is vital for us to create a system in people, people and things, and people and information are which we can exercise our comprehensive strengths as “All connected and communicate quickly and easily, allowing AGC” by removing the barriers between organizations and people to live with abundance, safety and security. Working allowing people and technologies move freely between towards the realization of this type of community, the AGC them. In 2011, the Business Development Office was estab- Group will provide solutions based on diverse materials in six lished to act as the flagbearer for this initiative. Human fields (see page 44). resources with varied knowledge and experience have These six fields are not clearly separated; they overlap and come together from the R&D, Sales and Marketing divisions merge with one another. When providing solutions in these and are working to create a wide range of new technologies fields, there are limits to working with one material or limited and products. technology, and it is necessary to combine diverse materials In the future, within the AGC Group, we will continue to and technologies to create new innovations. contribute to the resolution of social issues by constantly The AGC Group is unique. It is the only corporation in the thinking and proposing solutions from the customer’s per- world that is simultaneously developing glass, chemicals and spective as we assess the shape of the society which is to ceramics businesses. The core glass, chemical and ceramic come and the needs it will have. Smart community- related markets Social changes and trends The AGC Group’s approach Next-Generation (cid:127)Fusion of cars and ICT Mobility (cid:127)Exhaust gas and fuel efficiency regulations of cars Provide glass and other materials for transportation methods such as railways and cars with automated driving and collision prevention functions, and for surrounding fields Heat Management (cid:127)Changes to energy efficiency and other energy policies in every country (cid:127)Trends of tightened chemical substance and exhaust gas regulations Use heat-control technology cultivated by the AGC Group at super-high temperatures such as 1,700ºC to below freezing to provide materials to housing and other industrial fields Provide coolant with a low environmental impact Next-Generation Communication (cid:127)The evolution of displays and communication technology (cid:127)Rapid increase in data and the evolution of storage technology (cid:127)New markets from urbanization and developing middle income groups Provide digital signage and sensing technology that can make communication smoother and more effective through glass interfaces Life Science (cid:127)Rising interest in medical treatment as society ages (cid:127)Breakthroughs in life science-related technology (cid:127)Expanding demand in fast-growing countries Provide pharmaceutical and agrochemical intermediates and devices for disease prevention and diagnostics, enabling people to live healthier lives Security and Safety (cid:127)Evolution of IoT (cid:127)Increasing devastation of natural disasters triggered by climate change (cid:127)Rapid increase in data and evolution of storage technology Provide security systems that merge glass and sensing technology in order to contribute to the realization of a safe, secure society New Energy and New Green (cid:127)Changes to each country’s energy policies, including energy efficiency (cid:127)Power (transportation)-related new technologies and ICT (cid:127)Development of renewable energy policies Provide materials geared towards solar power stabilization, hydrogen energy societies, and fuel-cell vehicles, which are beginning to be made practical Life Science Next-Generation Communication Next-Generation Communication New Energy and New Green Pharmaceutical and agrochemical Glascene™ is a glass screen that allows infoverre™ achieves clear and bright Lightjoule™ is an ultra-lightweight solar intermediate and active ingredient images to be projected onto transpar- images by attaching a liquid crystal panel that is helping to spread adop- Tafluprost ent glass display directly onto a glass surface tion of solar power generation facilities 43 AGC Report 2015 AGC Report 2015 44 New Business Creation at the AGC Group In Focus The Potential of Smart Communities Society is ever changing and evolving. In order to provide needed solutions and to achieve further growth, the AGC Group is developing new business areas. Naoki Sugimoto GM of Business Development Office The AGC Group is focusing on cultivating the “smart commu- technologies that we have cultivated in these business areas nity”-related market as a new business area in which it can are all on the cutting edge globally, and at the same time, I am leverage its technologies, human resources and other man- convinced that, if combined, they will be able to create inno- agement resources to the utmost. vative materials found nowhere in the world. Smart communities are communities in which people and In order to realize this, it is vital for us to create a system in people, people and things, and people and information are which we can exercise our comprehensive strengths as “All connected and communicate quickly and easily, allowing AGC” by removing the barriers between organizations and people to live with abundance, safety and security. Working allowing people and technologies move freely between towards the realization of this type of community, the AGC them. In 2011, the Business Development Office was estab- Group will provide solutions based on diverse materials in six lished to act as the flagbearer for this initiative. Human fields (see page 44). resources with varied knowledge and experience have These six fields are not clearly separated; they overlap and come together from the R&D, Sales and Marketing divisions merge with one another. When providing solutions in these and are working to create a wide range of new technologies fields, there are limits to working with one material or limited and products. technology, and it is necessary to combine diverse materials In the future, within the AGC Group, we will continue to and technologies to create new innovations. contribute to the resolution of social issues by constantly The AGC Group is unique. It is the only corporation in the thinking and proposing solutions from the customer’s per- world that is simultaneously developing glass, chemicals and spective as we assess the shape of the society which is to ceramics businesses. The core glass, chemical and ceramic come and the needs it will have. Smart community- related markets Social changes and trends The AGC Group’s approach Next-Generation Mobility (cid:127)Fusion of cars and ICT (cid:127)Exhaust gas and fuel efficiency regulations of cars Provide glass and other materials for transportation methods such as railways and cars with automated driving and collision prevention functions, and for surrounding fields Heat Management (cid:127)Changes to energy efficiency and other energy policies in every country (cid:127)Trends of tightened chemical substance and exhaust gas regulations Use heat-control technology cultivated by the AGC Group at super-high temperatures such as 1,700ºC to below freezing to provide materials to housing and other industrial fields Provide coolant with a low environmental impact Next-Generation Communication (cid:127)The evolution of displays and communication technology (cid:127)Rapid increase in data and the evolution of storage technology (cid:127)New markets from urbanization and developing middle income groups Provide digital signage and sensing technology that can make communication smoother and more effective through glass interfaces Life Science (cid:127)Rising interest in medical treatment as society ages (cid:127)Breakthroughs in life science-related technology (cid:127)Expanding demand in fast-growing countries Provide pharmaceutical and agrochemical intermediates and devices for disease prevention and diagnostics, enabling people to live healthier lives Security and Safety (cid:127)Increasing devastation of natural disasters triggered by climate change (cid:127)Rapid increase in data and evolution of storage technology (cid:127)Evolution of IoT Provide security systems that merge glass and sensing technology in order to contribute to the realization of a safe, secure society New Energy and New Green (cid:127)Changes to each country’s energy policies, including energy efficiency (cid:127)Power (transportation)-related new technologies and ICT (cid:127)Development of renewable energy policies Provide materials geared towards solar power stabilization, hydrogen energy societies, and fuel-cell vehicles, which are beginning to be made practical Life Science Next-Generation Communication Next-Generation Communication New Energy and New Green Pharmaceutical and agrochemical intermediate and active ingredient Tafluprost Glascene™ is a glass screen that allows images to be projected onto transpar- ent glass infoverre™ achieves clear and bright images by attaching a liquid crystal display directly onto a glass surface Lightjoule™ is an ultra-lightweight solar panel that is helping to spread adop- tion of solar power generation facilities 43 AGC Report 2015 AGC Report 2015 44 Corporate Governance Approach to Corporate Governance As its basic policy on corporate governance, Asahi Glass clearly separates its management oversight and management execution functions, and conducts management on a group-wide basis, beyond the conventional framework of parent-company and sub- sidiaries. Moreover, the company makes efforts to enhance its management oversight function and ensure speedy decision-mak- ing when executing management. requirements under the Companies Act of Japan as well as Asahi Glass’ own selection criteria designed to ensure director indepen- dence (see page 46 for details). The three outside directors also fulfill the criteria for Independent Directors set forth by the securi- ties listing regulations and enforcement rules for the securities listing regulations. Outside directors are expected to offer proposals in the Board of Directors concerning general management from an indepen- dent standpoint, based on their extensive experience in global corporate management and knowledge of corporate governance related issues. Framework for Management Oversight 1 As of March 27, 2015 Board of Directors Improving the Objectivity and Transparency of the Board of Directors by Incorporating Opinions from Outside Directors The Board of Directors of Asahi Glass comprises seven directors, each appointed to a one-year term, and includes three outside directors, including one woman1. The Board is responsible for approving the AGC Group’s basic policies and monitoring the execution of its management. Asahi Glass began employing outside directors in 2002 in an effort to enhance the management oversight function. The appointment of outside directors is carried out in accordance with Board of Directors Meetings in Fiscal 2014 (cid:127)Meetings held: 13 (cid:127)Attendance rate of each outside director in meetings: 99% Board of Corporate Auditors Enhancing the Effectiveness of Audits with Accounting Auditors and the Internal Audit Organization while Auditing the Performance of Directors Asahi Glass employs corporate auditors who audit the perfor- mance of directors by attending important meetings, including Overview of Corporate Governance Structure (as of March 27, 2015) Corporate Auditors: 4 Auditors (Including 3 Outside Corporate Auditors) Independent Accountants General Meeting of Shareholders Board of Directors: 7 Directors (Including 3 Outside Directors) Chairman President & CEO Senior Executive Officers: 2 Executive Officers Management Committee CSR Committee Internal Audit Office Group Corporate t h g i s r e v O t n e m e g a n a M n o i t u c e x E s s e n i s u B n o i t a r e p o o C l a u t u M In-house Companies/Strategic Business Unit (SBU)2 Nominating Committee: 5 Directors (Including 3 Outside Directors) Compensation Committee: 5 Directors (Including 3 Outside Directors) Compliance Committee Fair Trade Committee Information Management Council Security Export Control Headquarters e t a r o p r o C p u o r G n o i t c n u F s n o i t a r e p O s s e n i s u B n o i t c n u F meeting of the Board of Directors and the Management Commit- tee, and by holding regular meetings with representative direc- tors. The corporate auditors also enhance the effectiveness of auditing by exchanging views and obtaining information concern- ing audit results and other matters in cooperation with account- ing auditors and the Internal Audit Office. As of March 27, 2015, Standards for Independence of Outside Officers (Summary) (cid:127)An outside officer shall not be a business executing　person from a company competing in the same industries as the AGC Group or a company that has conducted a major transaction with the AGC Group4, or a major shareholder of Asahi Glass. (cid:127)An outside officer will not have received a significant sum of money (in the past three years) from the AGC Group besides compensation Asahi Glass employed four corporate auditors in total, of which designated for their respective position. three were outside auditors. All three fulfill the requirements of the Companies Act, as well as standards for independence set forth by our company (see list at right). The outside auditors also (cid:127)An outside officer shall not have been an employee of an auditing firm that has conducted audits on the AGC Group in the past three years. (cid:127)The absence of serious conflicts of interest between the Company and an outside officer, or any matter between the Company and an outside fulfill the criteria for Independent Auditors set forth by securities officer that may damage his or her independence. listing regulations and the enforcement rules for the securities listing regulations. Board of Auditors Meetings in Fiscal 2014 (cid:127)Meetings held: 13 (cid:127)Attendance rate of members of the Board of Auditors: 100% Framework for Enhancing the Management Oversight Function Early Establishment of Nominating and Compensation Committees in 2003 Support System for Outside Officers Assistance Provided to Outside Directors and Outside Corporate Auditors to Help Them more Effectively Perform Their Respective Supervision and Auditing Duties To help enable outside directors to effectively oversee opera- tions, the Office of the President, which serves as the Secretariat of the Board of Directors, provides them with relevant information and documents prior to Board of Directors meetings, as well as comprehensive explanations of issues to be debated by the Board in advance when necessary. Asahi Glass established its Nominating and Compensation Similarly, the Secretariat of the Board of Corporate Auditors Committees in 2003 as voluntary advisory committees of the assists outside corporate auditors by holding Board of Corporate Board of Directors. Committee Activities in Fiscal 2014 Auditors meetings, attending important meetings, and helping them coordinate meetings with representative directors and accounting auditors. Committee and Duties members Number of meetings held Nominating Committee: 4 Directors Deliberate on candidates for direc- tor and executive officer positions, and make recommendations to (of which 3 are the Board of Directors outside directors) Compensation Deliberate on the compensation Committee: 4 Directors system for directors and executive officers, directors’ compensation (of which 3 are limits and bonuses to be reported outside directors) to the general shareholders meet- ing, and the amount of compen- sation for executive officer Framework for Management Execution 6 times Executive Officers Ensure Speedy and Transparent Business Execution, while the Adoption of an In-House Company System Facilitates Flexible Operational Management At Asahi Glass, the management execution function is the responsibility of executive officers below the president & CEO. 5 times As an advisory committee to the president & CEO, Asahi Glass establishes the Management Committees and discusses business management monitoring and decisions regarding management execution. A system of In-house Companies (quasi-subsidiaries within the Group) has been introduced and a global consolidated management system is adopted with authority for business execution has been delegated to the Standards for Independence of Outside Officers regard to business execution. Much of the responsibility and 2 An In-house Company is defined as a business unit with net sales exceeding 200 billion yen which conducts its business globally. At present, there are three In-house Companies: the Glass Company, the Electronics Company and the Chemicals Company. Business units smaller than this are defined as Strategic Business Units (SBUs). Asahi Glass has set the following standards to ensure the inde- In-house Companies and the Strategic Business Unit. pendence of outside directors and outside corporate auditors. 45 AGC Report 2015 AGC Report 2015 46 Corporate Governance Approach to Corporate Governance requirements under the Companies Act of Japan as well as Asahi Glass’ own selection criteria designed to ensure director indepen- As its basic policy on corporate governance, Asahi Glass clearly dence (see page 46 for details). The three outside directors also separates its management oversight and management execution fulfill the criteria for Independent Directors set forth by the securi- functions, and conducts management on a group-wide basis, ties listing regulations and enforcement rules for the securities beyond the conventional framework of parent-company and sub- listing regulations. sidiaries. Moreover, the company makes efforts to enhance its Outside directors are expected to offer proposals in the Board management oversight function and ensure speedy decision-mak- of Directors concerning general management from an indepen- ing when executing management. Framework for Management Oversight Board of Directors Improving the Objectivity and Transparency of the Board of Directors by Incorporating Opinions from Outside Directors The Board of Directors of Asahi Glass comprises seven directors, each appointed to a one-year term, and includes three outside directors, including one woman1. The Board is responsible for approving the AGC Group’s basic policies and monitoring the execution of its management. Asahi Glass began employing outside directors in 2002 in an dent standpoint, based on their extensive experience in global corporate management and knowledge of corporate governance related issues. 1 As of March 27, 2015 Board of Directors Meetings in Fiscal 2014 (cid:127)Meetings held: 13 (cid:127)Attendance rate of each outside director in meetings: 99% Board of Corporate Auditors Enhancing the Effectiveness of Audits with Accounting Auditors and the Internal Audit Organization while Auditing the Performance of Directors effort to enhance the management oversight function. The Asahi Glass employs corporate auditors who audit the perfor- appointment of outside directors is carried out in accordance with mance of directors by attending important meetings, including Overview of Corporate Governance Structure (as of March 27, 2015) Corporate Auditors: 4 Auditors (Including 3 Outside Corporate Auditors) Independent Accountants General Meeting of Shareholders Board of Directors: 7 Directors (Including 3 Outside Directors) Chairman President & CEO Senior Executive Officers: 2 Executive Officers Management Committee CSR Committee Internal Audit Office Group Corporate t h g i s r e v O t n e m e g a n a M n o i t u c e x E s s e n i s u B n o i t a r e p o o C l a u t u M In-house Companies/Strategic Business Unit (SBU)2 Nominating Committee: 5 Directors (Including 3 Outside Directors) Compensation Committee: 5 Directors (Including 3 Outside Directors) Compliance Committee Fair Trade Committee Information Management Council Security Export Control Headquarters e t a r o p r o C p u o r G n o i t c n u F s n o i t a n o i t r e p O c n u F s s e n i s u B 2 An In-house Company is defined as a business unit with net sales exceeding 200 billion yen which conducts its business globally. At present, there are three In-house Companies: the Glass Company, the Electronics Company and the Chemicals Company. Business units smaller than this are defined as Strategic Business Units (SBUs). meeting of the Board of Directors and the Management Commit- tee, and by holding regular meetings with representative direc- tors. The corporate auditors also enhance the effectiveness of auditing by exchanging views and obtaining information concern- ing audit results and other matters in cooperation with account- ing auditors and the Internal Audit Office. As of March 27, 2015, Asahi Glass employed four corporate auditors in total, of which three were outside auditors. All three fulfill the requirements of the Companies Act, as well as standards for independence set forth by our company (see list at right). The outside auditors also fulfill the criteria for Independent Auditors set forth by securities listing regulations and the enforcement rules for the securities listing regulations. Board of Auditors Meetings in Fiscal 2014 (cid:127)Meetings held: 13 (cid:127)Attendance rate of members of the Board of Auditors: 100% Framework for Enhancing the Management Oversight Function Early Establishment of Nominating and Compensation Committees in 2003 Asahi Glass established its Nominating and Compensation Committees in 2003 as voluntary advisory committees of the Board of Directors. Committee Activities in Fiscal 2014 Committee and members Duties Number of meetings held Nominating Committee: 4 Directors (of which 3 are outside directors) Compensation Committee: 4 Directors (of which 3 are outside directors) Deliberate on candidates for direc- tor and executive officer positions, and make recommendations to the Board of Directors 6 times Deliberate on the compensation system for directors and executive officers, directors’ compensation limits and bonuses to be reported to the general shareholders meet- ing, and the amount of compen- sation for executive officer 5 times Standards for Independence of Outside Officers Asahi Glass has set the following standards to ensure the inde- pendence of outside directors and outside corporate auditors. Standards for Independence of Outside Officers (Summary) (cid:127)An outside officer shall not be a business executing　person from a company competing in the same industries as the AGC Group or a company that has conducted a major transaction with the AGC Group4, or a major shareholder of Asahi Glass. (cid:127)An outside officer will not have received a significant sum of money (in the past three years) from the AGC Group besides compensation designated for their respective position. (cid:127)An outside officer shall not have been an employee of an auditing firm that has conducted audits on the AGC Group in the past three years. (cid:127)The absence of serious conflicts of interest between the Company and an outside officer, or any matter between the Company and an outside officer that may damage his or her independence. Support System for Outside Officers Assistance Provided to Outside Directors and Outside Corporate Auditors to Help Them more Effectively Perform Their Respective Supervision and Auditing Duties To help enable outside directors to effectively oversee opera- tions, the Office of the President, which serves as the Secretariat of the Board of Directors, provides them with relevant information and documents prior to Board of Directors meetings, as well as comprehensive explanations of issues to be debated by the Board in advance when necessary. Similarly, the Secretariat of the Board of Corporate Auditors assists outside corporate auditors by holding Board of Corporate Auditors meetings, attending important meetings, and helping them coordinate meetings with representative directors and accounting auditors. Framework for Management Execution Executive Officers Ensure Speedy and Transparent Business Execution, while the Adoption of an In-House Company System Facilitates Flexible Operational Management At Asahi Glass, the management execution function is the responsibility of executive officers below the president & CEO. As an advisory committee to the president & CEO, Asahi Glass establishes the Management Committees and discusses business management monitoring and decisions regarding management execution. A system of In-house Companies (quasi-subsidiaries within the Group) has been introduced and a global consolidated management system is adopted with regard to business execution. Much of the responsibility and authority for business execution has been delegated to the In-house Companies and the Strategic Business Unit. 45 AGC Report 2015 AGC Report 2015 46 Corporate Governance CSR Management Compensation System Basic Philosophy on Compensation System Establishing an Objective and Highly Transparent Compensation System In its Compensation Principles, Asahi Glass sets out its basic stances and philosophies on overall compensation for officers as follows. (cid:127)The compensation system shall be one that enables the Company to attract, secure and reward diverse and talented personnel, in order to establish and expand the Company’s edge over its peers. (cid:127)The compensation system shall be one that promotes continued improvement of corporate value, and in this way allows shareholders and management to share gains (cid:127)The compensation system shall be one that gives motivations to achieve performance goals relating to management strategies for the AGC Group’s continuous development. (cid:127)The decision-making process of determining compensation shall be objective and highly transparent Composition of Compensation Directors Receive Fixed and Performance-Linked Compensation while Outside Directors Receive Fixed Compensation Under the company’s compensation system, directors who also serve as executive officers receive a fixed monthly salary, perfor- mance-linked bonuses, and stock-based compensation stock options, while directors who do not serve as executive officers receive a fixed monthly salary and stock-based compensation stock options. Meanwhile, outside directors and corporate audi- tors receive a monthly salary. The amount of the Bonuses, which is aimed at motivating recipients to achieve their single-fiscal-year business results goals, Composition of Compensation for Directors and Corporate Auditors Type of compensation Eligible persons Directors Fixed compensation Monthly compensation All directors Performance- linked compensation Performance-linked bonuses Directors who also serve as executive officers Stock compensation- type stock options Directors excluding outside directors Corporate auditors Fixed compensation Monthly compensation All corporate auditors varies depending on consolidated business results for a single fiscal year. The stock-based compensation stock options are intended to allow recipients to share benefits and risks associ- ated with stock price fluctuations with our shareholders, and enhance their motivation and morale so as to raise business results and corporate value on a medium to long term basis. Compensation Determination Method Ensuring the Objectivity and Transparency of the　 Company’s Compensation Decision-Making Process The Compensation Committee deliberates on matters such as the compensation system and level for directors and executive officers based on the Compensation Principles, makes proposals regarding them to the Board of Directors, and verifies the results of compensation payments in order to increase the objectivity and transparency of the compensation determination process. Compensation to Directors and Corporate Auditors in Fiscal 2014 Number of recipients1 Total payment (millions of yen)1 All directors Outside directors only All corporate auditors Outside corporate auditors only 9 4 5 4 394 48 93 57 1 Figures include compensation for two directors (including one outside director) and one outside corporate auditor who stepped down at the time of the 89th General Meeting of Shareholders held on March 28, 2014. Internal Control Maintaining, Applying, and Assessing Internal Control over Financial Reporting In response to the enactment of the Companies Act of Japan, Asahi Glass established a basic policy for internal control in May 2006, with the aim of confirming that its business execution sys- tems, including the compliance system, were functioning appro- priately. Furthermore, Asahi Glass adopted an internal control reporting system in compliance with Japan’s Financial Instru- ments and Exchange Act, and on that basis, created the AGC Group Internal Control over Financial Reporting Implementation Regulations and established an internal control system for its financial reporting. CSR Management In order to fulfill its corporate mission to “Look beyond to make CSR Promotion System Facilitating Discussions on Group-Wide CSR Policies and Issues the world a brighter place” as outlined in the Group Vision The AGC Group established the CSR Committee in 2005 as an “Look Beyond”, the AGC Group endeavors to both foster trust in-house organization dedicated to promoting CSR. On the CSR and meet the expectations of the community and contribute to Committee, the AGC Group CEO presides as the committee the creation of a sustainable society by adopting behaviors chair, while the board of directors, corporate auditors and the based on our four shared values, namely innovation and opera- head of each organization deliberate over general policies and tional excellence, diversity, the environment, and integrity. Fur- issues related to the Group’s CSR activities on a quarterly basis. ther, the Group utilizes the ISO 26000, an international standard Moreover, the CSR Promotion Team, which consists of CSR exec- on social responsibility as a guideline for its global CSR activities utives from each business division, as well as the Human in order to more concretely demonstrate values-based conduct Resources, Purchases and Audit departments, discuss and share and establish the AGC Group Charter of Corporate Behavior responsibility for each policy and issue prior to CSR Committee (refer to the Asahi Glass website for more details). meetings. In addition, specialized CSR Organizations (CSR In 2011, the AGC Group began to develop the CSR monitoring Offices of each In-house Company) established in each business framework based on ISO 26000 to assess the Group’s CSR activi- division share information globally regarding policies that have ties from the perspective of stakeholders and strengthen mea- been discussed and shared by the CSR Committee and CSR Pro- sures and policies that benefit the community (refer to the AGC motion Team, and work to promote each policy. through the AGC Report and other channels, including the AGC The AGC Group works to solve various social issues including Group’s CSR website for more details). Within the matrix of CSR issues established in this framework, targets and results regard- ing material issues for which frameworks are to be developed and commitments made to society are reported to stakeholders Group’s CSR website. CSR Promotion System CSR Committee (meets quarterly) Deliberates over general policies and issues related to the Group’s CSR activities Chair: Group CEO Office: Group Corporate CSR Office Subcommittees (cid:127)Compliance Committee (cid:127)EHSQ Management2 (cid:127)Enterprise Risk Management Each In-house Company / SBU In-house Company / SBU CSR Offices Group companies world wide CSR Promotion Team Meeting Working-level meeting for discussion and sharing individual CSR policies and issues AGC Group Corporate Office of the President Human Resources & Administration Office Corporate Communications & Investor Relations Office CSR Office Purchase & Logistics Center Support/ Guidance 2 Environment, occupational Health & Safety and Quality. Promoting Social Responsibility across the Supply Chain challenges related to human rights, labor practices, and the envi- ronment across the entire supply chain, including efforts with sup- pliers. It emphasizes the importance of corporate social responsibility in its AGC Group Purchasing Policy, which it revised in 2009, and encourages its suppliers to follow the policy and cooperate in its enforcement. In 2014, the AGC Group formally requested 248 of its main sup- pliers, including those outside Japan, to cooperate in raising aware- ness of the AGC Group Purchasing Policy at their worksites. It has also been conducting surveys of suppliers to determine their status of implementing CSR activities. The Group conducted a survey of its major business partners among Group companies in Europe and North America in 2014, following a similar survey carried out in Japan in the previous year. In the future, the Group plans to extend the survey to its Group companies in Asia other than Japan, and put in place a mechanism to check the results of these surveys. Excerpt from the AGC Group Purchasing Policy Items suppliers are requested to cooperate on when promoting CSR in the supply chain: 1. Concentrate to supply products and services with good quality, considering Safety & Environment and Compliance to Laws & Regulations of each country. 2. Secure and proper managing of Proprietary information and Intellectual property. 3. Not to be engaged to forced labor or child labor and never tolerate infringements of human rights. 4. Make efforts to environment preservation and ensuring safety and security. 5. Maintain adequate level of occupational health and safety. 47 AGC Report 2015 WEB Please refer to the Asahi Glass website for more information about CSR management. AGC Report 2015 48 Corporate Governance CSR Management Compensation System Basic Philosophy on Compensation System Establishing an Objective and Highly Transparent Compensation System In its Compensation Principles, Asahi Glass sets out its basic stances and philosophies on overall compensation for officers as follows. (cid:127)The compensation system shall be one that enables the Company to attract, secure and reward diverse and talented personnel, in order to establish and expand the Company’s edge over its peers. (cid:127)The compensation system shall be one that promotes continued improvement of corporate value, and in this way allows shareholders and management to share gains (cid:127)The compensation system shall be one that gives motivations to achieve performance goals relating to management strategies for the AGC Group’s continuous development. (cid:127)The decision-making process of determining compensation shall be objective and highly transparent Composition of Compensation Directors Receive Fixed and Performance-Linked Compensation while Outside Directors Receive Fixed Compensation Under the company’s compensation system, directors who also serve as executive officers receive a fixed monthly salary, perfor- mance-linked bonuses, and stock-based compensation stock options, while directors who do not serve as executive officers receive a fixed monthly salary and stock-based compensation stock options. Meanwhile, outside directors and corporate audi- tors receive a monthly salary. varies depending on consolidated business results for a single fiscal year. The stock-based compensation stock options are intended to allow recipients to share benefits and risks associ- ated with stock price fluctuations with our shareholders, and enhance their motivation and morale so as to raise business results and corporate value on a medium to long term basis. Compensation Determination Method Ensuring the Objectivity and Transparency of the　 Company’s Compensation Decision-Making Process The Compensation Committee deliberates on matters such as the compensation system and level for directors and executive officers based on the Compensation Principles, makes proposals regarding them to the Board of Directors, and verifies the results of compensation payments in order to increase the objectivity and transparency of the compensation determination process. Compensation to Directors and Corporate Auditors in Fiscal 2014 Number of recipients1 Total payment (millions of yen)1 All directors Outside directors only All corporate auditors Outside corporate auditors only 9 4 5 4 394 48 93 57 1 Figures include compensation for two directors (including one outside director) and one outside corporate auditor who stepped down at the time of the 89th General Meeting of Shareholders held on March 28, 2014. The amount of the Bonuses, which is aimed at motivating recipients to achieve their single-fiscal-year business results goals, Internal Control Composition of Compensation for Directors and Corporate Auditors Type of compensation Eligible persons Directors Fixed Monthly compensation compensation All directors Performance- Performance-linked linked compensation bonuses Directors who also serve as executive officers Stock compensation- Directors excluding type stock options outside directors Corporate Fixed Monthly auditors compensation compensation All corporate auditors Maintaining, Applying, and Assessing Internal Control over Financial Reporting In response to the enactment of the Companies Act of Japan, Asahi Glass established a basic policy for internal control in May 2006, with the aim of confirming that its business execution sys- tems, including the compliance system, were functioning appro- priately. Furthermore, Asahi Glass adopted an internal control reporting system in compliance with Japan’s Financial Instru- ments and Exchange Act, and on that basis, created the AGC Group Internal Control over Financial Reporting Implementation Regulations and established an internal control system for its financial reporting. CSR Management In order to fulfill its corporate mission to “Look beyond to make the world a brighter place” as outlined in the Group Vision “Look Beyond”, the AGC Group endeavors to both foster trust and meet the expectations of the community and contribute to the creation of a sustainable society by adopting behaviors based on our four shared values, namely innovation and opera- tional excellence, diversity, the environment, and integrity. Fur- ther, the Group utilizes the ISO 26000, an international standard on social responsibility as a guideline for its global CSR activities in order to more concretely demonstrate values-based conduct and establish the AGC Group Charter of Corporate Behavior (refer to the Asahi Glass website for more details). In 2011, the AGC Group began to develop the CSR monitoring framework based on ISO 26000 to assess the Group’s CSR activi- ties from the perspective of stakeholders and strengthen mea- sures and policies that benefit the community (refer to the AGC Group’s CSR website for more details). Within the matrix of CSR issues established in this framework, targets and results regard- ing material issues for which frameworks are to be developed and commitments made to society are reported to stakeholders through the AGC Report and other channels, including the AGC Group’s CSR website. CSR Promotion System CSR Committee (meets quarterly) Deliberates over general policies and issues related to the Group’s CSR activities Chair: Group CEO Office: Group Corporate CSR Office Subcommittees (cid:127)Compliance Committee (cid:127)EHSQ Management2 (cid:127)Enterprise Risk Management Each In-house Company / SBU In-house Company / SBU CSR Offices Group companies world wide CSR Promotion Team Meeting Working-level meeting for discussion and sharing individual CSR policies and issues AGC Group Corporate Office of the President Human Resources & Administration Office Corporate Communications & Investor Relations Office CSR Office Purchase & Logistics Center Support/ Guidance 2 Environment, occupational Health & Safety and Quality. CSR Promotion System Facilitating Discussions on Group-Wide CSR Policies and Issues The AGC Group established the CSR Committee in 2005 as an in-house organization dedicated to promoting CSR. On the CSR Committee, the AGC Group CEO presides as the committee chair, while the board of directors, corporate auditors and the head of each organization deliberate over general policies and issues related to the Group’s CSR activities on a quarterly basis. Moreover, the CSR Promotion Team, which consists of CSR exec- utives from each business division, as well as the Human Resources, Purchases and Audit departments, discuss and share responsibility for each policy and issue prior to CSR Committee meetings. In addition, specialized CSR Organizations (CSR Offices of each In-house Company) established in each business division share information globally regarding policies that have been discussed and shared by the CSR Committee and CSR Pro- motion Team, and work to promote each policy. Promoting Social Responsibility across the Supply Chain The AGC Group works to solve various social issues including challenges related to human rights, labor practices, and the envi- ronment across the entire supply chain, including efforts with sup- pliers. It emphasizes the importance of corporate social responsibility in its AGC Group Purchasing Policy, which it revised in 2009, and encourages its suppliers to follow the policy and cooperate in its enforcement. In 2014, the AGC Group formally requested 248 of its main sup- pliers, including those outside Japan, to cooperate in raising aware- ness of the AGC Group Purchasing Policy at their worksites. It has also been conducting surveys of suppliers to determine their status of implementing CSR activities. The Group conducted a survey of its major business partners among Group companies in Europe and North America in 2014, following a similar survey carried out in Japan in the previous year. In the future, the Group plans to extend the survey to its Group companies in Asia other than Japan, and put in place a mechanism to check the results of these surveys. Excerpt from the AGC Group Purchasing Policy Items suppliers are requested to cooperate on when promoting CSR in the supply chain: 1. Concentrate to supply products and services with good quality, considering Safety & Environment and Compliance to Laws & Regulations of each country. 2. Secure and proper managing of Proprietary information and Intellectual property. 3. Not to be engaged to forced labor or child labor and never tolerate infringements of human rights. 4. Make efforts to environment preservation and ensuring safety and security. 5. Maintain adequate level of occupational health and safety. 47 AGC Report 2015 WEB Please refer to the Asahi Glass website for more information about CSR management. AGC Report 2015 48 Risk Management/ Compliance/ Intellectual Property Risk Management Compliance In accordance with its Corporate Policy over Internal Control, the AGC Group has established the AGC Group Enterprise Risk Management Basic Policies. Under these policies, the Group defines risks that could interfere with achieving its management objectives, and works to continuously enhance and improve the ability of its management to prevent risks from occurring and to respond to any risk that becomes manifest. Examples of risks managed by the AGC Group: (cid:127)Natural disasters such as earthquakes (cid:127)Procurement of resources (cid:127)Overseas business development (cid:127)Infectious diseases including pandemic influenza (cid:127)Environmental regulations (cid:127)Market conditions with regard to product demand (cid:127)Occupational accidents (cid:127)Product liability Business Continuity Management (BCM) Structure Formulating BCP Development Guidelines and Promoting Solid Group-Wide Countermeasures The AGC Group has formulated business continuity plans (BCP) in preparation for large-scale accidents or disasters. It has issued the AGC Group Business Continuity Plan (BCP) Development Guidelines for divisions and business sites to use when formulat- ing BCPs, and efforts are progressing based on the business continuity management (BCM) processes for continuously main- taining and improving BCPs. At Asahi Glass’s headquarters, the company implements annual desktop simulation drills in which top management and the managers of each division participate. Executive managers up to the Group CEO participate in an effort to spread informa- tion and raise the effectiveness of the BCPs. BCP training at Asahi Glass headquarters in October 2014 49 AGC Report 2015 Raising Awareness of Compliance Conducting Compliance Training in Each Region Issued in 12 types covering 18 languages, the AGC Group Code of Conduct contains guidelines that all employees are required to follow in their work. The Group has also introduced a system in which employees periodically submit a personal certification to follow the AGC Group Code of Conduct. The purpose of the system is to give employees regular opportunities to renew their awareness of compliance and recognize its significance in the workplace and in their own work. In 2014, the certification was submitted by about 40,000 designated employees, equivalent to around 80% of all Group employees. In Asia including Japan and in North America, excluding new Group companies, the subject coverage rate was 100%. As a means to raise awareness of its Code of Conduct globally, the AGC Group is stepping up its compliance training programs for employees around the world. The Group continually imple- ments compliance-related online training (e-learning) in Japan, Europe and North America. The Group also proactively pro- motes training activities intended to rein- force compliance in each country and region, including classroom training as well as the production of training materials that include illustrations and quizzes, compli- ance pocket-sized cards, video materials for training and educational posters. Globally Establishing Help Lines Committed to Promoting Awareness and Protecting Callers The AGC Group has established several varieties of help line to serve as points of contact regarding compliance. As a general rule, help lines are set up at each company, while additional, common help lines are established in Europe, North America, China, Japan, South Korea and Thailand. To encourage employees to use the help lines, the Group pro- tects the anonymity of consultants and strictly forbids any act of retaliation against anyone who makes a report in good faith. When consultants offer their real names, efforts are made to facili- tate effective two-way communication and provide feedback on the status and results of handling reported issues. In addition, the Group is making efforts to promote awareness of its help lines so that its members do not hesitate to use them if necessary. Compliance with Antitrust Laws Ensuring Fair Transactions with Thorough Compliance of Guidelines, Training and Audits Intellectual Property The AGC Group regards intellectual property rights, such as pat- ents, utility model rights, trademarks, design rights and copyrights In addition to the Group Code of Conduct, the AGC Group has as important intangible assets. In addition to creating intellectual formulated and implemented global guidelines for compliance property as a vital business strategy resource, the Group works to with antitrust laws. Under the guidelines, the legitimacy of having protect and increase it, and promotes the preemptive use of intel- a meeting with a competitor company must be thoroughly vetted lectual property in order to heighten its competitive advantage. first. As a means to minimize the necessity of such meetings, For example, the Group globally files applications for inven- employees must gain approval to participate from a supervisor in tions created at development sites in each country and works to advance, and then submit meeting minutes and a report to the acquire rights adapted to its business activities. Since the proce- supervisor after the meeting. The Group is also carrying out vari- dures for the protection of intellectual property differ by country, ous other measures, such as providing training on compliance rights acquisition is conducted in cooperation with local patent with antitrust laws in each region and organization, and conduct- attorney offices and Group companies. ing audits on the status of compliance with relevant guidelines. Cycle of Intellectual Property Creation Investment in research and resulting inventions Creation Major investment for development and commercialization Profits through commercialization Utilization Exclusion of others within the scope of acquired rights (removal rights) Topics Acquisition of patents Protection Public disclosure Stimulate development by others Selected as One of the World’s 100 Most Innovative　 Companies and Organizations for Two Years Running For the second year in a row, Asahi Glass was recognized as one of the world’s 100 most inno- vative companies and organizations with a 2014 Top 100 Global Innovators Award, sponsored by Thomson Reuters. Thomson Reuters analyzes world trends in intellectual property and patents and selects companies and universities that are at the center of technological innovation to receive the award, which is in its fourth year. Evaluation criteria are organized into four categories: patent suc- cess rate, internationalization, influence, and volume. As with last year, in light of the balance of its patent acquisition in the four major markets of China, Europe, Japan and America, Asahi Glass was Classroom antitrust law training in China Preventative Measures for Corruption and Graft Reinforcing Training Regarding Preventative Measures for Corruption and Graft The AGC Group Code of Conduct stipulates that the AGC Group will maintain sound relationships with government agen- cies and other responsible organizations, and the Group works to comply with each country and region’s laws and regulations regarding anti-corruption. In addition, as the prevention of bribery and other corrupt practices is being reinforced worldwide, the AGC Group is pro- actively promoting employee education. In 2014, training related to anti-corruption was implemented for compliance managers and management from Thailand, Indonesia, the Philippines, Taiwan and South Korea. In China, the regional headquarters, AGC China, reinforced its anti-corruption training initiatives. The anti-corruption frameworks at each site are globally given a particularly high evaluation for its internationalization, audited as priority internal audit items. which led to its selection for the award. WEB Please visit the Asahi Glass website for more detailed information about risk management, compliance, and intellectual property. AGC Report 2015 50 Risk Management/ Compliance/ Intellectual Property Risk Management Compliance In accordance with its Corporate Policy over Internal Control, the AGC Group has established the AGC Group Enterprise Risk Management Basic Policies. Under these policies, the Group Raising Awareness of Compliance Conducting Compliance Training in Each Region defines risks that could interfere with achieving its management Issued in 12 types covering 18 languages, the AGC Group Code objectives, and works to continuously enhance and improve the of Conduct contains guidelines that all employees are required ability of its management to prevent risks from occurring and to to follow in their work. The Group has also introduced a system respond to any risk that becomes manifest. Examples of risks managed by the AGC Group: (cid:127)Natural disasters such as earthquakes (cid:127)Procurement of resources (cid:127)Overseas business development (cid:127)Infectious diseases including pandemic influenza (cid:127)Environmental regulations (cid:127)Market conditions with regard to product demand (cid:127)Occupational accidents (cid:127)Product liability in which employees periodically submit a personal certification to follow the AGC Group Code of Conduct. The purpose of the system is to give employees regular opportunities to renew their awareness of compliance and recognize its significance in the workplace and in their own work. In 2014, the certification was submitted by about 40,000 designated employees, equivalent to around 80% of all Group employees. In Asia including Japan and in North America, excluding new Group companies, the subject coverage rate was 100%. As a means to raise awareness of its Code of Conduct globally, the AGC Group is stepping up its compliance training programs for employees around the world. The Group continually imple- Business Continuity Management (BCM) Structure Formulating BCP Development Guidelines and Promoting Solid Group-Wide Countermeasures ments compliance-related online training (e-learning) in Japan, Europe and North America. The Group also proactively pro- motes training activities intended to rein- The AGC Group has formulated business continuity plans (BCP) force compliance in each country and in preparation for large-scale accidents or disasters. It has issued region, including classroom training as well the AGC Group Business Continuity Plan (BCP) Development as the production of training materials that Guidelines for divisions and business sites to use when formulat- include illustrations and quizzes, compli- ing BCPs, and efforts are progressing based on the business ance pocket-sized cards, video materials continuity management (BCM) processes for continuously main- for training and educational posters. taining and improving BCPs. At Asahi Glass’s headquarters, the company implements annual desktop simulation drills in which top management and the managers of each division participate. Executive managers tion and raise the effectiveness of the BCPs. up to the Group CEO participate in an effort to spread informa- The AGC Group has established several varieties of help line to Globally Establishing Help Lines Committed to Promoting Awareness and Protecting Callers serve as points of contact regarding compliance. As a general rule, help lines are set up at each company, while additional, common help lines are established in Europe, North America, China, Japan, South Korea and Thailand. To encourage employees to use the help lines, the Group pro- tects the anonymity of consultants and strictly forbids any act of retaliation against anyone who makes a report in good faith. When consultants offer their real names, efforts are made to facili- tate effective two-way communication and provide feedback on the status and results of handling reported issues. In addition, the Group is making efforts to promote awareness of its help lines so that its members do not hesitate to use them BCP training at Asahi Glass headquarters in October 2014 if necessary. 49 AGC Report 2015 Compliance with Antitrust Laws Ensuring Fair Transactions with Thorough Compliance of Guidelines, Training and Audits In addition to the Group Code of Conduct, the AGC Group has formulated and implemented global guidelines for compliance with antitrust laws. Under the guidelines, the legitimacy of having a meeting with a competitor company must be thoroughly vetted first. As a means to minimize the necessity of such meetings, employees must gain approval to participate from a supervisor in advance, and then submit meeting minutes and a report to the supervisor after the meeting. The Group is also carrying out vari- ous other measures, such as providing training on compliance with antitrust laws in each region and organization, and conduct- ing audits on the status of compliance with relevant guidelines. Intellectual Property The AGC Group regards intellectual property rights, such as pat- ents, utility model rights, trademarks, design rights and copyrights as important intangible assets. In addition to creating intellectual property as a vital business strategy resource, the Group works to protect and increase it, and promotes the preemptive use of intel- lectual property in order to heighten its competitive advantage. For example, the Group globally files applications for inven- tions created at development sites in each country and works to acquire rights adapted to its business activities. Since the proce- dures for the protection of intellectual property differ by country, rights acquisition is conducted in cooperation with local patent attorney offices and Group companies. Cycle of Intellectual Property Creation Investment in research and resulting inventions Creation Major investment for development and commercialization Acquisition of patents Protection Public disclosure Stimulate development by others Profits through commercialization Utilization Exclusion of others within the scope of acquired rights (removal rights) Topics Selected as One of the World’s 100 Most Innovative　 Companies and Organizations for Two Years Running For the second year in a row, Asahi Glass was recognized as one of the world’s 100 most inno- vative companies and organizations with a 2014 Top 100 Global Innovators Award, sponsored by Thomson Reuters. Thomson Reuters analyzes world trends in intellectual property and patents and selects companies and universities that are at the center of technological innovation to receive the award, which is in its fourth year. Evaluation criteria are organized into four categories: patent suc- cess rate, internationalization, influence, and volume. As with last year, in light of the balance of its patent acquisition in the four major markets of China, Europe, Japan and America, Asahi Glass was given a particularly high evaluation for its internationalization, which led to its selection for the award. Classroom antitrust law training in China Preventative Measures for Corruption and Graft Reinforcing Training Regarding Preventative Measures for Corruption and Graft The AGC Group Code of Conduct stipulates that the AGC Group will maintain sound relationships with government agen- cies and other responsible organizations, and the Group works to comply with each country and region’s laws and regulations regarding anti-corruption. In addition, as the prevention of bribery and other corrupt practices is being reinforced worldwide, the AGC Group is pro- actively promoting employee education. In 2014, training related to anti-corruption was implemented for compliance managers and management from Thailand, Indonesia, the Philippines, Taiwan and South Korea. In China, the regional headquarters, AGC China, reinforced its anti-corruption training initiatives. The anti-corruption frameworks at each site are globally audited as priority internal audit items. WEB Please visit the Asahi Glass website for more detailed information about risk management, compliance, and intellectual property. AGC Report 2015 50 Board of Directors, Corporate Auditors and Executive Officers (As of 27 March, 2015) Board of Directors Corporate Auditors Apr. 1980 Jan. 2009 Jan. 2010 Jan. 2013 Jan. 2015 Mar. 2015 Joined Asahi Glass Executive Officer and GM of Planning & Coordination Office, Chemicals Company Executive Officer and Chemicals Company President Senior Executive Officer and Electronics Company President President & CEO Representative Director and President & CEO (Incumbent) Aug. 1990 Jan. 2010 Nov. 2012 Feb. 2013 Oct. 2013 Jan. 2014 Jan. 2015 Mar. 2015 Joined Asahi Glass Executive Officer and Group Leader of Corporate Planning Group, Office of the President Executive Officer (Senior Vice President of AGC Flat Glass North America) Executive Officer and Regional President of North America, Glass Company Executive Officer and GM of Strategy Office, Glass Company Executive Officer and GM of Electronics General Division, Electronics Company Senior Executive Officer and GM of Office of the President Director and Senior Executive Officer of Office of the President (Incumbent) Apr. 1976 Jun. 1999 Jun. 2001 Jun. 2005 Jun. 2006 Jun. 2012 Mar. 2013 Jun. 2014 Joined Japan Tobacco and Salt Public Corporation (currently Japan Tobacco Inc.) Director of Japan Tobacco Inc. Retired as Director of Japan Tobacco Inc. Director of Japan Tobacco Inc. President and CEO of Japan Tobacco Inc. Chairman of Japan Tobacco Inc. Director of Asahi Glass (Incumbent) Special Advisor to Japan Tobacco Inc. (Incumbent) [Significant concurrent positions] Special Advisor to Japan Tobacco Inc. Apr. 1979 Jan. 2006 Jan. 2007 Mar. 2008 Jan. 2010 Jan. 2015 Joined Asahi Glass Executive Officer Senior Executive Officer and GM of Electronics & Energy General Div. Director and President & COO Director and President & CEO Representative Director & Chairman (Incumbent) Kazuhiko Ishimura Representative Director & Chairman Takuya Shimamura Representative Director and President & CEO Apr. 1987 Jan. 2012 Jan. 2014 Mar. 2014 Joined Asahi Glass Executive Officer and GM of Business Development Office Senior Executive Officer and GM of Technology General Division Director and Senior Executive Officer and GM of Technology General Division (Incumbent) Yoshinori Hirai Director Shinji Miyaji Director Hiroshi Kimura Director (Outside) Apr. 1963 Jun. 1989 Jun. 2001 Jun. 2007 Mar. 2011 Jun. 2013 Joined Komatsu Ltd. Director of Komatsu President of Komatsu Chairman of Komatsu Director of Asahi Glass (Incumbent) Councilor to Komatsu Ltd. (Incumbent) [Significant concurrent positions] Councilor to Komatsu Ltd. Outside Director of Tokyo Electron Ltd. Outside Director of Nomura Holdings, Inc. Outside Director of Nomura Securities Co., Ltd. Outside Director of Takeda Pharmaceutical Co., Ltd. Apr. 1980 Sep. 1986 Jun. 1988 Dec. 1993 Nov. 2001 Apr. 2009 Mar. 2014 Mar. 2015 Joined Citibank, N.A., Tokyo Branch Joined Salomon Brothers Inc., New York Head Office Joined Salomon Brothers Asia Ltd, Tokyo Branch Joined S.G. Warburg & Co., Ltd. Tokyo Branch Executive Director of the Harvard Business School Japan Research Center Director of the University of Tokyo Director of Asahi Glass (Incumbent) Retired as Director of the University of Tokyo Masahiro Sakane Director (Outside) Masako Egawa Director (Outside) 51 AGC Report 2015 Apr. 1973 Mar. 2005 Joined Asahi Glass Executive Officer and GM of Finance Center Jan. 2007 Senior Executive Officer and GM of Financial Planning Office Mar. 2008 Senior Executive Officer and GM of Financial Planning Office Mar. 2013 Corporate Auditor (Incumbent) Shukichi Umemoto Corporate Auditor Yasushi Marumori Corporate Auditor (Outside) Apr. 1977 May 2004 Joined Bank of Japan Head of Information System Services Department of Bank of Japan Apr. 2007 Head of Internal Auditors’ Affairs Jun. 2009 Jun. 2009 Jun. 2013 Jul. 2013 Office of Bank of Japan Retired from Bank of Japan Corporate Auditor of the Bank of Yokohama, Ltd. Retired from the previous position Adviser of Transportation Security Services of NIPPON EXPRESS CO., LTD (Incumbent) Mar. 2014 Asahi Glass Corporate Auditor (Incumbent) Hiroshi Kawamura Jan. 2014 Corporate Auditor (Outside) Apr. 1981 Joined Mitsubishi Bank (Currently the Bank of Tokyo-Mitsubishi UFJ, Ltd.) Apr. 2008 Executive Officer of the Bank of Tokyo-Mitsubishi UFJ, Ltd. May 2011 Senior Executive Officer of the Bank of Tokyo-Mitsubishi UFJ, Ltd. Jun. 2012 Executive Vice President of Mitsubishi UFJ Research and Consulting Co., Ltd. Jun. 2012 Dec. 2014 Mar. 2015 Mar. 2015 Retired from the previous position Director of Mitsubishi UFJ Research and Consulting Co., Ltd. Retired from the previous position Asahi Glass Corporate Auditor (Incumbent) [Significant concurrent positions] Outside Corporate Auditor at the Nanto Bank, Ltd. Apr. 1977 Tokyo District Public Prosecutors Office, Public Prosecutor Jul. 2008 Supreme Public Prosecutors Office Trial Manager Jan. 2009 Chiba District Public Prosecutors Office, Chief Public Prosecutor Apr. 2010 Yokohama District Public Prosecutors Office, Chief Public Prosecutor Jan. 2012 Sapporo High Public Prosecutors Office, Superintending Prosecutor Nagoya High Public Prosecutors Office, Superintending Prosecutor Jan. 2015 Mar. 2015 Retired from the above office Asahi Glass Corporate Auditor (Incumbent) Toru Hara Corporate Auditor (Outside) Executive Officers President & CEO Takuya Shimamura CEO (Leader of AGC Group Improvement Activities) Executive Vice President Yoshiaki Tamura President of Glass Company Senior Executive Officers Marehisa Ishiko GM of Automotive General Division, Glass Company Jean-François Heris GM of Building & Industrial General Division, Glass Company; President & CEO of AGC Glass Europe Yasumasa Nakao GM of Technology General Division, Glass Company Yoshinori Hirai Overall Business Management(Technology and Business Development); GM of Technology General Division; Tokio Matsuo GM of CSR Office Akinobu Shimao Oversight of Electronics Company and Applied Glass President of AGC Ceramics Co., Ltd. Materials General Division Takayasu Ide GM of Technology Management General Div., Chemicals Company Seigo Washinoue Deputy Leader of AGC Group Improvement Activities Tomoya Takigawa Deputy GM of Display Glass General Deputy Leader of AGC Group Improvement Activities Kimikazu Ichikawa Tetsuo Tatsuno GM of Finance & Control Office Shinji Miyaji Overall Business Management(Finance); GM of Office of the President Yoshinori Kobayashi President of Electronics Company Masao Nemoto President of Chemicals Company Executive Officers Tadayuki Oi GM of Strategy & Planning Office, Glass Company Shinichi Kawakami GM of Human Resources & Administration Office GM of Production Technology Center, Div., ; Technology General Division Takashi Shimbo Chief Representative of AGC Group for China Chief Representative of AGC Group for Southeast Asia Kazuyoshi Watanabe GM of Display Glass General Div., Electronics Company Kihachiro Okamoto Deputy GM of Automotive General Division, Glass Company Shigekuni Inoue GM of Applied Glass Materials General Division Hiroyuki Watanabe GM of Research Center, Technology General Division GM of Marketing & Sales Management Div., Display Glass General Div., Electronics Company Kazuaki Koga GM of Essential Chemicals General Div., Chemicals Company Kenzo Moriyama Group Leader of Corporate Planning Group, Office of the President Takashizu Minato GM of Performance Chemicals General Div., Chemicals Company Masahiro Takeda Deputy GM of Building & Industrial General Div., GlassCompany; GM of Japan/Asia Pacific Div., Building & Industrial General Div., Glass Company (Abbreviation)"GM": General Manager AGC Report 2015 52 Board of Directors, Corporate Auditors and Executive Officers (As of 27 March, 2015) Apr. 1980 Jan. 2009 Joined Asahi Glass Executive Officer and GM of Planning & Coordination Office, Chemicals Company Jan. 2010 Executive Officer and Chemicals Company President Jan. 2013 Senior Executive Officer and Electronics Company President Jan. 2015 Mar. 2015 President & CEO Representative Director and President & CEO (Incumbent) Aug. 1990 Jan. 2010 Joined Asahi Glass Executive Officer and Group Leader of Corporate Planning Group, Office of the President Nov. 2012 Executive Officer (Senior Vice President of AGC Flat Glass North America) Company Feb. 2013 Executive Officer and Regional President of North America, Glass Oct. 2013 Executive Officer and GM of Strategy Office, Glass Company Jan. 2014 Executive Officer and GM of Electronics General Division, Electronics Company Jan. 2015 Senior Executive Officer and GM of Office of the President Mar. 2015 Director and Senior Executive Officer of Office of the President (Incumbent) Apr. 1976 Joined Japan Tobacco and Salt Public Corporation (currently Japan Tobacco Inc.) Jun. 1999 Jun. 2001 Director of Japan Tobacco Inc. Retired as Director of Japan Tobacco Inc. Jun. 2005 Jun. 2006 Director of Japan Tobacco Inc. President and CEO of Japan Tobacco Inc. Jun. 2012 Mar. 2013 Jun. 2014 Chairman of Japan Tobacco Inc. Director of Asahi Glass (Incumbent) Special Advisor to Japan Tobacco Inc. (Incumbent) [Significant concurrent positions] Special Advisor to Japan Tobacco Inc. Apr. 1979 Jan. 2006 Jan. 2007 Mar. 2008 Jan. 2010 Jan. 2015 Joined Asahi Glass Executive Officer Senior Executive Officer and GM of Electronics & Energy General Div. Director and President & COO Director and President & CEO Representative Director & Chairman (Incumbent) Apr. 1987 Jan. 2012 Joined Asahi Glass Executive Officer and GM of Business Development Office Jan. 2014 Senior Executive Officer and GM of Technology General Division Mar. 2014 Director and Senior Executive Officer and GM of Technology General Division (Incumbent) Joined Komatsu Ltd. Director of Komatsu President of Komatsu Chairman of Komatsu Apr. 1963 Jun. 1989 Jun. 2001 Jun. 2007 Mar. 2011 Jun. 2013 Director of Asahi Glass (Incumbent) Councilor to Komatsu Ltd. (Incumbent) [Significant concurrent positions] Councilor to Komatsu Ltd. Outside Director of Tokyo Electron Ltd. Outside Director of Nomura Holdings, Inc. Outside Director of Nomura Securities Co., Ltd. Outside Director of Takeda Pharmaceutical Co., Ltd. Apr. 1980 Sep. 1986 Joined Citibank, N.A., Tokyo Branch Joined Salomon Brothers Inc., New York Head Office Jun. 1988 Joined Salomon Brothers Asia Ltd, Dec. 1993 Joined S.G. Warburg & Co., Ltd. Nov. 2001 Executive Director of the Harvard Business School Japan Research Tokyo Branch Tokyo Branch Center Apr. 2009 Mar. 2014 Mar. 2015 Director of the University of Tokyo Director of Asahi Glass (Incumbent) Retired as Director of the University of Tokyo Yoshinori Hirai Director Shinji Miyaji Director Masahiro Sakane Director (Outside) Hiroshi Kimura Director (Outside) Masako Egawa Director (Outside) 51 AGC Report 2015 Board of Directors Corporate Auditors Kazuhiko Ishimura Representative Director & Chairman Takuya Shimamura Representative Director and President & CEO Shukichi Umemoto Corporate Auditor Yasushi Marumori Corporate Auditor (Outside) Apr. 1973 Mar. 2005 Jan. 2007 Mar. 2008 Mar. 2013 Joined Asahi Glass Executive Officer and GM of Finance Center Senior Executive Officer and GM of Financial Planning Office Senior Executive Officer and GM of Financial Planning Office Corporate Auditor (Incumbent) Apr. 1981 Apr. 2008 May 2011 Jun. 2012 Jun. 2012 Dec. 2014 Mar. 2015 Mar. 2015 Joined Mitsubishi Bank (Currently the Bank of Tokyo-Mitsubishi UFJ, Ltd.) Executive Officer of the Bank of Tokyo-Mitsubishi UFJ, Ltd. Senior Executive Officer of the Bank of Tokyo-Mitsubishi UFJ, Ltd. Executive Vice President of Mitsubishi UFJ Research and Consulting Co., Ltd. Retired from the previous position Director of Mitsubishi UFJ Research and Consulting Co., Ltd. Retired from the previous position Asahi Glass Corporate Auditor (Incumbent) [Significant concurrent positions] Outside Corporate Auditor at the Nanto Bank, Ltd. Apr. 1977 Jul. 2008 Jan. 2009 Apr. 2010 Jan. 2012 Jan. 2014 Jan. 2015 Mar. 2015 Tokyo District Public Prosecutors Office, Public Prosecutor Supreme Public Prosecutors Office Trial Manager Chiba District Public Prosecutors Office, Chief Public Prosecutor Yokohama District Public Prosecutors Office, Chief Public Prosecutor Sapporo High Public Prosecutors Office, Superintending Prosecutor Nagoya High Public Prosecutors Office, Superintending Prosecutor Retired from the above office Asahi Glass Corporate Auditor (Incumbent) Hiroshi Kawamura Corporate Auditor (Outside) Tokio Matsuo GM of CSR Office Akinobu Shimao President of AGC Ceramics Co., Ltd. Tomoya Takigawa GM of Production Technology Center, Technology General Division Takashi Shimbo Chief Representative of AGC Group for China Kimikazu Ichikawa Chief Representative of AGC Group for Southeast Asia Kazuyoshi Watanabe GM of Display Glass General Div., Electronics Company Kihachiro Okamoto Deputy GM of Automotive General Division, Glass Company Shigekuni Inoue GM of Applied Glass Materials General Division Hiroyuki Watanabe GM of Research Center, Technology General Division Takayasu Ide GM of Technology Management General Div., Chemicals Company Seigo Washinoue Deputy GM of Display Glass General Div., ; GM of Marketing & Sales Management Div., Display Glass General Div., Electronics Company Kazuaki Koga GM of Essential Chemicals General Div., Chemicals Company Kenzo Moriyama Group Leader of Corporate Planning Group, Office of the President Takashizu Minato GM of Performance Chemicals General Div., Chemicals Company Masahiro Takeda Deputy GM of Building & Industrial General Div., GlassCompany; GM of Japan/Asia Pacific Div., Building & Industrial General Div., Glass Company (Abbreviation)"GM": General Manager AGC Report 2015 52 Apr. 1977 May 2004 Apr. 2007 Jun. 2009 Jun. 2009 Jun. 2013 Jul. 2013 Mar. 2014 Joined Bank of Japan Head of Information System Services Department of Bank of Japan Head of Internal Auditors’ Affairs Office of Bank of Japan Retired from Bank of Japan Corporate Auditor of the Bank of Yokohama, Ltd. Retired from the previous position Adviser of Transportation Security Services of NIPPON EXPRESS CO., LTD (Incumbent) Asahi Glass Corporate Auditor (Incumbent) Toru Hara Corporate Auditor (Outside) Executive Officers President & CEO Takuya Shimamura CEO (Leader of AGC Group Improvement Activities) Executive Vice President Yoshiaki Tamura President of Glass Company Senior Executive Officers Marehisa Ishiko GM of Automotive General Division, Glass Company Jean-François Heris GM of Building & Industrial General Division, Glass Company; President & CEO of AGC Glass Europe Yasumasa Nakao GM of Technology General Division, Glass Company Yoshinori Hirai Overall Business Management(Technology and Business Development); GM of Technology General Division; Oversight of Electronics Company and Applied Glass Materials General Division Deputy Leader of AGC Group Improvement Activities Tetsuo Tatsuno GM of Finance & Control Office Shinji Miyaji Overall Business Management(Finance); GM of Office of the President Deputy Leader of AGC Group Improvement Activities Yoshinori Kobayashi President of Electronics Company Masao Nemoto President of Chemicals Company Executive Officers Tadayuki Oi GM of Strategy & Planning Office, Glass Company Shinichi Kawakami GM of Human Resources & Administration Office A G C R e p o r t 2 0 1 5 AGC Report 2015 Main Communication Tools Used to Reach Each of Our Stakeholders Financial Information The AGC Group’s Corporate Vision and Business Activities Non-Financial Information (Sustainability Reporting) For Comprehensive Information Financial Review (PDF file only) Reports the AGC Group’s business outline and financial information including consolidated financial statements AGC Report 2015 (This report) For customers (including general consumers) CSR Website www.agc.com/english/csr/ Provides a comprehensive report on the AGC Group’s efforts to fulfill its social responsibilities. Based on the “core” of G41 1 The 4th edition of the GRI Sustainability Reporting Guidelines CSR Information Supplement (PDF file only) Reports on the AGC Group’s non-financial data and its various CSR policies and organizations for promoting CSR-related activities AGC Website www.agc-group.com/ Provides information about the AGC Group more widely, timely and in more detail For shareholders and investors For CSR-related experts (ESG research agencies, etc.) and other stakeholders with an interest in CSR Scope (cid:127) Reporting Period: Fiscal 2014 (Jan.–Dec. 2014) (cid:127) Primary Notation and Report Targets Used in the Report Some information includes content from both fiscal 2013 and 2015 (cid:127) Organizations Covered in the Report: Asahi Glass and its 194 consolidated subsidiaries (Group companies in and outside Japan) The AGC Group Same as “Organizations Covered in the Report” mentioned at left. The AGC Group (Japan) Group companies in Japan including Asahi Glass Co., Ltd. Asahi Glass/the Company Asahi Glass Co. Ltd. (on an unconsolidated basis) Related Information WEB Articles with this mark have related information on the AGC website (www.agc-group.com/). Date of Publication May 2015 (Last date of publication: May 2014) Regarding Future Assumption, Forecasts and Plans Future perspectives described in this report are based on the latest information available to the AGC Group at the time of editing this report. Nevertheless, please note that results and consequences may vary with fluctuations in the business environment. www.agc-group.com 1-5-1, Marunouchi, Chiyoda-ku, Tokyo, 100-8405, JAPAN Corporate Communications & Investor Relations Office Tel: +81-3-3218-5603 Fax: +81-3-3218-5390 Printed on paper made with wood from forest thinning.“Morino Chonai Kai” (Forest Neighborhood Association) —Supporting sound forest management. All rights reserved. Unauthorized reproduction of this report is a violation of applicable laws. 

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