Asahi Glass Co. Ltd.
Annual Report 2017

Plain-text annual report

Main Communication Tools Used to Reach Each of Our Stakeholders For customers (including general consumers) AGC Report 2017 (This report) For all stakeholders For shareholders and investors AGC Asahi Glass Website www.agc-group.com/ Provides information about the AGC Group more widely, timely and in more detail Financial Review Reports the AGC Group’s business outline and financial information including consolidated financial statements (PDF file only) For CSR-related experts1 and stakeholders with an interest in CSR CSR Website www.agc.com/english/csr/ Provides a comprehensive report on the AGC Group’s efforts to fulfill its social responsibilities CSR Information Supplement Reports on the AGC Group’s non-financial data and its various CSR policies and organizations for promoting CSR-related activities (PDF file only) A Broad Overview of the AGC Group’s Corporate Vision, Business Strategies and Business Activities 1 ESG research agencies, etc. Scope •Reporting Period Fiscal 2016 (Jan.–Dec. 2016) Some information includes content from both fiscal 2015 and 2017 •Organizations Covered in the Report Asahi Glass and its 204 consolidated subsidiaries (Group companies in and outside Japan) •Primary Notation and Report Targets Used in the Report 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. AGC 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 Asahi Glass website (www.agc.com/english/). Date of Publication April 2017 (Last date of publication: April 2016) Regarding Future Assumption, Forecasts and Plans vary with fluctuations in the business environment. 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 A G C R e p o r t 2 0 1 7 A G C A s a h i G l a s s AGC Asahi Glass www.agc.com/english/ 1-5-1, Marunouchi, Chiyoda-ku, Tokyo, 100-8405, JAPAN Corporate Communications & Investor Relations Office, Corporate Planning Division 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. AGC Report 2017 Our Mission AGC Group Vision AGC, an Everyday Essential Part of Our World AGC’s unique materials and solutions make people’s lives better around the world every day is the AGC Group’s corporate philosophy on which all the activities Structure and elements of ® of the Group are founded. The following thoughts are expressed in . We will continue to Anticipate and envision the future, Have perspectives beyond our own fields of expertise, Pursue innovations, not becoming complacent with the status quo. We will continue to create value worldwide, demonstrating the vast potential of the Group’s entire organization. Our Mission “Our Mission” expresses the value that the Group should offer to the world, and represents the reason why the AGC Group exists. Our Shared Values “Our Shared Values” expresses the key ideas that all AGC Group members must share as the basis for every action we take. Our Spirit This founding spirit is precisely the ‘AGC spirit’ that has been handed down from generation to generation and shared by all Group members. Our Mission AGC, an everyday essential part of our world —AGC’s unique materials and solutions make people’s lives better around the world every day— We, the AGC Group, aim to continue being the “first choice” solution provider for our customers by building long-term trusted relationships with them through unique materials and solutions developed using our wide-ranging material and production technologies. We will continue offering products and solutions that customers and society need, thereby making people’s lives better around the world every day. Our Shared Values Innovation & Operational excellence • We will continuously seek innovations in the technology, products and services we provide by thinking beyond conventional ideas and frameworks. • We will continuously create new value which satisfies the needs of our potential and future customers by thinking from the customer’s perspective and accurately forecasting the changes in society and markets. • We will continuously improve our operations for maximum efficiency and quality in every activity and will strive for the highest possible standard of performance. Diversity Environment Integrity • We will respect individuals with different capabilities and personalities, and our global management will operate without regard to nationality, gender or background. • We will respect cultural diversity regardless of race, ethnicity, religion, language, and nationality. • We will respect different perspectives and opinions at all times. • We, as good global citizens, will contribute to the creation of a sustain- able society in harmony with nature. • We will build open and fair relationships with all of our stakeholders based on the highest ethical standards. • We will strive to ensure and further • We will strictly comply with applicable improve occupational health and safety laws and regulations. in our working environment. • We will fulfill our responsibilities in relation to all the products and services we provide 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 1907. 1 AGC Report 2017 AGC Report 2017 2 Our Mission AGC Group Vision AGC, an Everyday Essential Part of Our World AGC’s unique materials and solutions make people’s lives better around the world every day ® is the AGC Group’s corporate philosophy on which all the activities of the Group are founded. The following thoughts are expressed in . We will continue to Anticipate and envision the future, Have perspectives beyond our own fields of expertise, Pursue innovations, not becoming complacent with the status quo. We will continue to create value worldwide, demonstrating the vast potential of the Group’s entire organization. Structure and elements of Our Mission “Our Mission” expresses the value that the Group should offer to the world, and represents the reason why the AGC Group exists. Our Shared Values “Our Shared Values” expresses the key ideas that all AGC Group members must share as the basis for every action we take. Our Spirit This founding spirit is precisely the ‘AGC spirit’ that has been handed down from generation to generation and shared by all Group members. Our Mission AGC, an everyday essential part of our world —AGC’s unique materials and solutions make people’s lives better around the world every day— We, the AGC Group, aim to continue being the “first choice” solution provider for our customers by building long-term trusted relationships with them through unique materials and solutions developed using our wide-ranging material and production technologies. We will continue offering products and solutions that customers and society need, thereby making people’s lives better around the world every day. Our Shared Values Innovation & Operational excellence • We will continuously seek innovations in the technology, products and services we provide by thinking beyond conventional ideas and frameworks. • We will continuously create new value which satisfies the needs of our potential and future customers by thinking from the customer’s perspective and accurately forecasting the changes in society and markets. • We will continuously improve our operations for maximum efficiency and quality in every activity and will strive for the highest possible standard of performance. Diversity Environment Integrity • We will respect individuals with different capabilities and personalities, and our global management will operate without regard to nationality, gender or background. • We will respect cultural diversity regardless of race, ethnicity, religion, language, and nationality. • We will respect different perspectives and opinions at all times. Our Spirit • We, as good global citizens, will contribute to the creation of a sustain- able society in harmony with nature. • We will strive to ensure and further improve occupational health and safety in our working environment. • We will build open and fair relationships with all of our stakeholders based on the highest ethical standards. • We will strictly comply with applicable laws and regulations. • We will fulfill our responsibilities in relation to all the products and services we provide to achieve customer satisfaction and trust. “Never take the easy way out, but confront difficulties.” The founding spirit of Toshiya Iwasaki, who established Asahi Glass Company in 1907. 1 AGC Report 2017 AGC Report 2017 2 Message from the President and CEO The AGC Group’s history began more than a century ago, when we took on the challenge of manufacturing the first flat glass in Japan with a view to contributing to people’s lives and the country’s industrial development. Since that time, the Group has built up expertise and technologies in the fields of glass, electronics, chemicals and ceramics, while providing solutions to a wide range of industries, including the building, automotive and electronics sectors. After the launch of its business operations in India in the 1950s, the Group has expanded its business throughout Asia, Europe, North America, South America and the Middle East, and its employees around the world have been striving for the development of the local economy and society in each region. The fundamental principle of our business is to contribute to society through our unique materials and solutions developed using the Group’s exper- tise and technologies. In recent years, the business environment surrounding the Group has been changing drastically. Amidst such a volatile environment, the AGC Group’s management policy serves as a reminder of AGC’s fundamental principles that the Group’s officers and employees should follow as they provide added value to all stakeholders. In addition, we also formulated our long-term vision called Vision 2025 and a long-term management strategy to achieve it under AGC plus. We aim to be a highly profitable, leading global material provider as the Group’s Core Businesses serve as a solid revenue base and its Strategic Businesses become a growth driver to generate further profits. The AGC Group will continue innovating and offering new solutions that are indispensable to society. We remain strongly committed to the sustainable development of countries worldwide with the hope of ensuring a bright future for our planet. The AGC Group will continue making positive contributions moving forward to meet the expec- tations of our stakeholders around the world. The AGC Group’s Management Policy The AGC Group adds a “plus” by: •Providing safety, security and comfort to society; •Creating new value and functions for customers and business partners and building trust with them; •Enhancing job satisfaction among employees; and •Increasing the Groups’ corporate value for investors. Takuya Shimamura Representative Director, President and Chief Executive Officer Through Diverse Technologies, the AGC Group Offers Solutions that Contribute to People’s Lives Worldwide. Takuya Shimamura Representative Director, President and Chief Executive Officer 3 AGC Report 2017 AGC Report 2017 4 Message from the President and CEO The AGC Group’s history began more than a century ago, materials and solutions developed using the Group’s exper- when we took on the challenge of manufacturing the first tise and technologies. flat glass in Japan with a view to contributing to people’s lives and the country’s industrial development. Since that In recent years, the business environment surrounding the time, the Group has built up expertise and technologies in Group has been changing drastically. Amidst such a volatile the fields of glass, electronics, chemicals and ceramics, environment, the AGC Group’s management while providing solutions to a wide range of industries, policy serves as a reminder of AGC’s fundamental principles including the building, automotive and electronics sectors. that the Group’s officers and employees should follow as After the launch of its business operations in India in the they provide added value to all stakeholders. In addition, 1950s, the Group has expanded its business throughout we also formulated our long-term vision called Vision 2025 Asia, Europe, North America, South America and the and a long-term management strategy to achieve it under Middle East, and its employees around the world have been AGC plus. We aim to be a highly profitable, leading global striving for the development of the local economy and material provider as the Group’s Core Businesses serve as a society in each region. The fundamental principle of our solid revenue base and its Strategic Businesses become a business is to contribute to society through our unique growth driver to generate further profits. The AGC Group will continue innovating and offering new solutions that are indispensable to society. We remain strongly committed to the sustainable development of countries worldwide with the hope of ensuring a bright future for our planet. The AGC Group will continue making positive contributions moving forward to meet the expec- tations of our stakeholders around the world. The AGC Group’s Management Policy The AGC Group adds a “plus” by: •Providing safety, security and comfort to society; •Creating new value and functions for customers and business partners and building trust with them; •Enhancing job satisfaction among employees; and •Increasing the Groups’ corporate value for investors. Takuya Shimamura Representative Director, President and Chief Executive Officer Through Diverse Technologies, the AGC Group Offers Solutions that Contribute to People’s Lives Worldwide. Takuya Shimamura Representative Director, President and Chief Executive Officer 3 AGC Report 2017 AGC Report 2017 4 Long-term Strategy The AGC Group is Realizing Vision 2025 by Enhancing Core Businesses and Expanding Strategic Businesses. In February 2016, the AGC Group established Vision 2025, alongside a long-term management strategy for realizing its goals. Under the strategy, the Group has designated its glass, chemicals, display glass and ceramics businesses as Core Businesses for ensuring stable sources of earnings over the long term. By designating its mobility, electronics and life science businesses as Strategic Businesses, it will aim for high growth in targeted markets. Both of these business catego- ries will serve as twin pillars for achieving Vision 2025. Based on the principle of always meeting customers’ expectations and continuing to earn their trust, the AGC Group is pursuing strategic mergers, acquisitions and other investments aimed at generating value and growth, while working to allocate operational resources with an emphasis on asset efficiency. Looking ahead, the AGC Group will continue offering value to customers and society as it aims to be a highly profit- able, leading global material and solution provider. Basic policy to achieve our goals under “Vision 2025” 1. Always look from market perspective, respond to customers’ needs, and continue building trust with them. 2. Achieve sustainable growth in both Core and Strategic Businesses by boldly pursuing strategic M&A opportuni- ties along with the organic growth approach. 3. Take advantage of high growth in Asia by leveraging regional operations and strategic actions in the geographical area covering from Southeast Asia through the Middle East. 4. Concentrate the Group’s management resources into the business fields that have high earnings/growth potential and achieve the business structure with improved asset efficiency. “Vision 2025” By 2025, the AGC Group’s Core Businesses will serve as solid sources of earnings, and Strategic Businesses will become growth drivers and lead further earnings growth. In 2025, the AGC Group will continue being a highly profitable, leading global material and solution provider. Core Strategy 1 Core businesses Core Strategy 2 Strategic businesses Establishing long-term, stable sources of earnings through the portfolio management Establishing highly profitable businesses through expansion of high value-added businesses Growth Strategies in Asia Architectural glass Automotive glass (existing) Display glass Mobility Electronics Life science Essential chemicals Performance chemicals Ceramics The AGC Group’s competitive advantages Wide-ranging customer base Varieties of material technologies in the field of glass, electronics, chemicals and ceramics Production technology development capability and operational excellence Middle East (West Asia) The AGC Group’s business foundations in glass and chemicals Southeast Asia Main business locations extend across Asia from Southeast Asia to the Middle East (West Asia). Glass Chemicals 5 AGC Report 2017 AGC Report 2017 6 Core Strategy 1 Core businesses Practicing Comprehensive Portfolio Management The AGC Group now designates its architectural glass, investments, including mergers and acquisitions. automotive glass, chemicals and display glass businesses as The AGC Group has established a strong presence in Core Businesses. Through these businesses, the Group will Thailand and Indonesia through its glass and chemicals establish long-term, stable sources of earnings while focus- businesses. By taking advantage of growth in Asia in partic- ing on the effective allocation of resources based on its ular, this has created opportunity for business expansion business portfolio. It will also carry out growth-oriented from Southeast Asia to the Middle East (West Asia). Basic Strategies for Enhancing Core Businesses Business Basic strategy Architectural glass Automotive glass (existing) Display glass Essential chemicals Performance chemicals Ceramics •Select and concentrate on high growth countries & countries that the Group has a competitive advantage •Innovative business models to enhance the asset efficiency •Respond to needs for more advanced functions and performance amid the expansion of the Eco-friendly vehicles and automated driving systems •Optimize the allocation of production bases to respond to the demand shift in the LCD glass market •Cultivate markets for new display applications •Further strengthen the business foundation of Chlor-alkali business in Southeast Asia •Take advantage of the global demand increase in high performance materials for the growth of the fluorochemicals business •Deliver new value propositions with a mix of materials, engineering & services •Establish business bases in Southeast Asia and expand the global sales Long-term Strategy The AGC Group is Realizing Vision 2025 by Enhancing Core Businesses and Expanding Strategic Businesses. In February 2016, the AGC Group established Vision 2025, alongside a long-term management strategy for realizing its goals. Under the strategy, the Group has designated its glass, Basic policy to achieve our goals under “Vision 2025” chemicals, display glass and ceramics businesses as Core 1. Always look from market perspective, respond to Businesses for ensuring stable sources of earnings over the customers’ needs, and continue building trust with them. long term. By designating its mobility, electronics and life science businesses as Strategic Businesses, it will aim for high growth in targeted markets. Both of these business catego- ries will serve as twin pillars for achieving Vision 2025. Based on the principle of always meeting customers’ expectations and continuing to earn their trust, the AGC Group is pursuing strategic mergers, acquisitions and other investments aimed at generating value and growth, while working to allocate operational resources with an emphasis on asset efficiency. Looking ahead, the AGC Group will continue offering value to customers and society as it aims to be a highly profit- able, leading global material and solution provider. 2. Achieve sustainable growth in both Core and Strategic Businesses by boldly pursuing strategic M&A opportuni- ties along with the organic growth approach. 3. Take advantage of high growth in Asia by leveraging regional operations and strategic actions in the geographical area covering from Southeast Asia through the Middle East. 4. Concentrate the Group’s management resources into the business fields that have high earnings/growth potential and achieve the business structure with improved asset efficiency. “Vision 2025” By 2025, the AGC Group’s Core Businesses will serve as solid sources of earnings, and Strategic Businesses will become growth drivers and lead further earnings growth. In 2025, the AGC Group will continue being a highly profitable, leading global material and solution provider. Core Strategy 1 Core businesses Core Strategy 2 Strategic businesses Architectural glass Automotive glass (existing) Essential chemicals Performance chemicals Ceramics Display glass Mobility Electronics Life science The AGC Group’s competitive advantages Wide-ranging customer base Varieties of material technologies in the field of glass, electronics, chemicals and ceramics Production technology development capability and operational excellence Core Strategy 1 Core businesses Practicing Comprehensive Portfolio Management The AGC Group now designates its architectural glass, automotive glass, chemicals and display glass businesses as Core Businesses. Through these businesses, the Group will establish long-term, stable sources of earnings while focus- ing on the effective allocation of resources based on its business portfolio. It will also carry out growth-oriented investments, including mergers and acquisitions. The AGC Group has established a strong presence in Thailand and Indonesia through its glass and chemicals businesses. By taking advantage of growth in Asia in partic- ular, this has created opportunity for business expansion from Southeast Asia to the Middle East (West Asia). Basic Strategies for Enhancing Core Businesses Business Basic strategy Architectural glass •Select and concentrate on high growth countries & countries that the Group has a competitive advantage •Innovative business models to enhance the asset efficiency Automotive glass (existing) •Respond to needs for more advanced functions and performance amid the expansion of the Eco-friendly vehicles and automated driving systems Display glass •Optimize the allocation of production bases to respond to the demand shift in the LCD glass market •Cultivate markets for new display applications Essential chemicals Performance chemicals Ceramics •Further strengthen the business foundation of Chlor-alkali business in Southeast Asia •Take advantage of the global demand increase in high performance materials for the growth of the fluorochemicals business •Deliver new value propositions with a mix of materials, engineering & services •Establish business bases in Southeast Asia and expand the global sales Establishing long-term, stable sources of Establishing highly profitable businesses through earnings through the portfolio management expansion of high value-added businesses Growth Strategies in Asia 5 AGC Report 2017 AGC Report 2017 6 Middle East (West Asia) The AGC Group’s business foundations in glass and chemicals extend across Asia from Southeast Asia to the Middle East (West Asia). Southeast Asia Main business locations Glass Chemicals Long-term Strategy Medium-term Strategy Core Strategy 2 Strategic businesses Expanding High Value-added Businesses Through its Strategic Businesses, the AGC Group is offering solutions with increased added value, targeting markets covering the three categories of mobility, electronics and the life science. The Group’s mobility business provides solutions that help integrate information and communication technol- ogy (ICT) in automobiles and construct innovative infrastruc- tures and new ecosystems for transportation. The electron- ics business supplies optical materials for smartphones and signage-related products and technologies based on the vision of an Internet of Things (IoT) society, in which all types of products are interconnected via the Internet. Products in this business help further diversify input/output devices, as well as increase the speed of communications and the densi- ty of data storage. Finally, the life science business provides products that facilitate advanced medical care and solutions for global food shortages. The AGC Group’s Solutions for Targeted Markets Changes in the social environment Targeted markets Changes in the market trends The AGC Group’s solutions also acquired a biopharmaceutical contract manufacturer 2016 •Evolution of transportation infrastructure •Everything can be connected •Anyone can be connected anytime •Aging society •Increase of global population •Greater safety, security, comfort Mobility Electronics •Advancement in drive assist system, and innovation in automatic driving and transportation infrastructure •Connecting moving vehicles and society, and safety/security/ comfort •Everything connects with each other and safety/security/ comfort •Advancement of data entry devices (cameras, sensors) •Higher-speed communications, increased density of data storage Using spaces as displays Next-generation communication antennas Supply parts and materials for eco-friendly vehicles Finer, more advanced semiconductors Sales promotion of blue filters for CMOS / CCD for cameras Sales promotion of consumer materials used for semiconductor manufacturing processes Life science •Longevity and World’s population increase •Pursuing safety and security Working on synthetic pharmaceutical & agrochemical business with world’s major pharmaceutical/agrochemical companies Contract Development & Manufacturing Organization (CDMO) business Acquired overseas bases and mammalian CDMO through M&As in biopharmaceutical business The AGC Group is Establishing the Basis for Long-term Growth with the Medium-term Management Plan, AGC plus-2017. By effectively allocating management resources and Major Industry Investments in Recent Years Glass Electronics Chemicals carrying out strategies based on its business portfolio, which has been created based on the profitability and growth potential for each of the Group’s businesses, the AGC Group is aiming to achieve the management and financial targets set under the medium-term management plan, AGC plus-2017. In 2016, the Group increased production capacity and acquired local companies in Southeast Asia, where demand for polyvinyl chloride (PVC), architectural coating glass and other products is growing alongside economic development. In addition, the Group started operation of an architectural coating glass plant in Saudi Arabia and based in Europe. In 2017, the final year of the medium-term management plan, the Group will aggressively implement strategic initiatives and accelerate its re-growth toward the realization of Vision 2025. In its Core Businesses, the Group intends to establish a long-term stable sources of earnings through the expansion of high-performance, high value-added products. In its Strategic Businesses, the Group will aim for further growth by placing a greater focus on developing products for car-mounted displays and next-generation semiconductor manufacturing process components, in addition to global development of the biopharmaceutical and manufacturing contract business. 2015 Acquired “NordGlass”, a manufacturer of automobile replacement glass (Poland) Started operation of a new automotive glass plant (Mexico) Increased Low-E glass production capacity by 50% (Thailand) Started operation of a coating glass plant (Saudi Arabia) Doubled the PVC production capacity of PVC (Indonesia) Increased PVC production capacity by 50% (Vietnam) Acquired “Biomeva,” a contract manufacturer of biopharmaceuticals (Germany) Relocated LCD float furnace from Japan (China) 2017 Acquired “Vinythai,” a manufacturer / sales company of chemicals products (Thailand) Acquired CMC Biologics, a contract manufacturer of biopharmaceuticals (Denmark, USA) Progress Under the Medium-term Management Plan, AGC plus-2017 2015 2016 2017 2025 Medium-term management plan, AGC plus-2017 Long-term management strategies for realization of Vision 2025 Net sales (Billion yen) 1,326.3 1,282.6 1,350.0 Operating profit (Billion yen) ROE (%) 71.2 3.9 96.3 4.3 2015 2016 2017 (Forecast) (Year) 105.0 6.0 Management targets for 2017 Net sales ¥1.6 trillion Operating profit More than ¥100 billion ROE 5% or above D/E 0.5 or less 7 AGC Report 2017 AGC Report 2017 8 Long-term Strategy Long-term Strategy Medium-term Strategy Medium-term Strategy The AGC Group is Establishing the Basis for Long-term Growth The AGC Group is Establishing the Basis for Long-term Growth with the Medium-term Management Plan, AGC plus-2017. with the Medium-term Management Plan, AGC plus-2017. Core Strategy 2 Strategic businesses Core Strategy 2 Strategic businesses Expanding High Value-added Businesses Expanding High Value-added Businesses Through its Strategic Businesses, the AGC Group is offering Through its Strategic Businesses, the AGC Group is offering signage-related products and technologies based on the signage-related products and technologies based on the solutions with increased added value, targeting markets solutions with increased added value, targeting markets vision of an Internet of Things (IoT) society, in which all types vision of an Internet of Things (IoT) society, in which all types covering the three categories of mobility, electronics and the covering the three categories of mobility, electronics and the of products are interconnected via the Internet. Products in of products are interconnected via the Internet. Products in life science. The Group’s mobility business provides solutions life science. The Group’s mobility business provides solutions this business help further diversify input/output devices, as this business help further diversify input/output devices, as that help integrate information and communication technol- that help integrate information and communication technol- well as increase the speed of communications and the densi- well as increase the speed of communications and the densi- ogy (ICT) in automobiles and construct innovative infrastruc- ogy (ICT) in automobiles and construct innovative infrastruc- ty of data storage. Finally, the life science business provides ty of data storage. Finally, the life science business provides tures and new ecosystems for transportation. The electron- tures and new ecosystems for transportation. The electron- products that facilitate advanced medical care and solutions products that facilitate advanced medical care and solutions ics business supplies optical materials for smartphones and ics business supplies optical materials for smartphones and for global food shortages. for global food shortages. The AGC Group’s Solutions for Targeted Markets The AGC Group’s Solutions for Targeted Markets Changes in the Changes in the social environment social environment Targeted Targeted markets markets Changes in the Changes in the market trends market trends The AGC Group’s solutions The AGC Group’s solutions •Advancement in •Advancement in drive assist system, drive assist system, and innovation in and innovation in automatic driving automatic driving and transportation and transportation infrastructure infrastructure •Connecting moving •Connecting moving vehicles and society, vehicles and society, and safety/security/ and safety/security/ comfort comfort •Everything connects •Everything connects with each other and with each other and safety/security/ safety/security/ comfort comfort •Advancement of data •Advancement of data (cameras, sensors) (cameras, sensors) •Higher-speed •Higher-speed communications, communications, increased density of increased density of data storage data storage Mobility Mobility Using spaces as displays Using spaces as displays Next-generation Next-generation communication antennas communication antennas Supply parts and materials Supply parts and materials for eco-friendly vehicles for eco-friendly vehicles Electronics Electronics entry devices entry devices Finer, more advanced Finer, more advanced semiconductors semiconductors Sales promotion of Sales promotion of Sales promotion of consumer Sales promotion of consumer blue filters for CMOS / blue filters for CMOS / materials used for semiconductor materials used for semiconductor CCD for cameras CCD for cameras manufacturing processes manufacturing processes •Evolution of •Evolution of transportation transportation infrastructure infrastructure •Everything can be •Everything can be connected connected •Anyone can be •Anyone can be connected anytime connected anytime •Aging society •Aging society •Increase of global •Increase of global population population •Greater safety, •Greater safety, security, comfort security, comfort By effectively allocating management resources and carrying out strategies based on its business portfolio, which has been created based on the profitability and growth potential for each of the Group’s businesses, the AGC Group is aiming to achieve the management and financial targets set under the medium-term management plan, AGC plus-2017. By effectively allocating management resources and carrying out strategies based on its business portfolio, which has been created based on the profitability and growth potential for each of the Group’s businesses, the AGC Group is aiming to achieve the management and financial targets set under the medium-term management plan, AGC plus-2017. In 2016, the Group increased production capacity In 2016, the Group increased production capacity and acquired local companies in Southeast Asia, where and acquired local companies in Southeast Asia, where demand for polyvinyl chloride (PVC), architectural coating demand for polyvinyl chloride (PVC), architectural coating glass and other products is growing alongside economic glass and other products is growing alongside economic development. In addition, the Group started operation of development. In addition, the Group started operation of an architectural coating glass plant in Saudi Arabia and an architectural coating glass plant in Saudi Arabia and also acquired a biopharmaceutical contract manufacturer also acquired a biopharmaceutical contract manufacturer based in Europe. based in Europe. In 2017, the final year of the medium-term management In 2017, the final year of the medium-term management plan, the Group will aggressively implement strategic plan, the Group will aggressively implement strategic initiatives and accelerate its re-growth toward the realization initiatives and accelerate its re-growth toward the realization of Vision 2025. In its Core Businesses, the Group intends of Vision 2025. In its Core Businesses, the Group intends to establish a long-term stable sources of earnings through to establish a long-term stable sources of earnings through the expansion of high-performance, high value-added the expansion of high-performance, high value-added products. In its Strategic Businesses, the Group will aim products. In its Strategic Businesses, the Group will aim for further growth by placing a greater focus on developing for further growth by placing a greater focus on developing products for car-mounted displays and next-generation products for car-mounted displays and next-generation semiconductor manufacturing process components, in semiconductor manufacturing process components, in addition to global development of the biopharmaceutical addition to global development of the biopharmaceutical and manufacturing contract business. and manufacturing contract business. Major Industry Investments in Recent Years Electronics Major Industry Investments in Recent Years Electronics Glass Glass Chemicals Chemicals 2015 2015 Acquired “NordGlass”, a manufacturer of Acquired “NordGlass”, a manufacturer of automobile replacement glass (Poland) automobile replacement glass (Poland) Started operation of a new automotive glass plant (Mexico) Started operation of a new automotive glass plant (Mexico) 2016 2016 Increased Low-E glass production capacity by 50% (Thailand) Increased Low-E glass production capacity by 50% (Thailand) Started operation of a coating glass plant (Saudi Arabia) Started operation of a coating glass plant (Saudi Arabia) Doubled the PVC production capacity of PVC (Indonesia) Doubled the PVC production capacity of PVC (Indonesia) Increased PVC production capacity by 50% (Vietnam) Increased PVC production capacity by 50% (Vietnam) Acquired “Biomeva,” a contract manufacturer of biopharmaceuticals (Germany) Acquired “Biomeva,” a contract manufacturer of biopharmaceuticals (Germany) Relocated LCD float furnace from Japan (China) Relocated LCD float furnace from Japan (China) 2017 2017 Acquired “Vinythai,” a manufacturer / sales Acquired “Vinythai,” a manufacturer / sales company of chemicals products (Thailand) company of chemicals products (Thailand) Acquired CMC Biologics, a contract manufacturer of biopharmaceuticals (Denmark, USA) Acquired CMC Biologics, a contract manufacturer of biopharmaceuticals (Denmark, USA) Progress Under the Medium-term Management Plan, AGC plus-2017 Progress Under the Medium-term Management Plan, AGC plus-2017 2015 2015 2016 2016 2017 2017 2025 2025 Medium-term management plan, AGC plus-2017 Medium-term management plan, AGC plus-2017 Long-term management strategies Long-term management strategies for realization of Vision 2025 for realization of Vision 2025 Life Life science science •Longevity and •Longevity and World’s population World’s population increase increase •Pursuing safety and •Pursuing safety and security security Working on synthetic pharmaceutical & Working on synthetic pharmaceutical & agrochemical business with world’s major agrochemical business with world’s major pharmaceutical/agrochemical companies pharmaceutical/agrochemical companies Operating Operating profit profit (Billion yen) (Billion yen) ROE (%) ROE (%) 71.2 71.2 3.9 3.9 96.3 96.3 4.3 4.3 105.0 105.0 6.0 6.0 Net sales Net sales (Billion yen) (Billion yen) 1,326.3 1,326.3 1,282.6 1,282.6 1,350.0 1,350.0 Management targets for 2017 Management targets for 2017 Net sales Net sales ¥1.6 trillion ¥1.6 trillion Operating profit Operating profit More than More than ¥100 billion ¥100 billion ROE ROE 5% or above 5% or above D/E D/E 0.5 or less 0.5 or less 7 7 AGC Report 2017 AGC Report 2017 AGC Report 2017 8 AGC Report 2017 8 Contract Development & Contract Development & Acquired overseas bases and Acquired overseas bases and Manufacturing Organization Manufacturing Organization mammalian CDMO through M&As mammalian CDMO through M&As (CDMO) business (CDMO) business in biopharmaceutical business in biopharmaceutical business 2015 2015 2016 2016 2017 (Forecast) 2017 (Forecast) (Year) (Year) 187mm 187mm Overview of the AGC Group The AGC Group Creates New Value in the Fields of Glass, Electronics, Chemicals and Ceramics. Corporate Data (As of the end of December 2016) Company Name AGC Asahi Glass Founded September 8, 1907 Outstanding Stock 1,186,705,905 shares Registered Company Name ASAHI GLASS CO., LTD Head Office Incorporated June 1, 1950 Capital Employees 50,963 (consolidated), 6,024 (non-consolidated) 1-5-1, Marunouchi, Chiyoda-ku, 90,873 million yen Consolidated Group Companies Tokyo 100-8405 JAPAN 204 (165 overseas) Business Segment (As of the end of December 2016) Sales Ratio1 Sales Trends2 (Billion yen) Main Businesses and Fields/Main Products GLASS ELECTRONICS The AGC Group’s business extends into four fields: glass, electronics, chemicals and ceramics. Through world-leading technologies and expertise the Group has developed over more than a century of technological innovation, it provides a diverse lineup of products for customers across a wide range of industries. From architectural glass and automotive glass and extending to display glass and electronic materials—as well as high-func- tion materials such as chemicals and ceramics—the AGC Group proposes new solutions from its unique perspective as a manufacturer of glass and other materials. In order to further enrich society, the AGC Group is constantly pushing the limits in the creation of new standards of value. Sales Ratio1 Chemicals 25% Ceramics/ Other 2% 2016 Net Sales 1,282.6 billion yen CHEMICALS Electronics 20% Glass 53% Sales Trends (Billion yen) 1,348.3 1,326.3 1,282.6 CERAMICS/ OTHER 2014 2015 2016 (Year) Note Numeric data is based on International Financial Reporting Standards (IFRS). (Subject organizations: Asahi Glass Co., Ltd. and its consolidated subsidiaries / Target period: Each business year ending December 31) 1 Sales Ratio calculated from sales to external customers. 9 AGC Report 2017 53% 20% 25% 2% 686.3 692.9 680.0 2014 2015 2016 (Year) 319.7 288.6 258.1 2014 2015 2016 (Year) 318.5 316.6 317.2 2014 2015 2016 (Year) 80.8 68.1 70.8 •Double glazing glass for solar control/heat-insulation Architectural glass •Float glass •Low-emissivity (Low-E) glass •Safety glass •Decorative glass Automotive glass •Tempered automotive glass •Laminated automotive glass Display •Glass substrates for TFT-LCDs Electronic materials •CMOS/CCD blue filter •CMP slurry •Synthetic quartz glass •Glass frit and paste •Glass molded lenses Applied glass materials •Cover glass for electronic devices •Thin glass for electronic devices •Glass for light guide plates •Glass for photovoltaic devices Chlor-alkali and urethane •Polyvinyl chloride •Vinyl chloride monomer •Caustic soda •Urethane materials Fluorochemicals and specialty chemicals •Fluoropolymers/films •Water and oil repellents active ingredients •Iodine-related products •Pharmaceutical and agrochemical intermediates and Ceramics •Refractory materials •Fine ceramics •Sputtering targets Logistics/Engineering 2 Sales by business were calculated before elimination, therefore the sum will not match company-wide sales when totaled. 2014 2015 2016 (Year) AGC Report 2017 10 187mm 187mm Overview of the AGC Group The AGC Group Creates New Value in the Fields of Glass, Electronics, Chemicals and Ceramics. Corporate Data (As of the end of December 2016) Company Name AGC Asahi Glass Founded September 8, 1907 Outstanding Stock 1,186,705,905 shares Registered Company Name ASAHI GLASS CO., LTD Head Office 1-5-1, Marunouchi, Chiyoda-ku, Tokyo 100-8405 JAPAN Incorporated June 1, 1950 Capital 90,873 million yen Employees 50,963 (consolidated), 6,024 (non-consolidated) Consolidated Group Companies 204 (165 overseas) The AGC Group’s business extends into Business Segment (As of the end of December 2016) Sales Ratio1 Sales Trends2 (Billion yen) Main Businesses and Fields/Main Products GLASS ELECTRONICS four fields: glass, electronics, chemicals and ceramics. Through world-leading technologies and expertise the Group has developed over more than a century of technological innovation, it provides a diverse lineup of products for customers across a wide range of industries. From architectural glass and automotive glass and extending to display glass and electronic materials—as well as high-func- tion materials such as chemicals and ceramics—the AGC Group proposes new solutions from its unique perspective as a manufacturer of glass and other materials. In order to further enrich society, the AGC Group is constantly pushing the limits in the creation of new standards of value. Sales Ratio1 Chemicals 25% Ceramics/ Other 2% 2016 Net Sales 1,282.6 billion yen CHEMICALS Electronics 20% Glass 53% Sales Trends (Billion yen) 1,348.3 1,326.3 1,282.6 CERAMICS/ OTHER 2014 2015 2016 (Year) Note Numeric data is based on International Financial Reporting Standards (IFRS). (Subject organizations: Asahi Glass Co., Ltd. and its consolidated subsidiaries / Target period: Each business year ending December 31) 1 Sales Ratio calculated from sales to external customers. 9 AGC Report 2017 53% 20% 25% 2% 686.3 692.9 680.0 2014 2015 2016 (Year) 319.7 288.6 258.1 2014 2015 2016 (Year) 318.5 316.6 317.2 2014 2015 2016 (Year) 80.8 68.1 70.8 Architectural glass •Float glass •Low-emissivity (Low-E) glass •Double glazing glass for solar control/heat-insulation •Safety glass •Decorative glass Automotive glass •Tempered automotive glass •Laminated automotive glass Display •Glass substrates for TFT-LCDs Electronic materials •CMOS/CCD blue filter •CMP slurry •Synthetic quartz glass •Glass frit and paste •Glass molded lenses Applied glass materials •Cover glass for electronic devices •Thin glass for electronic devices •Glass for light guide plates •Glass for photovoltaic devices Chlor-alkali and urethane •Polyvinyl chloride •Vinyl chloride monomer •Caustic soda •Urethane materials Fluorochemicals and specialty chemicals •Fluoropolymers/films •Water and oil repellents •Pharmaceutical and agrochemical intermediates and active ingredients •Iodine-related products Ceramics •Refractory materials •Fine ceramics •Sputtering targets Logistics/Engineering 2 Sales by business were calculated before elimination, therefore the sum will not match company-wide sales when totaled. 2014 2015 2016 (Year) AGC Report 2017 10 Product Applications Glass substrates for display devices In a Wide Range of Places and Situations, the AGC Group’s Diverse Products Support a Safe, Pleasant and Sustainable Society. Glass materials and components for optical equipment Major Products Glass Electronics Chemicals Ceramics/Other Supporting Mobility Beginning with lightweight, high-function automotive glass, the AGC Group provides a wide range of products that are vital to transportation equipment. Fluoropolymer resin for coatings Glass substrates for display devices Glass materials and components for storage devices Architectural glass Bus glass Supporting Displays and Optical Equipment The AGC Group provides materials and components for electronic equipment used in a variety of business situations. Train platform screen doors Railway glass Truck glass Automotive glass Cover glass for console panels LED/OLED lighting components Urethane materials for car seats Fluoropolymer resins and rubber for automotive components Photovoltaic devices for buildings Glass for office buildings Laminated safety glass for public facilities Supporting Construction and Social Infrastructure The AGC Group provides architectural materials that contribute to the creation of safe and pleasant spaces, and industrial materials that strengthen social infrastructure. Cover glass for lightweight photovoltaic module Protective fluoropolymer resin film for photovoltaic devices Fuel cell-related materials Supporting the Environment The AGC Group provides components and technologies that contribute to the realization of smart cities and smart mobility. Sodium hypochlorite for tap water disinfectants Washstand mirrors Heat resistant glass Caustic soda (for hand soap) Filler for cosmetic products Caustic soda (for dishwashing detergent) Sodium bicarbonate (baking powder) Supporting Optical materials for digital cameras Glass substrates for display devices Cover glass for electronic devices Glass materials and components for optical equipment Glass substrates for display devices Cover glass for electronic devices Fluoropolymer resin for coatings Fluoropolymer resin for coatings Fluoropolymers for membrane structures (films) Ceramic material for road surfaces (heat shielding/anti-skid) LED/OLED lighting components Glass integrated digital signage Show window glass Insulated glass doors for refrigerated and frozen showcases Low-E insulating glass for residential use 11 AGC Report 2017 AGC Report 2017 12 13 AGC Report 2017 Fluoropolymers resin for coatings Fluoroelastomer for petroleum extraction machinery (rubber) TCO substrates for photovoltaic devices Glass fiber-reinforced plastic for photovoltaic device frames Glass-ceramics substrates for high-power LED lighting Fuel cell-related materials Materials for lithium-ion battery Sodium bicarbonate (infusion solution for artificial dialysis) Active ingredients for eyedrops Fluoropolymers for horticultural use (greenhouse film) Agrochemical active ingredients Bulking agent for liquid chromatography Consumer Products The AGC Group provides products that bring comfort and convenience to daily life and many of the materials vital to their creation. Supporting Life Science The AGC Group provides ph armaceuticals and agrochemicals used in the field of life scie nce, and materials for a wide variety of its related facilities. Biopharmaceutical active ingredients Lab use ware Tissue culture ware Prepared specimens for microscopes AGC Report 2017 14 In a Wide Range of Places and Situations, the AGC Group’s Diverse Products Support a Safe, Pleasant and Sustainable Society. Glass materials and components for optical equipment Product Applications Major Products Glass Electronics Chemicals Ceramics/Other Supporting Mobility Beginning with lightweight, high-function automotive glass, the AGC Group provides a wide range of products that are vital to transportation equipment. Fluoropolymer resin for coatings Glass substrates for display devices Glass materials and components for storage devices Architectural glass Bus glass Supporting Displays and Optical Equipment The AGC Group provides materials and components for electronic equipment used in a variety of business situations. Train platform screen doors Railway glass Truck glass Automotive glass Cover glass for console panels LED/OLED lighting components Urethane materials for car seats Fluoropolymer resins and rubber for automotive components Photovoltaic devices for buildings Glass for office buildings Laminated safety glass for public facilities Supporting Construction and Social Infrastructure The AGC Group provides architectural materials that contribute to the creation of safe and pleasant spaces, and industrial materials that strengthen social infrastructure. Glass substrates for display devices Optical materials for digital cameras Glass substrates for display devices Cover glass for electronic devices Glass materials and components for optical equipment Glass substrates for display devices Cover glass for electronic devices Fluoropolymer resin for coatings Fluoropolymer resin for coatings Fluoropolymers for membrane structures (films) Ceramic material for road surfaces (heat shielding/anti-skid) LED/OLED lighting components Glass integrated digital signage Show window glass Insulated glass doors for refrigerated and frozen showcases Low-E insulating glass for residential use Cover glass for lightweight photovoltaic module Protective fluoropolymer resin film for photovoltaic devices Fuel cell-related materials Supporting the Environment The AGC Group provides components and technologies that contribute to the realization of smart cities and smart mobility. Sodium hypochlorite for tap water disinfectants Washstand mirrors Heat resistant glass Caustic soda (for hand soap) Filler for cosmetic products Fluoropolymers resin for coatings Fluoroelastomer for petroleum extraction machinery (rubber) TCO substrates for photovoltaic devices Glass fiber-reinforced plastic for photovoltaic device frames Glass-ceramics substrates for high-power LED lighting Fuel cell-related materials Materials for lithium-ion battery Sodium bicarbonate (infusion solution for artificial dialysis) Active ingredients for eyedrops Fluoropolymers for horticultural use (greenhouse film) Agrochemical active ingredients Bulking agent for liquid chromatography 11 AGC Report 2017 AGC Report 2017 12 13 AGC Report 2017 Caustic soda (for dishwashing detergent) Sodium bicarbonate (baking powder) Supporting Consumer Products The AGC Group provides products that bring comfort and convenience to daily life and many of the materials vital to their creation. Supporting Life Science The AGC Group provides ph armaceuticals and agrochemicals used in the field of life scie nce, and materials for a wide variety of its related facilities. Biopharmaceutical active ingredients Lab use ware Tissue culture ware Prepared specimens for microscopes AGC Report 2017 14 Global Network The AGC Group’s Global Business is Built on Three Regional Pillars: Japan/Asia, Europe and the Americas. JAPAN EUROPE THE AMERICAS ASIA Main Locations Glass Electronics Chemicals Ceramics/Other As economic globalization advances, the AGC Group’s business extends into over 30 countries and regions with the regional pillars in Japan/Asia, Europe and the Ameri- cas. In its glass business, which has markets around the world, the Group has product development and manu- facturing bases in each of these three regions. In its electronics business, as its client businesses are concen- trated in East Asia, development and manufacturing bases are concentrated in Japan and other Asian coun- tries. In the chemicals business, the Group has been working on the enhancement of its manufacturing bases with a focus on Southeast Asia, where infrastructure development is progressing. Utilizing such a global network, the AGC Group strives to expand businesses and grow even deeper roots in local communities, while exploring opportunities to develop new business areas. Sales Ratio1 (As of the end of December 2016) Japan/Asia Europe The Americas Japan/Asia 67% The Americas 11% Europe 22% 2016 Net Sales 1,282.6 billion yen 15 AGC Report 2017 1 Sales Ratio calculated from sales to external customers. Percentage of sales by region 67% Percentage of sales by region 22% Percentage of sales by region 11% Main Products Main Products Main Products Architectural glass Electronic materials Architectural glass Display glass Automotive glass Chemicals Display glass Ceramics/Other Automotive glass Chemicals Architectural glass Electronic materials Automotive glass Chemicals Employees Approximately Employees Approximately Employees Approximately 30,000 16,700 4,300 AGC Report 2017 16 Global Network Global Network The AGC Group’s Global Business is Built on Three Regional Pillars: The AGC Group’s Global Business is Built on Three Regional Pillars: Japan/Asia, Europe and the Americas. Japan/Asia, Europe and the Americas. JAPAN JAPAN EUROPE EUROPE THE THE AMERICAS AMERICAS Sales Ratio1 (As of the end of December 2016) Sales Ratio1 (As of the end of December 2016) Japan/Asia Japan/Asia Europe Europe The Americas The Americas Japan/Asia Japan/Asia 67% 67% The Americas The Americas 11% 11% Europe Europe 22% 22% 2016 2016 Net Sales Net Sales 1,282.6 1,282.6 billion yen billion yen Percentage of sales by region Percentage of sales by region 67% 67% Percentage of sales by region Percentage of sales by region 22% 22% Percentage of sales by region Percentage of sales by region 11% 11% Main Products Main Products Main Products Main Products Main Products Main Products Architectural glass Architectural glass Automotive glass Automotive glass Display glass Display glass Electronic materials Electronic materials Chemicals Chemicals Ceramics/Other Ceramics/Other Architectural glass Automotive glass Architectural glass Automotive glass Display glass Display glass Chemicals Chemicals Architectural glass Automotive glass Architectural glass Automotive glass Electronic materials Chemicals Electronic materials Chemicals ASIA ASIA Main Locations Main Locations Glass Glass Electronics Electronics Chemicals Chemicals Ceramics/Other Ceramics/Other As economic globalization advances, the AGC Group’s As economic globalization advances, the AGC Group’s business extends into over 30 countries and regions with business extends into over 30 countries and regions with the regional pillars in Japan/Asia, Europe and the Ameri- the regional pillars in Japan/Asia, Europe and the Ameri- cas. In its glass business, which has markets around the cas. In its glass business, which has markets around the world, the Group has product development and manu- world, the Group has product development and manu- facturing bases in each of these three regions. In its facturing bases in each of these three regions. In its electronics business, as its client businesses are concen- electronics business, as its client businesses are concen- trated in East Asia, development and manufacturing trated in East Asia, development and manufacturing bases are concentrated in Japan and other Asian coun- bases are concentrated in Japan and other Asian coun- tries. In the chemicals business, the Group has been tries. In the chemicals business, the Group has been working on the enhancement of its manufacturing bases working on the enhancement of its manufacturing bases with a focus on Southeast Asia, where infrastructure with a focus on Southeast Asia, where infrastructure development is progressing. Utilizing such a global development is progressing. Utilizing such a global network, the AGC Group strives to expand businesses network, the AGC Group strives to expand businesses and grow even deeper roots in local communities, while and grow even deeper roots in local communities, while exploring opportunities to develop new business areas. exploring opportunities to develop new business areas. Employees Employees Approximately Approximately Employees Employees Approximately Approximately Employees Employees Approximately Approximately 30,000 30,000 16,700 16,700 4,300 4,300 15 15 AGC Report 2017 AGC Report 2017 1 Sales Ratio calculated from sales to external customers. 1 Sales Ratio calculated from sales to external customers. AGC Report 2017 16 AGC Report 2017 16 Business Overview GLASS The AGC Group provides diverse products and solutions as a leading architectural glass and automotive glass manufacturer. Architectural Glass Business The AGC Group’s architectural glass business supplies a wide range of products—such as float glass, fabricated glass, decorative glass and glass for photovoltaic devices—which are tailored to the needs of each region and client. The AGC Group is also committed to the development and sale of functional glass products that offer comfort and reduce environmental impact. For buildings, the AGC Group provides glass with solar control and heat insulation, and glass with anti-condensation and anti-reflective properties. The Group’s architectural glass business holds a world-leading market share. Market share rankings for main products (Based on fiscal 2016 estimates by AGC) Float glass Global No.1 Automotive Glass Business The AGC Group’s automotive glass business holds a world-leading market share in the sale of laminated glass and tempered glass. The Group makes use of its global market- ing functions, production networks and cutting-edge technologies to pursue greater product safety, design, comfort and environmental performance. It has a wide variety of products, including UV cut glass, infrared ray cut glass, water repellent glass for doors and glass antennas. Market share rankings for main products (Based on fiscal 2016 estimates by AGC) Automotive glass Global No.1 Laminated Low-E (Low emissivity) double glazing glass Outstanding safety and heat insulation performance “ATTOCH™” Low-E glass for on-site retrofitting installation Ideal for remodeling buildings and stores “Clearsight™” anti-reflective glass Minimizing light reflections on the glass surface “Temperlite™” tempered automotive glass Several times the strength of general-purpose flat glass “Lamisafe™” laminated automotive glass Designed with safety in mind, shatterproof even when broken Lacobel™ painted glass for indoor applications Excellent coloring properties and improved transparency Madomado™ multi-functional window unit Adds new features to existing windows “Sunjoule™” building integrated photovoltaic devices Glass with integrated photovoltaics “UV Verre Premium™” series for automotive glass A global first!1 All-around 99% UV cut, providing Light Control glass “WONDERLITE™” Contributing to improved in-car comfort and safety and comfort in the vehicle 1 AGC survey as of November 2015 (when single-glazed glass is used for everything but the windshield) energy conservation Outstanding weather resistance, sound insulation Glass for railroads and heat insulation Architectural glass pursues superior design, improved comfort and reduced environmental impact Automotive glass that pursues superior safety, design sensibility, comfort and environmental performance. 17 AGC Report 2017 AGC Report 2017 18 Business Overview GLASS The AGC Group provides diverse products and solutions as a leading architectural glass and automotive glass manufacturer. Architectural Glass Business The AGC Group’s architectural glass business supplies a wide with anti-condensation and anti-reflective properties. The range of products—such as float glass, fabricated glass, Group’s architectural glass business holds a world-leading decorative glass and glass for photovoltaic devices—which market share. are tailored to the needs of each region and client. The AGC Group is also committed to the development and sale of functional glass products that offer comfort and reduce environmental impact. For buildings, the AGC Group provides glass with solar control and heat insulation, and glass Market share rankings for main products (Based on fiscal 2016 estimates by AGC) Float glass Global No.1 Automotive Glass Business The AGC Group’s automotive glass business holds a world-leading market share in the sale of laminated glass and tempered glass. The Group makes use of its global market- ing functions, production networks and cutting-edge technologies to pursue greater product safety, design, comfort and environmental performance. It has a wide variety of products, including UV cut glass, infrared ray cut glass, water repellent glass for doors and glass antennas. Market share rankings for main products (Based on fiscal 2016 estimates by AGC) Automotive glass Global No.1 Laminated Low-E (Low emissivity) double glazing glass “ATTOCH™” Low-E glass for on-site retrofitting installation Outstanding safety and heat insulation performance Ideal for remodeling buildings and stores “Clearsight™” anti-reflective glass Minimizing light reflections on the glass surface “Temperlite™” tempered automotive glass Several times the strength of general-purpose flat glass “Lamisafe™” laminated automotive glass Designed with safety in mind, shatterproof even when broken Lacobel™ painted glass for indoor applications Madomado™ multi-functional window unit “Sunjoule™” building integrated Excellent coloring properties and improved transparency Adds new features to existing windows photovoltaic devices Glass with integrated photovoltaics “UV Verre Premium™” series for automotive glass A global first!1 All-around 99% UV cut, providing safety and comfort in the vehicle 1 AGC survey as of November 2015 (when single-glazed glass is used for everything but the windshield) Light Control glass “WONDERLITE™” Contributing to improved in-car comfort and energy conservation Glass for railroads Outstanding weather resistance, sound insulation and heat insulation Architectural glass pursues superior design, improved comfort and reduced environmental impact Automotive glass that pursues superior safety, design sensibility, comfort and environmental performance. 17 AGC Report 2017 AGC Report 2017 18 Business Overview ELECTRONICS The AGC Group will continue to offer high value-added products and solutions that support the evolution of the electronics industry. Display Business In its display business, the AGC Group holds a number-two global market share in glass substrates used for thin-film-transistor (TFT) liquid crystal displays (LCDs). The Group leverages its unique manufacturing methods and advanced production techniques to increase its global competitiveness, while focusing on developing glass products for next-generation display devices. Market share rankings for main products (Based on fiscal 2016 estimates by AGC) Glass substrates for TFT-LCDs Global No.2 Glass substrates for TFT-LCDs Key materials for displays Electronic Materials Business In its electronic materials business, the AGC Group contrib- facturing components, CMOS/CCD blue filters and other utes to the most advanced sectors of the electronics indus- optical materials for smartphones and digital cameras, and try by applying the leading-edge technologies it has glass frit and paste display materials for electrical insulation fostered in its glass, chemicals, and ceramics businesses, and sealing. including material, processing, surface treatment and molding technologies. The business supplies a wide lineup of products, such as synthetic quartz glass—a product boasting a world-leading market share—as well as high-pu- rity silicon carbide (SiC) jigs and other semiconductor manu- Market share rankings for main products (Based on fiscal 2016 estimates by AGC) Quartz materials for stepper lenses Global No.1 Applied Glass Materials Business The AGC Group is promoting the advantages of the Group’s “thin, light and strong” specialty glass in an effort to create new applications, while broadening the Group’s product lineup, which includes cover glass for smartphones and tablet devices, and glass substrates for photovoltaic devices and touch panels. Enabling image sensors to match the luminosity Ensuring high quality in semiconductor processing Synthetic quartz glass CMOS/CCD blue filter of the human eye Chemical mechanical polishing (CMP) slurry and Glass frit Enabling multi-layered components to be made other applications in various industries Used for electrical insulation, airtight seals, and polishing solutions extremely flat and even “Roiceram™-HS” high-purity SiC jigs Used for heat treatment and other semiconductor processes “XCV™” glass for light guide plates Enabling liquid crystal displays to be made thinner “Dragontrail™ Pro” specialty glass for chemical strengthening Cover glass for electronic devices Glass substrates for touch panels The world’s thinnest electronic device glass TCO substrates for photovoltaic devices Improving the power generating efficiency of thin film silicon photovoltaic devices “Leoflex™” chemically strengthened specialty glass Used for various applications in architecture, solar cells and more 19 AGC Report 2017 Glass substrates for displays contribute to the continuous evolution of high definition imagery AGC Report 2017 20 Business Overview ELECTRONICS The AGC Group will continue to offer high value-added products and solutions that support the evolution of the electronics industry. Display Business In its display business, the AGC Group holds a number-two global market share in glass substrates used for thin-film-transistor (TFT) liquid crystal displays (LCDs). The Group leverages its unique manufacturing methods and advanced production techniques to increase its global competitiveness, while focusing on developing glass products for next-generation display devices. Market share rankings for main products (Based on fiscal 2016 estimates by AGC) Glass substrates for TFT-LCDs Global No.2 Glass substrates for TFT-LCDs Key materials for displays Electronic Materials Business In its electronic materials business, the AGC Group contrib- utes to the most advanced sectors of the electronics indus- try by applying the leading-edge technologies it has fostered in its glass, chemicals, and ceramics businesses, including material, processing, surface treatment and molding technologies. The business supplies a wide lineup of products, such as synthetic quartz glass—a product boasting a world-leading market share—as well as high-pu- rity silicon carbide (SiC) jigs and other semiconductor manu- facturing components, CMOS/CCD blue filters and other optical materials for smartphones and digital cameras, and glass frit and paste display materials for electrical insulation and sealing. Market share rankings for main products (Based on fiscal 2016 estimates by AGC) Quartz materials for stepper lenses Global No.1 Applied Glass Materials Business The AGC Group is promoting the advantages of the Group’s “thin, light and strong” specialty glass in an effort to create new applications, while broadening the Group’s product lineup, which includes cover glass for smartphones and tablet devices, and glass substrates for photovoltaic devices and touch panels. CMOS/CCD blue filter Enabling image sensors to match the luminosity of the human eye Synthetic quartz glass Ensuring high quality in semiconductor processing Chemical mechanical polishing (CMP) slurry and polishing solutions Enabling multi-layered components to be made extremely flat and even Glass frit Used for electrical insulation, airtight seals, and other applications in various industries “Roiceram™-HS” high-purity SiC jigs Used for heat treatment and other semiconductor processes “XCV™” glass for light guide plates Enabling liquid crystal displays to be made thinner “Dragontrail™ Pro” specialty glass for chemical strengthening Cover glass for electronic devices Glass substrates for touch panels The world’s thinnest electronic device glass TCO substrates for photovoltaic devices Improving the power generating efficiency of thin film silicon photovoltaic devices “Leoflex™” chemically strengthened specialty glass Used for various applications in architecture, solar cells and more 19 AGC Report 2017 Glass substrates for displays contribute to the continuous evolution of high definition imagery AGC Report 2017 20 Business Overview CHEMICALS The AGC Group’s products and solutions help create an affluent, safe and secure society while promoting environmental conservation. Chemicals Business The AGC Group’s chemicals business originally began with the production of soda ash, the main raw material for producing glass. The Group subsequently developed a wide variety of products through its own chemical chain, which enables full use of by-products generated through chemical reaction process. While working to keep its environmental impact to a minimum, the AGC Group supplies a broad lineup of prod- ucts ranging from basic chemicals like caustic soda to highly functional chemicals such as Fluon® ETFE, which holds the number-one global market share for fluorinated resins. Market share rankings for main products (Based on fiscal 2016 estimates by AGC) Fluorinated resins (Fluon® ETFE) Global No.1 The AGC Group’s Chemical Chain Chlor-alkali and urethanes Fluorochemicals and specialty chemicals Methane Fluorite Hydrofluoric acid Gases and solvents Chlorinated solvents Chlorine Chloroform HCFC-22 Tetrafluoro- ethylene Raw salt Potassium chloride Electrolysis Liquid chlorine Sodium hypochlorite Caustic soda Sodium bicarbonate Vinyl chloride monomer Vinyl chloride polymer Caustic potash Potassium carbonate Epichlorohydrin Hydrogen Fluorochemicals Fluorinated gas recovery and processing Fluorinated solvents ASAHIKLIN™ AMOLEA™ HFO-1234yf Fluorinated water & oil repellents AsahiGuard™ E-SERIES Fluoropolymer Fluon® Fluoropolymer film Fluon® ETFE FILM F-CLEAN™ Fluoroelastomers AFLAS™ Transparent amorphous fluoropolymer CYTOP™ Fluoropolymer ion-exchange membrane Flemion™ Fluoroplymer resin for coatings LUMIFLON™ Propylene oxide (PO) Propylene glycol (PG) Polypropylene glycol (PPG) Polyurethanes Chlor-alkali Polyurethanes Fluorine containing pharmaceutical & agrochemical intermediates & active ingredients Biopharmaceutical CDMO (Contract Development & Manufacturing Organization) Services Life science Chlor-alkali and urethane Fluorochemicals and specialty chemicals are commonly applied in the automotive and In its chlor-alkali and urethane business, the In its fluorine and specialty chemicals aircraft industries, and its fluoropolymer films AGC Group supplies highly versatile basic business, the AGC Group’s fluorochemical and fluoropolymer resins for coating are used chemical products—such as caustic soda products have gained a strong reputation for in the building construction industry. Likewise, and sodium bicarbonate—used in various their outstanding heat resistance, chemical its multifunctional materials are used in industries. In addition, its urethane-related resistance and weather resistance. Led by electronic devices and displays. In addition, products are used as raw materials in thermal Fluon® ETFE fluorinated resin—which holds the AGC Group contributes to the life science insulation, vehicle seats and other products top global market share—the business’ wide industry by supplying services and products that are vital for providing comfort in our range of high-performance products are such as pharmaceutical and agrochemical everyday lives. used in various industries. For example, its intermediates and active ingredients. fluorinated resins and fluorinated elastomers PREMINOL™ high purity and high molecular “Fluon® ETFE FILM” Fluoropolymer film “LUMIFLON™” highly weather-resistant weight polypropylene glycol Used widely as an adhesive and sealant Used for a wide range of applications due to its fluoropolymer resin for coatings excellent transparency and weatherability Used for coating buildings and structures Sodium bicarbonate such as dialysis fluid Used widely, including medical applications “HFO-1234yf” refrigerant for next-generation “Tafluprost” pharmaceutical active ingredients vehicle air-conditioners Helping to reduce environmental load Photo HFO-1234yf manufacturing plant Used in medications for treating glaucoma Note A glaucoma and ocular hypertension therapeutic agent jointly developed with Santen Pharmaceutical Co., Ltd. 21 AGC Report 2017 Fluon® ETFE FILM used for the Allianz Arena, a soccer stadium in Germany AGC Report 2017 22 Business Overview CHEMICALS The AGC Group’s products and solutions help create an affluent, safe and secure society while promoting environmental conservation. Chemicals Business The AGC Group’s chemicals business originally began with ucts ranging from basic chemicals like caustic soda to highly the production of soda ash, the main raw material for functional chemicals such as Fluon® ETFE, which holds the producing glass. number-one global market share for fluorinated resins. The Group subsequently developed a wide variety of products through its own chemical chain, which enables full use of by-products generated through chemical reaction process. While working to keep its environmental impact to a minimum, the AGC Group supplies a broad lineup of prod- The AGC Group’s Chemical Chain Market share rankings for main products (Based on fiscal 2016 estimates by AGC) Fluorinated resins (Fluon® ETFE) Global No.1 Chlor-alkali and urethanes Fluorochemicals and specialty chemicals Methane Fluorite Hydrofluoric acid Gases and solvents Chlorinated solvents Liquid chlorine Sodium hypochlorite Raw salt Potassium chloride Electrolysis Fluorinated gas recovery and processing Fluorinated solvents ASAHIKLIN™ AMOLEA™ HFO-1234yf Fluorinated water & oil repellents AsahiGuard™ E-SERIES Fluoropolymer Fluon® Fluoropolymer film Fluon® ETFE FILM F-CLEAN™ Fluoroelastomers AFLAS™ Transparent amorphous fluoropolymer CYTOP™ Fluoropolymer ion-exchange membrane Flemion™ Fluoroplymer resin for coatings LUMIFLON™ Caustic soda Sodium bicarbonate Vinyl chloride monomer Vinyl chloride polymer Caustic potash Potassium carbonate Epichlorohydrin Hydrogen Propylene oxide (PO) Propylene glycol (PG) Polypropylene glycol (PPG) Polyurethanes Chlor-alkali Polyurethanes Fluorochemicals Fluorine containing pharmaceutical & agrochemical intermediates & active ingredients Biopharmaceutical CDMO (Contract Development & Manufacturing Organization) Services Life science Chlor-alkali and urethane In its chlor-alkali and urethane business, the AGC Group supplies highly versatile basic chemical products—such as caustic soda and sodium bicarbonate—used in various industries. In addition, its urethane-related products are used as raw materials in thermal insulation, vehicle seats and other products that are vital for providing comfort in our everyday lives. Fluorochemicals and specialty chemicals In its fluorine and specialty chemicals business, the AGC Group’s fluorochemical products have gained a strong reputation for their outstanding heat resistance, chemical resistance and weather resistance. Led by Fluon® ETFE fluorinated resin—which holds top global market share—the business’ wide range of high-performance products are used in various industries. For example, its fluorinated resins and fluorinated elastomers are commonly applied in the automotive and aircraft industries, and its fluoropolymer films and fluoropolymer resins for coating are used in the building construction industry. Likewise, its multifunctional materials are used in electronic devices and displays. In addition, the AGC Group contributes to the life science industry by supplying services and products such as pharmaceutical and agrochemical intermediates and active ingredients. Chlorine Chloroform HCFC-22 Tetrafluoro- ethylene PREMINOL™ high purity and high molecular weight polypropylene glycol Used widely as an adhesive and sealant “Fluon® ETFE FILM” Fluoropolymer film Used for a wide range of applications due to its excellent transparency and weatherability “LUMIFLON™” highly weather-resistant fluoropolymer resin for coatings Used for coating buildings and structures Sodium bicarbonate Used widely, including medical applications such as dialysis fluid “HFO-1234yf” refrigerant for next-generation vehicle air-conditioners Helping to reduce environmental load Photo HFO-1234yf manufacturing plant “Tafluprost” pharmaceutical active ingredients Used in medications for treating glaucoma Note A glaucoma and ocular hypertension therapeutic agent jointly developed with Santen Pharmaceutical Co., Ltd. 21 AGC Report 2017 Fluon® ETFE FILM used for the Allianz Arena, a soccer stadium in Germany AGC Report 2017 22 Business Overview CERAMICS/ OTHER The AGC Group offers a variety of products and solutions that contribute to innovation in glass production processes and environmental conservation. New Products Products for New Markets Combining diverse technologies, the AGC Group is creating products with even higher added value for new markets. Ceramics Business The AGC Group’s ceramics business has a long history, dating back to 1916, when it began producing refractory bricks for glass melting furnaces. The business is now operated by AGC Ceramics Co., Ltd. With its core businesses in glass engineer- ing, environmental and energy-related domains, the compa- ny leverages its diverse lineup of refractory products and leading-edge engineering technologies. In the glass engineering business, the company aims to help its customers improve energy efficiency and extend the service life of their glass furnaces, as well as ensure stable operations and lower lifecycle costs by supplying high-durabil- ity, high-performance fused cast bricks and related solutions. In environmental and energy-related businesses, AGC Ceramics offers a wide range of ecological solutions, imple- menting castable refractories that make industrial furnaces more energy efficient and reduce environmental load. The company also focuses on developing ceramic materials that help reduce global environmental impact, such as high-tem- perature fine ceramic fans and sputtering targets for eco-friendly glass. For Next-generation Communications Markets Making all the glass around us into an information interface infoverre™ Glass integrated digital signage Glascene™ Transparent glass screen Transforming Glass into an Informational Device Opening Up New Possibilities for Glass Signage by Integrating Liquid Crystal Displays by Enabling Image Projection Onto Transparent Glass Infoverre™ digital signage is a brand-new technology comprised Manufactured using a unique process, Glascene™ is a glass of an LCD directly attached on building exterior or interior screen that enables images to be projected onto it. This new glass. The AGC Group has enabled non-reflective, clear type of screen retains its transparency when images are not images that seem to float in the air by applying integrated projected. The images can be projected at sizes over 100 optical technologies cultivated through its chemicals business. inches, from the front or rear of the screen—depending on A mount or monitor stand is not necessary, so the signage the Glascene™ screen type. can be installed without using much space. “Tough Coore™” ceramic material for heat shielding pavement Alleviates heat island phenomenon “THERMOTECT™” high thermal insulating ceramic furnace materials Outstanding durability and heat insulation for long-term insulation performance under high temperatures, helping to reduce costs by conserving energy Just ordinary glass when not in use. Castable refractories for industrial furnaces Supporting stable operations with an extensive lineup Attached to the windows of the Shin-Marunouchi Building in Tokyo, 55-inch GlasceneTM displays beautiful images while infoverreTM LCDs show a range of advertisements. This product received a retaining its transparency. 2015 Digital Signage Award in the Technology category. For Next-generation Mobility Markets Making vehicle interiors more comfortable with user-friendly touch panels Fused cast refractory bricks for glass melting furnace crown Cover Glass for Console Panels Realizing More Comfortable and Reliable Touch Panel Oper- ation through Electronic Device Cover Glass Technology In recent years, the automotive industry has been developing technologies that integrate the operation of various vehicle equipment, including stereos, navigation systems and air conditioners. Having outstanding strength, scratch resistant and anti-reflective properties, the AGC Group’s Dragontrail™ cover glass for electronic devices is now used for the console panels of vehicle equipment. 23 AGC Report 2017 AGC Report 2017 24 Business Overview CERAMICS/ OTHER The AGC Group offers a variety of products and solutions that contribute to innovation in glass production processes and environmental conservation. New Products Products for New Markets Combining diverse technologies, the AGC Group is creating products with even higher added value for new markets. Ceramics Business The AGC Group’s ceramics business has a long history, dating operations and lower lifecycle costs by supplying high-durabil- back to 1916, when it began producing refractory bricks for ity, high-performance fused cast bricks and related solutions. glass melting furnaces. The business is now operated by AGC In environmental and energy-related businesses, AGC Ceramics Co., Ltd. With its core businesses in glass engineer- Ceramics offers a wide range of ecological solutions, imple- ing, environmental and energy-related domains, the compa- menting castable refractories that make industrial furnaces ny leverages its diverse lineup of refractory products and more energy efficient and reduce environmental load. The leading-edge engineering technologies. company also focuses on developing ceramic materials that In the glass engineering business, the company aims to help reduce global environmental impact, such as high-tem- help its customers improve energy efficiency and extend the perature fine ceramic fans and sputtering targets for service life of their glass furnaces, as well as ensure stable eco-friendly glass. For Next-generation Communications Markets Making all the glass around us into an information interface infoverre™ Glass integrated digital signage Glascene™ Transparent glass screen Transforming Glass into an Informational Device by Integrating Liquid Crystal Displays Infoverre™ digital signage is a brand-new technology comprised of an LCD directly attached on building exterior or interior glass. The AGC Group has enabled non-reflective, clear images that seem to float in the air by applying integrated optical technologies cultivated through its chemicals business. A mount or monitor stand is not necessary, so the signage can be installed without using much space. Opening Up New Possibilities for Glass Signage by Enabling Image Projection Onto Transparent Glass Manufactured using a unique process, Glascene™ is a glass screen that enables images to be projected onto it. This new type of screen retains its transparency when images are not projected. The images can be projected at sizes over 100 inches, from the front or rear of the screen—depending on the Glascene™ screen type. “Tough Coore™” ceramic material for heat shielding pavement Alleviates heat island phenomenon “THERMOTECT™” high thermal insulating ceramic furnace materials Outstanding durability and heat insulation for long-term insulation performance under high temperatures, helping to reduce costs by conserving energy Just ordinary glass when not in use. Castable refractories for industrial furnaces Supporting stable operations with an extensive lineup Attached to the windows of the Shin-Marunouchi Building in Tokyo, 55-inch infoverreTM LCDs show a range of advertisements. This product received a 2015 Digital Signage Award in the Technology category. GlasceneTM displays beautiful images while retaining its transparency. For Next-generation Mobility Markets Making vehicle interiors more comfortable with user-friendly touch panels Fused cast refractory bricks for glass melting furnace crown Cover Glass for Console Panels Realizing More Comfortable and Reliable Touch Panel Oper- ation through Electronic Device Cover Glass Technology In recent years, the automotive industry has been developing technologies that integrate the operation of various vehicle equipment, including stereos, navigation systems and air conditioners. Having outstanding strength, scratch resistant and anti-reflective properties, the AGC Group’s Dragontrail™ cover glass for electronic devices is now used for the console panels of vehicle equipment. 23 AGC Report 2017 AGC Report 2017 24 Innovation Management The AGC Group is Combining a Diverse Range of Core Technologies to Drive All-New Innovations. Core Technologies Research and Development Framework As shown in the following diagram, the AGC Group has accumulated a diverse range of core technologies: glass and ceramic material technologies respond to various needs in society, coating and glass integration technologies add more value to products, and fluorine and chemistry technologies are used for creating advanced high-performance products. To underpin such research and development initiatives, the AGC Group is also working on the development and sophis- tication of its fundamental technologies such as simulation, analysis, sensing and process design technologies. By combining and integrating these technologies and then drawing from the vast technological possibilities that result, the AGC Group intends to drive innovations that bring new value to trades and communities, while also meet- ing the needs of customers and helping resolve the challeng- es they face. AGC Asahi Glass conducts research and development with the aim to develop more competitive and innovative core technologies and new products. The Innovative Technology Research Center creates innovative core technologies and applies advanced shared fundamental technologies to promote progress in product development. The New Product R&D Center develops new products and provides solutions to technical issues concerning existing products. The Produc- tion Technology Division develops and refines production technologies. In January 2017, the Float Technology Promo- tion Division, which controls the shared technology platform of the flat glass manufacturing process, was newly created. Based on an approach that integrates market and product development, AGC Asahi Glass is working on R&D in an agile manner while promoting close cooperation between six relevant organizations in its Technology General Division and the R&D divisions of each respective In-house Company. The AGC Group’s Core Technology Map An R&D Framework to Achieve Greater Competitiveness Creating New Value Technology General Division Responsible for shared fundamentals and mid- to long-term development Planning Division R&D Target Setting Process S t e p 1 S t e p 2 S t e p 3 Glass Integration Technologies •Laminate technology •Encapsulation technology Coating Technologies •Dry coating •Wet coating •Coating design Glass Material Technologies •Glass material design •Glass forming technology •Glass production technology Fluorine & Chemistry Technologies •Fluorine chemistry •Polymer materials •Biochemistry •Electrochemistry •Nano-materials •Inorganic materials Ceramic Material Technologies •Ceramic material design •Refractory materials Fundamental Technologies •Simulation technology •Analysis technology •Sensing technology •Process design (engineering) 25 AGC Report 2017 Innovative Technology Research Center New Product R&D Center Production Technology Division Intellectual Property Division Float Technology Promotion Division Collaboration Each In-house Company / SBU1 R&D Division Responsible for product development technology, production technology implement Building & Industrial Glass Company R&D Division Automotive Company R&D Division Electronics Company R&D Division Chemicals Company R&D Division Applied Glass Materials General Division R&D Division AGC Ceramics R&D Division 1 Strategic Business Units The AGC Group’s Approach to Innovation The AGC Group is Accelerating Innovation Based on a Global Perspective and a Medium- to Long-term Outlook To chart a course for its R&D over the medium and AGC Group gathers and studies leading-edge techno- long terms, the AGC Group draws its own technolo- logical information and market trends through expert gy roadmap called “Technology Outlook,” which is personnel sent to strategic locations in Japan, South- based on projections of the products and technolo- east Asia, Europe and the United States, where gies that will be in high demand over the next 10 to 20 universities and corporate research facilities are years. To develop and commercialize such products concentrated. This activity helps strengthen the and technologies, the AGC Group also creates a relationship between marketing and product devel- business roadmap called “Business Outlook” which opment operations on a global scale, explore the consists of survey results on whether they are suitable seeds of new businesses, build on the Group’s for the Group and can sustainably generate profits. technologies and expand business networks. As a result of extensive studies and analysis, smart Another R&D initiative is open innovation. By community-related markets have been identified as making extensive use of resources from outside crucial R&D targets to explore in the future. The AGC through strategic business alliances as well as mergers Group is now moving forward with proactive R&D and acquisitions, the AGC Group aims to accelerate and business development in related areas. technical innovations and opportunities for new A key to successful commercialization of new market creation, and shorten product development products and technologies is a close link between the lead times. The Group also participates in national market and product development. Under an initiative projects related to smart communities, collaborating called Global Technology Networking (GTNET), the with other companies and research institutions. Identify seeds for innovative technology Establish and follow a technology roadmap Predict the potential for commercialization Establish and follow a business roadmap Set key objectives for R&D with a view to create new value Analyze social trends and assess technical potential Analyze suitability as a company business and assess business potential Smart community-related markets Next-generation Mobility Heat Management Next-generation Communication Security and Safety Life Science New Energy and New Green AGC Report 2017 26 Innovation Management The AGC Group is Combining a Diverse Range of Core Technologies to Drive All-New Innovations. Core Technologies Research and Development Framework As shown in the following diagram, the AGC Group has AGC Asahi Glass conducts research and development with accumulated a diverse range of core technologies: glass and the aim to develop more competitive and innovative core ceramic material technologies respond to various needs in technologies and new products. The Innovative Technology society, coating and glass integration technologies add more Research Center creates innovative core technologies and value to products, and fluorine and chemistry technologies applies advanced shared fundamental technologies to are used for creating advanced high-performance products. promote progress in product development. The New Product To underpin such research and development initiatives, the R&D Center develops new products and provides solutions AGC Group is also working on the development and sophis- to technical issues concerning existing products. The Produc- tication of its fundamental technologies such as simulation, tion Technology Division develops and refines production analysis, sensing and process design technologies. technologies. In January 2017, the Float Technology Promo- By combining and integrating these technologies and tion Division, which controls the shared technology platform then drawing from the vast technological possibilities that of the flat glass manufacturing process, was newly created. result, the AGC Group intends to drive innovations that Based on an approach that integrates market and product bring new value to trades and communities, while also meet- development, AGC Asahi Glass is working on R&D in an agile ing the needs of customers and helping resolve the challeng- manner while promoting close cooperation between six es they face. relevant organizations in its Technology General Division and the R&D divisions of each respective In-house Company. The AGC Group’s Core Technology Map An R&D Framework to Achieve Greater Competitiveness Creating New Value Responsible for shared fundamentals and mid- to long-term development Technology General Division Glass Integration Technologies •Laminate technology •Encapsulation technology Coating Technologies •Dry coating •Wet coating •Coating design Innovative Technology Research Center New Product R&D Center Production Technology Division Intellectual Property Division Float Technology Promotion Division Fluorine & Chemistry Ceramic Material Collaboration Glass Material Technologies •Glass material design •Glass forming technology •Glass production technology Technologies •Fluorine chemistry •Polymer materials •Biochemistry •Electrochemistry •Nano-materials •Inorganic materials Technologies •Ceramic material design •Refractory materials Each In-house Company / SBU1 R&D Division Responsible for product development technology, production technology implement Building & Industrial Glass Company R&D Division Automotive Company Electronics Company R&D Division R&D Division Chemicals Company R&D Division Applied Glass Materials General Division R&D Division AGC Ceramics R&D Division 1 Strategic Business Units Fundamental Technologies •Simulation technology •Analysis technology •Sensing technology •Process design (engineering) 25 AGC Report 2017 The AGC Group’s Approach to Innovation The AGC Group is Accelerating Innovation Based on a Global Perspective and a Medium- to Long-term Outlook To chart a course for its R&D over the medium and long terms, the AGC Group draws its own technolo- gy roadmap called “Technology Outlook,” which is based on projections of the products and technolo- gies that will be in high demand over the next 10 to 20 years. To develop and commercialize such products and technologies, the AGC Group also creates a business roadmap called “Business Outlook” which consists of survey results on whether they are suitable for the Group and can sustainably generate profits. As a result of extensive studies and analysis, smart community-related markets have been identified as crucial R&D targets to explore in the future. The AGC Group is now moving forward with proactive R&D and business development in related areas. A key to successful commercialization of new products and technologies is a close link between the market and product development. Under an initiative called Global Technology Networking (GTNET), the AGC Group gathers and studies leading-edge techno- logical information and market trends through expert personnel sent to strategic locations in Japan, South- east Asia, Europe and the United States, where universities and corporate research facilities are concentrated. This activity helps strengthen the relationship between marketing and product devel- opment operations on a global scale, explore the seeds of new businesses, build on the Group’s technologies and expand business networks. Another R&D initiative is open innovation. By making extensive use of resources from outside through strategic business alliances as well as mergers and acquisitions, the AGC Group aims to accelerate technical innovations and opportunities for new market creation, and shorten product development lead times. The Group also participates in national projects related to smart communities, collaborating with other companies and research institutions. Planning Division R&D Target Setting Process S t e p 1 S t e p 2 S t e p 3 Identify seeds for innovative technology Establish and follow a technology roadmap Predict the potential for commercialization Establish and follow a business roadmap Set key objectives for R&D with a view to create new value Analyze social trends and assess technical potential Analyze suitability as a company business and assess business potential Smart community-related markets Next-generation Mobility Heat Management Next-generation Communication Security and Safety Life Science New Energy and New Green AGC Report 2017 26 CSR Management By Specifying CSR Material Issues, the AGC Group Promotes CSR Management within Corporate Management. Approach to CSR and Related Policies CSR Promotion System The PDCA Cycle and Material Issues The CSR PDCA Cycle The AGC Group’s Stakeholders “Look Beyond” The AGC Group Vision (see page 2) is comprised of “Our Mission,” “Our Shared Values” and “Our Spirit.” This Vision provides the basis for the Management Policy AGC plus, through which the Group strives to offer added value (add a “plus”) to all stakeholders. By following this approach, the Group strives to both foster trust and meet the expectations of the community and contributes to the creation of a sustainable society. In addition, the AGC Group has established “the AGC Group Charter of Corporate Behavior,” which outlines the corporate social responsibility expected of Group compa- nies, and “the AGC Group Code of Conduct,” which clarifies the standards of behavior for all employees. 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 heads of each business and corporate division deliberate over general policies and issues related to the Group’s CSR activities on a quarterly basis, and develops concrete measures to address them. Furthermore, issues relevant to compliance, Environment, Occupational Health, Safety and Quality (EHSQ) manage- ment, risk management and other topics are shared globally across the AGC Group through subcommittees specializing in relevant areas. The information is then reflected in measures implemented by the Group’s In-house Companies and Strategic Business Units (SBUs). In 2011, the AGC Group began CSR monitoring based on ISO 26000. In CSR monitoring, issues defined in ISO 26000 are classified into four categories on the basis of their importance to either the AGC Group or its stakeholders. From these categories, a CSR Matrix is created, and issues judged important to both sides are recognized as CSR Material Issues. At present, there are eleven established CSR Material Issues, and their targets and current progress are disclosed on the CSR website. Customers Shareholders and investors Society Business partners Employees Evaluation/ Requirements, Expectations Information Disclosure AGC Group CSR Monitoring Review of CSR-related Issues Target-setting for Material Issues CSR Activities CSR-related Policies CSR Promotion System Matrix of CSR Issues Material Issues relating to the AGC Group Social Responsibility AGC Group Business Environment Charter of Corporate Behavior Group Vision The Group’s corporate philosophy for all business and social activities Management Policy AGC plus Code of Conduct CSR Committee (meets quarterly) Deliberates over general policies and issues related to the Group’s CSR activities Chair: Group CEO Office: Group Corporate General Affairs Division CSR Office Subcommittees •Compliance Committee •EHSQ Management •Enterprise Risk Management AGC Group Charter of Corporate Behavior The Group Charter sets forth and declares the perspectives that form the basis of our behavior to ensure that the AGC Group will remain a good corporate citizen. AGC Group Code of Conduct The Code of Conduct sets forth standards to be observed by all Group members from the perspective of “integrity” in Our Shared Values under the AGC Group Vision “Look Beyond.” Management Policy AGC plus The Management Policy sets forth the course of action for all the Group’s business activities providing social and business aspirations, guidelines and directives. It is revised as necessary to reflect changes in the business environment and circumstances of the Group. Each In-house Company/SBU CSR Offices in In-house Company/SBU Group companies world wide Corporate Divisions Corporate Planning Division General Affairs Division Legal Division Support and guidance Human Resources Division Purchase & Logistics Division CSR material issues Issues for which information is to continue to be collected Issues for which a framework is to be developed and a commitment made to society s r e d l o h e k a t s r o f s e u s s i l a i r e t a M ISO 26000 Items Core subjects Issues Organizational Governance Decision-making processes and Organizational structures protection Conditions of work and social AGC Group’s material issues governance Fair working conditions Occupational health & safety Human development and training in the workplace Human resource development Prevention of pollution Pollution prevention Human Rights and Labor Practices Health and safety at work Issues for which additional measures are deemed unnecessary Issues for which a framework is to be developed The Environment Sustainable resource use Climate change mitigation and Response to climate Material issues for the AGC Group adaptation Anti-corruption Fair Operating Practices Fair competition Sustainable use of resources change Anti-corruption Compliance with antitrust laws Promoting social responsibility in the value chain Social responsibility in the supply chain Consumer Issues Protecting consumers’ health and safety Product safety WEB Please visit the AGC Group’s CSR website for more information about its CSR management and activities: http://www.agc.com/english/csr/index.html 27 AGC Report 2017 AGC Report 2017 28 CSR Management By Specifying CSR Material Issues, the AGC Group Promotes CSR Management within Corporate Management. The AGC Group Vision “Look Beyond” (see page 2) is The AGC Group established the CSR Committee in 2005 as comprised of “Our Mission,” “Our Shared Values” and “Our an in-house organization dedicated to promoting CSR. On Spirit.” This Vision provides the basis for the Management the CSR Committee, the AGC Group CEO presides as the Policy AGC plus, through which the Group strives to offer committee chair, while the heads of each business and added value (add a “plus”) to all stakeholders. By following corporate division deliberate over general policies and issues this approach, the Group strives to both foster trust and related to the Group’s CSR activities on a quarterly basis, and meet the expectations of the community and contributes to develops concrete measures to address them. the creation of a sustainable society. Furthermore, issues relevant to compliance, Environment, In addition, the AGC Group has established “the AGC Occupational Health, Safety and Quality (EHSQ) manage- Group Charter of Corporate Behavior,” which outlines the ment, risk management and other topics are shared globally corporate social responsibility expected of Group compa- across the AGC Group through subcommittees specializing nies, and “the AGC Group Code of Conduct,” which clarifies in relevant areas. The information is then reflected in measures the standards of behavior for all employees. implemented by the Group’s In-house Companies and Strategic Business Units (SBUs). Social Responsibility AGC Group Business Environment Charter of Corporate Behavior Group Vision The Group’s corporate philosophy for all business and social activities Management Policy AGC plus Code of Conduct AGC Group Charter of Corporate Behavior The Group Charter sets forth and declares the perspectives that form the basis of our behavior to ensure that the AGC Group will remain a good corporate citizen. AGC Group Code of Conduct The Code of Conduct sets forth standards to be observed by all Group members from the perspective of “integrity” in Our Shared Values under the AGC Group Vision “Look Beyond.” Management Policy AGC plus The Management Policy sets forth the course of action for all the Group’s business activities providing social and business aspirations, guidelines and directives. It is revised as necessary to reflect changes in the business environment and circumstances of the Group. Group companies world wide CSR Committee (meets quarterly) Deliberates over general policies and issues related to the Group’s CSR activities Chair: Group CEO Office: Group Corporate General Affairs Division CSR Office Subcommittees •Compliance Committee •EHSQ Management •Enterprise Risk Management Each In-house Company/SBU CSR Offices in In-house Company/SBU Corporate Divisions Corporate Planning Division General Affairs Division Legal Division Support and guidance Human Resources Division Purchase & Logistics Division Approach to CSR and Related Policies CSR Promotion System The PDCA Cycle and Material Issues The CSR PDCA Cycle The AGC Group’s Stakeholders In 2011, the AGC Group began CSR monitoring based on ISO 26000. In CSR monitoring, issues defined in ISO 26000 are classified into four categories on the basis of their importance to either the AGC Group or its stakeholders. From these categories, a CSR Matrix is created, and issues judged important to both sides are recognized as CSR Material Issues. At present, there are eleven established CSR Material Issues, and their targets and current progress are disclosed on the CSR website. Customers Shareholders and investors Society Business partners Employees Evaluation/ Requirements, Expectations Information Disclosure AGC Group CSR Monitoring Review of CSR-related Issues Target-setting for Material Issues CSR Activities CSR-related Policies CSR Promotion System Matrix of CSR Issues Material Issues relating to the AGC Group CSR material issues Issues for which information is to continue to be collected Issues for which a framework is to be developed and a commitment made to society Issues for which additional measures are deemed unnecessary Issues for which a framework is to be developed Material issues for the AGC Group l s r e d o h e k a t s r o f s e u s s i l a i r e t a M ISO 26000 Items Core subjects Issues AGC Group’s material issues Organizational Governance Decision-making processes and structures Organizational governance Conditions of work and social protection Human Rights and Labor Practices Health and safety at work Fair working conditions Occupational health & safety Human development and training in the workplace Human resource development Prevention of pollution Pollution prevention The Environment Sustainable resource use Sustainable use of resources Climate change mitigation and adaptation Response to climate change Anti-corruption Fair Operating Practices Fair competition Anti-corruption Compliance with antitrust laws Promoting social responsibility in the value chain Social responsibility in the supply chain Consumer Issues Protecting consumers’ health and safety Product safety WEB Please visit the AGC Group’s CSR website for more information about its CSR management and activities: http://www.agc.com/english/csr/index.html 27 AGC Report 2017 AGC Report 2017 28 Corporate Governance The AGC Group is Raising the Transparency and Agility of Management Oversight and Execution. Approach to Corporate Governance Framework for Management Oversight Under the AGC Group Corporate Governance Basic Policy, AGC Asahi Glass strives to strengthen and improve its corporate governance with a view to ensuring its sustain- able growth and raising the AGC Group’s corporate value over the medium and long term. The Company is responsible for managing the AGC Group as a whole, beyond the conventional framework of a parent company and subsidiaries. On that basis, the follow- ing is the Company’s basic approach to its corporate gover- nance system: • The management oversight function and management execution function shall be clearly separated • In the execution of management, corporate functions and the business execution function shall be clearly separated Structure and Role of the Board of Directors The Board of Directors of AGC Asahi Glass consists of seven directors, each appointed to a one-year term, and includes three outside directors, including one female director1. The Board is responsible for the approval of the AGC Group’s basic policies and monitoring its management. The Company first employed outside directors in 2002 in an effort to enhance the management oversight function. Outside directors are appointed in compliance with the requirements under the Companies Act of Japan as well as the Company’s own selection criteria designed to ensure director independence. Outside directors monitor issues concerning the Group’s business management and offer advice to the Board of Directors from an independent and objective standpoint, based on their extensive experience in global corporate Overview of Corporate Governance Structure (as of March 30, 2017) 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 Corporate Auditors: 4 Auditors (Including 3 Outside Corporate Auditors) Accounting Auditor General Meeting of Shareholders Board of Directors: 7 Directors (Including 3 Outside Directors) Chairman President & CEO Senior Executive Officer CTO Senior Executive Officer CFO Nominating Committee: 5 Directors (Including 3 Outside Directors) Compensation Committee: 5 Directors (Including 3 Outside Directors) Executive Officers Management Committee CSR Committee Compliance Committee Fair Trade Committee Internal Audit Division Group Corporate Information Management Council Security Export Control Headquarters In-house Companies/Strategic Business Unit (SBU)2 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 n o i t 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 four In-house Companies: the Building & Industrial Glass Company, the Automotive Company, the Electronics Company and the Chemicals Company. Business units smaller than this are defined as Strategic Business Units (SBUs). management and knowledge of corporate governance related issues. In principle, meetings of the Board of Directors are chaired by an outside director. 1 As of March 30, 2017 Committee Activities in Fiscal 2016 Number of members Duties Number of meetings held 3 times Meetings of the Board of Directors in Fiscal 2016 Meetings held Attendance rate of members of the Board of Directors 100% Attendance rate of corporate auditors 14 98% Nominating Committee 5 Directors (of which 3 are outside directors) Deliberate on candidates for director and executive officer positions, and make recommendations to the Board of Directors Compensation Committee 5 Directors (of which 3 are outside directors) Deliberate on the compensation 9 times system for directors and executive officers, directors’ compensation limits and bonuses to be reported to the general shareholders meeting, and the amount of compensation for executive officer Assessment of the Effectiveness of the Board of Directors Evaluating the Effectiveness of the Board of Directors The effectiveness of the Board of Directors of AGC Asahi Structure and Role of the Board of Corporate Auditors Glass is subject to annual assessment and evaluation. The Board of Corporate Auditors audits the performance of Evaluation of the effectiveness of the Board of directors by attending important meetings, including meet- Directors in 2016 took the form of self-evaluation by all ing of the Board of Directors and the Management Committee, members comprising the Board. and by holding regular meetings with representative directors. First, each director evaluated the effectiveness of the The corporate auditors also enhance the effectiveness of Board by responding to the questionnaire and answering auditing by exchanging views and checking information questions in an individual interview. The Board then exam- concerning audit results and other matters in cooperation ined the evaluation results and discussed measures to with accounting auditor and the Internal Audit Division. As improve the effectiveness of the Board of Directors. of March 30, 2017, AGC Asahi Glass employed four corpo- rate auditors in total, of which three were outside corporate Outline of the Evaluation Results and Future Efforts auditors. The results of the above evaluation showed that the Board of Directors and the Advisory Committee of AGC Asahi Meetings of the Board of Corporate Auditors in Fiscal 2016 Glass, among others, were conducting appropriate management and securing adequate performance through Meetings held 14 Attendance rate of members of the Board of Corporate Auditors 96% active and frank discussion in a small group. It was also clarified that there is room for improvement on reporting of IR activities to outside directors and enhancement of strategic discussions. The AGC Group will continue to maintain the appro- priate management system and an environment to ensure frank discussions within the Board of Directors and the Framework for Management Execution Advisory Committee, working diligently on the issues At AGC Asahi Glass, the management execution function is clarified by the effectiveness evaluation. This will continu- the responsibility of executive officers below the president ously improve the functions of the Board of Directors, & CEO. As an advisory committee to the president & CEO, Advisory Committee and other parties. the Company establishes the Management Committees and discusses business management monitoring and Structure and Roles of the Nominating Committee and decisions regarding management execution. A system of Compensation Committee In-house Companies (quasi-subsidiaries within the Group) AGC Asahi Glass established its Nominating and Compensation has been introduced and a global consolidated manage- Committees in 2003 as voluntary advisory committees of the ment system is adopted with regard to business execution. Board of Directors. Much of the responsibility and authority for business execu- tion has been delegated to the In-house Companies and Strategic Business Units. 29 AGC Report 2017 AGC Report 2017 30 In its Compensation Principles, AGC Asahi Glass sets out its basic stances and philosophies on overall compensation for officers as follows. Under the company’s compensation system, directors who also serve as executive officers receive a fixed monthly salary, perfor- mance-linked bonuses, and stock compensation-type stock options, while directors who do not serve as executive officers receive a fixed monthly salary and stock compensation-type stock options. Meanwhile, outside directors and corporate auditors only receive a monthly salary. Approach to Corporate Governance Framework for Management Oversight management and knowledge of corporate governance related issues. In principle, meetings of the Board of Directors are chaired by an outside director. Committee Activities in Fiscal 2016 Number of members Duties Under the AGC Group Corporate Governance Basic Policy, Structure and Role of the Board of Directors AGC Asahi Glass strives to strengthen and improve its The Board of Directors of AGC Asahi Glass consists of seven 1 As of March 30, 2017 Meetings of the Board of Directors in Fiscal 2016 corporate governance with a view to ensuring its sustain- directors, each appointed to a one-year term, and includes Meetings held 14 able growth and raising the AGC Group’s corporate value three outside directors, including one female director1. The over the medium and long term. Board is responsible for the approval of the AGC Group’s Attendance rate of members of the Board of Directors 100% The Company is responsible for managing the AGC basic policies and monitoring its management. Attendance rate of corporate auditors 98% Nominating Committee 5 Directors (of which 3 are outside directors) Deliberate on candidates for director and executive officer positions, and make recommendations to the Board of Directors Compensation Committee 5 Directors (of which 3 are outside directors) Deliberate on the compensation system for directors and executive officers, directors’ compensation limits and bonuses to be reported to the general shareholders meeting, and the amount of compensation for executive officer Number of meetings held 3 times 9 times Assessment of the Effectiveness of the Board of Directors Evaluating the Effectiveness of the Board of Directors The effectiveness of the Board of Directors of AGC Asahi Glass is subject to annual assessment and evaluation. Evaluation of the effectiveness of the Board of Directors in 2016 took the form of self-evaluation by all members comprising the Board. First, each director evaluated the effectiveness of the Board by responding to the questionnaire and answering questions in an individual interview. The Board then exam- ined the evaluation results and discussed measures to improve the effectiveness of the Board of Directors. Outline of the Evaluation Results and Future Efforts The results of the above evaluation showed that the Board of Directors and the Advisory Committee of AGC Asahi Glass, among others, were conducting appropriate management and securing adequate performance through active and frank discussion in a small group. It was also clarified that there is room for improvement on reporting of IR activities to outside directors and enhancement of strategic discussions. The AGC Group will continue to maintain the appro- priate management system and an environment to ensure frank discussions within the Board of Directors and the Advisory Committee, working diligently on the issues clarified by the effectiveness evaluation. This will continu- ously improve the functions of the Board of Directors, Advisory Committee and other parties. Structure and Roles of the Nominating Committee and Compensation Committee AGC Asahi Glass established its Nominating and Compensation Committees in 2003 as voluntary advisory committees of the Board of Directors. Structure and Role of the Board of Corporate Auditors The Board of Corporate Auditors audits the performance of directors by attending important meetings, including meet- ing of the Board of Directors and the Management Committee, and by holding regular meetings with representative directors. The corporate auditors also enhance the effectiveness of auditing by exchanging views and checking information concerning audit results and other matters in cooperation with accounting auditor and the Internal Audit Division. As of March 30, 2017, AGC Asahi Glass employed four corpo- rate auditors in total, of which three were outside corporate auditors. Meetings of the Board of Corporate Auditors in Fiscal 2016 Meetings held 14 Attendance rate of members of the Board of Corporate Auditors 96% Framework for Management Execution At AGC Asahi Glass, the management execution function is the responsibility of executive officers below the president & CEO. As an advisory committee to the president & CEO, the Company 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 manage- ment system is adopted with regard to business execution. Much of the responsibility and authority for business execu- tion has been delegated to the In-house Companies and Strategic Business Units. 29 AGC Report 2017 AGC Report 2017 30 Corporate Governance The AGC Group is Raising the Transparency and Agility of Management Oversight and Execution. Group as a whole, beyond the conventional framework of a The Company first employed outside directors in 2002 parent company and subsidiaries. On that basis, the follow- in an effort to enhance the management oversight function. ing is the Company’s basic approach to its corporate gover- Outside directors are appointed in compliance with the nance system: • The management oversight function and management execution function shall be clearly separated • In the execution of management, corporate functions and the business execution function shall be clearly separated requirements under the Companies Act of Japan as well as the Company’s own selection criteria designed to ensure director independence. Outside directors monitor issues concerning the Group’s business management and offer advice to the Board of Directors from an independent and objective standpoint, based on their extensive experience in global corporate Overview of Corporate Governance Structure (as of March 30, 2017) 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 Corporate Auditors: 4 Auditors (Including 3 Outside Corporate Auditors) Accounting Auditor General Meeting of Shareholders Board of Directors: 7 Directors (Including 3 Outside Directors) Chairman President & CEO Senior Executive Officer CTO Senior Executive Officer CFO Nominating Committee: 5 Directors (Including 3 Outside Directors) Compensation Committee: 5 Directors (Including 3 Outside Directors) Executive Officers Management Committee CSR Committee Compliance Committee Fair Trade Committee Internal Audit Division Group Corporate Information Management Council Security Export Control Headquarters In-house Companies/Strategic Business Unit (SBU)2 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 n o i t 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 four In-house Companies: the Building & Industrial Glass Company, the Automotive Company, the Electronics Company and the Chemicals Company. Business units smaller than this are defined as Strategic Business Units (SBUs). In its Compensation Principles, AGC Asahi Glass sets out its basic stances and philosophies on overall compensation for officers as follows. Under the company’s compensation system, directors who also serve as executive officers receive a fixed monthly salary, perfor- mance-linked bonuses, and stock compensation-type stock options, while directors who do not serve as executive officers receive a fixed monthly salary and stock compensation-type stock options. Meanwhile, outside directors and corporate auditors only receive a monthly salary. Corporate Governance Board of Directors, Corporate Auditors and Executive Officers Compensation System Basic Philosophy on Compensation System for Directors and Corporate Auditors AGC Asahi Glass sets out its principles which consist of the basic stance and philosophy on overall compensation for directors and corporate auditors as follows. • 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. • The compensation system shall be one that promotes continued improvement of corporate value, and in this way allows shareholders and management to share gains. • The compensation system shall be one that gives motivations to achieve performance goals relating to management strategies for the AGC Group’s continuous development. • The decision-making process of determining compensation shall be objective and highly transparent. Of the performance-based compensation for directors, the amount of the Bonuses varies depending on consolidat- ed business results for a single fiscal year and a period covered by the mid-term management plan, with the aim of further encouraging directors to achieve performance goals for both the single fiscal year and the medium term. This amount may, in principle, fluctuate between plus and minus 100% of the standard amount of payment. Moreover, the Stock Compensation-Type Stock Options are intended to allow recipients to share benefits and risks associated 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 to Directors and Corporate Auditors in Fiscal 2016 Number of recipients Total payment (millions of yen) All directors Outside directors only All corporate auditors Outside corporate auditors only 7 3 4 3 450 46 93 57 Composition of Compensation for Directors and Corporate Auditors Internal Control In response to the enactment of the Companies Act of Japan, AGC Asahi Glass established a basic policy for internal control in May 2006, with the aim of confirming that its business execution systems, including the compliance system, were functioning appropriately. Furthermore, the Company adopted an internal control reporting system in compliance with Japan’s Financial Instruments and Exchange Act, and on that basis, created the AGC Group Internal Control over Financial Reporting Implementation Regulations, and is maintaining and imple- menting the system to ensure sound financial reporting. The compensation for directors and corporate auditors is as follows. Composition of Compensation for Directors and Corporate Auditors Type of compensation Eligible persons Directors Fixed compensation Monthly compensation All directors Performance-based compensation Performance-based 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 Directors of AGC Asahi Glass are responsible for management of the AGC Group from a short-, medium- and long-term perspec- tive, and aim to realize the sustainable growth of the Group and enhance its corporate value. The company’s performance-based compensation system is calculated in consideration of the balance of the short-, medium- and long-term perspectives. As a part of total compensation, performance-based compensa- tion is calculated based on the standard amount of payment, approximately in a 2:1:1 ratio of Monthly compensation: Bonuses: Stock Compensation-Type Stock Options, respectively. 31 AGC Report 2017 Board of Directors Kazuhiko Ishimura Takuya Shimamura Yoshinori Hirai Shinji Miyaji Representative Director & Chairman Representative Director, President & CEO Director, Senior Executive Officer & CTO Director, Senior Executive Officer & CFO Hiroshi Kimura Director (Outside) Masako Egawa Director (Outside) Appointed in March 2013 Appointed in March 2014 Member of the Nominating Committee and Member of the Nominating Committee and Compensation Committee Advisor to Japan Tobacco Inc. Outside Director of Nomura Holdings, Inc. Outside Director of IHI Corporation Compensation Committee Professor, Graduate School of Commerce and Management, Hitotsubashi University Outside Director of Tokio Marine Holdings, Inc. Outside Director of Mitsui Fudosan Co., Ltd. Yasuchika Hasegawa Director (Outside) Appointed in March 2017 Member of the Nominating Committee and Compensation Committee Director and Chairman of the Board of Takeda Pharmaceutical Co., Ltd. Outside Director of Tokyo Electronic Power Company Holdings, Inc. Corporate Auditors Tetsuo Tatsuno Yasushi Marumori (Outside) Toru Hara (Outside) Hiroshi Kawamura (Outside) Executive Officers President & CEO Executive Officers Takuya Shimamura Tadayuki Oi CEO Senior Vice President of Building & Industrial Glass Company Senior Executive Officers Shinichi Kawakami Marehisa Ishiko President of Automotive Company Akinobu Shimao GM of General Affairs Division President of AGC Ceramics Co., Jean-François Heris President of Building & Industrial Ltd. GM of Technology General Glass Company Yoshinori Hirai CTO Division CFO Division Shinji Miyaji GM of Corporate Planning GM of Export Compliance Control Directorate Yoshinori Kobayashi President of Electronics Company Masao Nemoto President of Chemicals Company Tomoya Takigawa Research Center, Technology General Division Kimikazu Ichikawa Chief Representative of AGC Group for Asia Pacific Shigekuni Inoue GM of Production Technology Div., Technology General Division Hiroyuki Watanabe GM of New Product R&D Center, Technology General Division Seigo Washinoue GM of Display Glass General Division Electronics Company Kazuaki Koga Naoki Sugimoto GM of Essential Chemicals GM of Business Development General Div., Chemicals Company Division Kenzo Moriyama Fumiaki Hayashi GM of Strategy & Planning Office, GM of Purchase & Logistics Corporate Planning Division Division Takashizu Minato GM of Performance Chemicals General Div., Chemicals Company Katsufumi Yajima Senior Vice President of Automotive Company Masahiro Takeda Toshiro Kasuya Regional President for Asia Pacific, GM of Finance & Control Division Tadashi Hiraoka GM of Technology Management General Div., Chemicals Company Company Takashi Misu GM of Human Resources Division Tatsuo Sugiyama Regional President for Americas, Automotive Company Takahisa Sugiyama GM of Electronic Materials General Div., Electronics Company Jean-Marc Meunier Regional President for Europe, Automotive Company GM of Innovative Technology Building & Industrial Glass Note GM: General Manager As of 30 March, 2017 AGC Report 2017 32 Corporate Governance Board of Directors, Corporate Auditors and Executive Officers Compensation System Board of Directors Of the performance-based compensation for directors, the amount of the Bonuses varies depending on consolidat- ed business results for a single fiscal year and a period covered by the mid-term management plan, with the aim of Basic Philosophy on Compensation System for Directors further encouraging directors to achieve performance goals and Corporate Auditors for both the single fiscal year and the medium term. This AGC Asahi Glass sets out its principles which consist of the amount may, in principle, fluctuate between plus and minus basic stance and philosophy on overall compensation for 100% of the standard amount of payment. Moreover, the directors and corporate auditors as follows. Kazuhiko Ishimura Representative Director & Chairman Takuya Shimamura Representative Director, President & CEO Yoshinori Hirai Director, Senior Executive Officer & CTO Shinji Miyaji Director, Senior Executive Officer & CFO Hiroshi Kimura Director (Outside) Masako Egawa Director (Outside) Yasuchika Hasegawa Director (Outside) Appointed in March 2013 Member of the Nominating Committee and Compensation Committee Advisor to Japan Tobacco Inc. Outside Director of Nomura Holdings, Inc. Outside Director of IHI Corporation Appointed in March 2014 Member of the Nominating Committee and Compensation Committee Professor, Graduate School of Commerce and Management, Hitotsubashi University Outside Director of Tokio Marine Holdings, Inc. Outside Director of Mitsui Fudosan Co., Ltd. Appointed in March 2017 Member of the Nominating Committee and Compensation Committee Director and Chairman of the Board of Takeda Pharmaceutical Co., Ltd. Outside Director of Tokyo Electronic Power Company Holdings, Inc. Corporate Auditors Tetsuo Tatsuno Yasushi Marumori (Outside) Toru Hara (Outside) Hiroshi Kawamura (Outside) Executive Officers President & CEO Takuya Shimamura CEO Senior Executive Officers Marehisa Ishiko President of Automotive Company Jean-François Heris President of Building & Industrial Glass Company Yoshinori Hirai CTO GM of Technology General Division Shinji Miyaji CFO GM of Corporate Planning Division GM of Export Compliance Control Directorate Yoshinori Kobayashi President of Electronics Company Masao Nemoto President of Chemicals Company Executive Officers Tadayuki Oi Senior Vice President of Building & Industrial Glass Company Shinichi Kawakami GM of General Affairs Division Akinobu Shimao President of AGC Ceramics Co., Ltd. Tomoya Takigawa GM of Innovative Technology Research Center, Technology General Division Kimikazu Ichikawa Chief Representative of AGC Group for Asia Pacific Shigekuni Inoue GM of Production Technology Div., Technology General Division Hiroyuki Watanabe GM of New Product R&D Center, Technology General Division Seigo Washinoue GM of Display Glass General Division Electronics Company Kazuaki Koga GM of Essential Chemicals General Div., Chemicals Company Naoki Sugimoto GM of Business Development Division Kenzo Moriyama GM of Strategy & Planning Office, Corporate Planning Division Fumiaki Hayashi GM of Purchase & Logistics Division Takashizu Minato GM of Performance Chemicals General Div., Chemicals Company Katsufumi Yajima Senior Vice President of Automotive Company Toshiro Kasuya GM of Finance & Control Division Tadashi Hiraoka GM of Technology Management General Div., Chemicals Company Masahiro Takeda Regional President for Asia Pacific, Building & Industrial Glass Company Takashi Misu GM of Human Resources Division Tatsuo Sugiyama Regional President for Americas, Automotive Company Takahisa Sugiyama GM of Electronic Materials General Div., Electronics Company Jean-Marc Meunier Regional President for Europe, Automotive Company Note GM: General Manager As of 30 March, 2017 AGC Report 2017 32 • 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. • The compensation system shall be one that promotes continued improvement of corporate value, and in this way allows shareholders and management to share gains. • The compensation system shall be one that gives motivations to achieve performance goals relating to management strategies for the AGC Group’s continuous development. • The decision-making process of determining compensation shall be objective and highly transparent. Stock Compensation-Type Stock Options are intended to allow recipients to share benefits and risks associated 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 to Directors and Corporate Auditors in Fiscal 2016 Number of recipients Total payment (millions of yen) All directors Outside directors only All corporate auditors Outside corporate auditors only 7 3 4 3 450 46 93 57 Composition of Compensation for Directors and Corporate Auditors Internal Control In response to the enactment of the Companies Act of Japan, AGC Asahi Glass established a basic policy for internal control in May 2006, with the aim of confirming that its business execution systems, including the compliance system, were functioning appropriately. Furthermore, the Company adopted an internal control reporting system in compliance with Japan’s Financial Instruments and Exchange Act, and on that basis, created the AGC Group Internal Control over Financial Reporting Implementation Regulations, and is maintaining and imple- menting the system to ensure sound financial reporting. The compensation for directors and corporate auditors is as follows. Composition of Compensation for Directors and Corporate Auditors Type of compensation Eligible persons Directors Fixed compensation Monthly compensation All directors Performance-based Performance-based compensation bonuses Directors who also serve as executive officers Stock compensation-type stock options Directors excluding outside directors Corporate Fixed auditors compensation Monthly compensation All corporate auditors Directors of AGC Asahi Glass are responsible for management of the AGC Group from a short-, medium- and long-term perspec- tive, and aim to realize the sustainable growth of the Group and enhance its corporate value. The company’s performance-based compensation system is calculated in consideration of the balance of the short-, medium- and long-term perspectives. As a part of total compensation, performance-based compensa- tion is calculated based on the standard amount of payment, approximately in a 2:1:1 ratio of Monthly compensation: Bonuses: Stock Compensation-Type Stock Options, respectively. 31 AGC Report 2017 History With Over 100 Years of History, the AGC Group Aims to Continue Contributing to Society for Years to Come. From 1900 Expanding Business Globally 1907 Asahi Glass Company established in Amagasaki, Hyogo Prefecture, by Toshiya Iwasaki (pictured). From 1920 Time of Establishment From 1940 From 1960 From 1980 From 2000 Period of Growth and Expansion Toward Global Operations 1925 Shoko Glass Co., Ltd. established in China as Asahi Glass’ first business outside Japan. 1952 Agreement concluded to export caustic soda electrolysis equipment to Indonesia. 1964 1981 Entry into the flat glass market in Thailand. Glaverbel S.A. in Belgium acquired. Full-scale Creation of AGC Group Vision, . entry in Europe’s flat glass market. In-house Company system introduced. 1955 Deming Prize received for quickly adopting quality management. 1972 Indonesia. Glass production operations commence in Full-scale entry of the automotive glass business in the United States. 1985 1986 Indonesia. 1997 Full-scale entry of the chlor-alkali business in Entry into Russia’s glass market. AGC plus management policy implemented. 1914 The first export of flat glass to England. 1917 Headquarters moved to Tokyo. 1933 The Asahi Foundation for Chemical Industry Promotion (now the Asahi Glass Foundation) established to commemorate our 25th anniversary. 1956 Glass manufacturing subsidiary established in India, demonstrating progress in expanding internation- ally ahead of other Japanese companies. 1937 Stocks listed on the Tokyo Stock Exchange. 1957 Asahi Glass Scholarship Foundation established to commemorate our 50th anniversary. Evolution of Products and Technologies 1909 Mass production of flat glass using a Belgian method of producing glass with hand-blown cylinders begins for the first time in Japan. 1916 In-house production of long-lasting refracto- ry bricks for melting furnaces begins. 1928 Production of flat glass by the Fourcault process begins. 1954 Production of double-glazing units PairGlass™ begins. 1933 Caustic soda production using the ammonia method begins. 1955 Manufacture of glass bulbs for television picture tubes begins. 1961 1966 glycol begins. Production of float glass begins. Production of propylene oxide and propylene AZEC System, a new ion-exchange membrane Sales of automotive door glass that blocks infra- electrolyzer, developed. red rays launched. 1980 1982 1990 1995 Production of fluoropoly- mer resin for coatings (LUMIFLON™) begins. CYTOP™ transparent amorphous fluoropoly- mer developed. Production of glass substrates for TFT-LCDs begins. automotive door windows sales begin. UV Verre Premium Cool on™ tempered glass for 1956 Automotive glass business launched on a full scale to respond to rapidly growing demand. 1938 Production of tempered glass and laminated glass begins. 1939 Production of refractory bricks begins at the Iho Plant. 1923 Great Kanto Earthquake in Japan 1929 Beginning of the Great Depression in the United States 1939-1945 Second World War 1951 Treaty of San Francisco concluded 1953 Television broadcasting begins in Japan 1954-1957 Economic boom in Japan 1917 In-house production of soda ash, a key raw material for glass, begins in Kitakyushu. 1914-1918 First World War 33 AGC Report 2017 2002 2007 2013 2013 Asia. 2015 2016 Group brand unified as “AGC” to mark its 100th anniversary. The Brazil Plant, one of the most environmentally friendly factories in South America starts operation. Entry into Brazil’s flat glass market. Regional headquarters established in Singapore with the aim of business expansion in Southeast Automotive glass production base established in Morocco. Information gathering and marketing bases established in India and Dubai. 2005 2008 in Beijing. 2011 2011 High-performance Fluon® ETFE FILM used for various sports venues at the global sports event Worldwide sales of Dragontrail™ glass for smart- phones and tablet computers begin. Supply of HFO-1234yf, a next-generation auto- mobile refrigerant with a low environmental bur- 2015 den, begins. Product development of AsahiGuard™ water and oil repellants and Aflon™ COP fluorinated resins begins. 1972 1975 Development of the Flemion™ fluoropolymer ion-exchange membrane electrolysis method for manufacturing caustic soda. Color television broadcasting begins in Japan Birth of the Internet Terrestrial digital broadcasting begins in Japan Tokaido shinkansen bullet train service commenc- Plaza Accord concluded Global financial crisis begins es in Japan and the Olympic Games held in Tokyo 1960 1964 1970 Expo ’70 world’s fair held in Osaka 1973 and 1979 First and second oil crises 1983 1985 1993 1997 European Union established Kyoto Protocol adopted 2003 2008 2011 2014 The Great East Japan Earthquake and tsunami disaster in Japan’s Tohoku region FIFA World Cup held in Brazil AGC Report 2017 34 History With Over 100 Years of History, the AGC Group Aims to Continue Contributing to Society for Years to Come. From 1900 From 1920 Time of Establishment From 1940 Expanding Business Globally 1907 1925 Deming Prize received for quickly adopting quality management. 1914 1917 Headquarters moved to Tokyo. The first export of flat glass to England. The Asahi Foundation for Chemical Industry Glass manufacturing subsidiary established in India, Promotion (now the Asahi Glass Foundation) demonstrating progress in expanding internation- established to commemorate our 25th anniversary. ally ahead of other Japanese companies. Stocks listed on the Tokyo Stock Exchange. Asahi Glass Scholarship Foundation established to commemorate our 50th anniversary. 1933 1937 1928 begins. 1933 Evolution of Products and Technologies 1909 Mass production of flat glass using a Belgian method of producing glass with hand-blown cylinders begins for the first time in Japan. 1916 In-house production of long-lasting refracto- ry bricks for melting furnaces begins. 1952 1955 1956 1957 1954 begins. 1955 From 1960 From 1980 Period of Growth and Expansion From 2000 Toward Global Operations Asahi Glass Company established in Amagasaki, Shoko Glass Co., Ltd. established in China as Agreement concluded to export caustic soda Hyogo Prefecture, by Toshiya Iwasaki (pictured). Asahi Glass’ first business outside Japan. electrolysis equipment to Indonesia. 1964 Entry into the flat glass market in Thailand. 1981 Glaverbel S.A. in Belgium acquired. Full-scale entry in Europe’s flat glass market. 2002 Creation of AGC Group Vision, . In-house Company system introduced. 1972 Glass production operations commence Indonesia. in 1985 Full-scale entry of the automotive glass business in the United States. 1986 Full-scale entry of the chlor-alkali business in Indonesia. 1997 Entry into Russia’s glass market. 2007 Group brand unified as “AGC” to mark its 100th anniversary. 2013 The Brazil Plant, one of the most environmentally friendly in South America starts operation. Entry into Brazil’s flat glass market. factories 2013 Regional headquarters established in Singapore with the aim of business expansion in Southeast Asia. 2015 AGC plus management policy implemented. 2016 Automotive glass production base established in Morocco. Information gathering and marketing bases established in India and Dubai. Production of flat glass by the Fourcault process Production of double-glazing units PairGlass™ 1961 Production of propylene oxide and propylene glycol begins. 1980 AZEC System, a new ion-exchange membrane electrolyzer, developed. 2005 Sales of automotive door glass that blocks infra- red rays launched. 1982 Production of fluoropoly- mer resin for coatings (LUMIFLON™) begins. 1990 CYTOP™ transparent amorphous fluoropoly- mer developed. 1995 Production of glass substrates for TFT-LCDs begins. 2008 High-performance Fluon® ETFE FILM used for various sports venues at the global sports event in Beijing. 2011 Worldwide sales of Dragontrail™ glass for smart- phones and tablet computers begin. 2011 UV Verre Premium Cool on™ tempered glass for automotive door windows sales begin. Caustic soda production using the ammonia Manufacture of glass bulbs for television picture method begins. tubes begins. 1966 Production of float glass begins. 1917 In-house production of soda ash, a key raw material for glass, begins in Kitakyushu. Production of refractory bricks begins at the Iho Plant. Production of tempered glass and laminated 1938 1939 glass begins. 1956 Automotive glass business launched on a full scale to respond to rapidly growing demand. 1972 Product development of AsahiGuard™ water and oil repellants and Aflon™ COP fluorinated resins begins. 1975 Development of the Flemion™ fluoropolymer ion-exchange membrane electrolysis method for manufacturing caustic soda. 1914-1918 First World War 33 AGC Report 2017 Great Kanto Earthquake in Japan Treaty of San Francisco concluded Beginning of the Great Depression in the United Television broadcasting begins in Japan 1951 1953 1954-1957 Economic boom in Japan 1923 1929 States 1939-1945 Second World War 1960 Color television broadcasting begins in Japan 1983 Birth of the Internet 1964 Tokaido shinkansen bullet train service commenc- es in Japan and the Olympic Games held in Tokyo 1970 Expo ’70 world’s fair held in Osaka 1973 and 1979 First and second oil crises 1985 Plaza Accord concluded 1993 European Union established 1997 Kyoto Protocol adopted 2015 Supply of HFO-1234yf, a next-generation auto- mobile refrigerant with a low environmental bur- den, begins. 2003 Terrestrial digital broadcasting begins in Japan 2008 Global financial crisis begins 2011 The Great East Japan Earthquake and tsunami disaster in Japan’s Tohoku region 2014 FIFA World Cup held in Brazil AGC Report 2017 34 Main Communication Tools Used to Reach Each of Our Stakeholders For customers (including general consumers) AGC Report 2017 (This report) For all stakeholders For shareholders and investors AGC Asahi Glass Website www.agc-group.com/ Provides information about the AGC Group more widely, timely and in more detail Financial Review Reports the AGC Group’s business outline and financial information including consolidated financial statements (PDF file only) A Broad Overview of the AGC Group’s Corporate Vision, Business Strategies and Business Activities For CSR-related experts1 and stakeholders with an interest in CSR CSR Website www.agc.com/english/csr/ Provides a comprehensive report on the AGC Group’s efforts to fulfill its social responsibilities CSR Information Supplement Reports on the AGC Group’s non-financial data and its various CSR policies and organizations for promoting CSR-related activities (PDF file only) 1 ESG research agencies, etc. Scope •Reporting Period Fiscal 2016 (Jan.–Dec. 2016) Some information includes content from both fiscal 2015 and 2017 •Organizations Covered in the Report Asahi Glass and its 204 consolidated subsidiaries (Group companies in and outside Japan) •Primary Notation and Report Targets Used in the Report 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. AGC 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 Asahi Glass website (www.agc.com/english/). Date of Publication April 2017 (Last date of publication: April 2016) 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. AGC Asahi Glass www.agc.com/english/ 1-5-1, Marunouchi, Chiyoda-ku, Tokyo, 100-8405, JAPAN Corporate Communications & Investor Relations Office, Corporate Planning Division 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. A G C R e p o r t 2 0 1 7 A G C A s a h i G l a s s AGC Report 2017 

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