Annual Report 2008
ASAHI KASEI CORPORATION
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A copy of the Company
s annual report and further information
will be made available upon request in writing to:
Corporate Communications
Asahi Kasei Corporation
1-105 Kanda Jinbocho, Chiyoda-ku,Tokyo 101-8101, Japan
Phone: +81-3-3296-3008 Fax: +81-3-3296-3162
www.asahi-kasei.co.jp
This annual report was printed with
vegetable-based ink on recycled paper.
Printed in Japan
2008.10
Contents
page. 02
History of
Diversification,
Operating Structure
page. 04
Asahi Kasei Group
Operations, Worldwide
page. 06
Strategic Management
Initiatives
page. 08 Consolidated Financial Highlights
page. 10 To Our Shareholders
page. 11
Driving the Strategic Advance:
Growth Action − 2010
page. 33 Toward Sustainable Growth
page. 34 Corporate Governance
page. 38 Corporate Social Responsibility
page. 40 Directors, Corporate Auditors, Executive Officers
page. 41 Financial Section
page. 72 Major Subsidiaries and Affiliates
Investors Information
As of March 31, 2008
Stock Listings
Stock Code
Authorized Shares
Outstanding Shares
Transfer Agent
Tokyo, Osaka, Nagoya, Fukuoka, Sapporo
3407
4,000,000,000
1,402,616,332
Sumitomo Trust & Banking Co., Ltd.
4-5-33 Kitahama, Chuo-ku
Osaka 541-8639, Japan
Independent Auditors
PricewaterhouseCoopers Aarata
Number of Shareholders
128,865
Largest Shareholders
% of equity*
Nippon Life Insurance Co. .................................................................................. 5.22
Master Trust Bank of Japan, Ltd. TS .................................................................. 5.17
Japan Trustee Services Bank, Ltd. TS ................................................................. 4.42
Sumitomo Mitsui Banking Corp. ....................................................................... 2.53
Employees’ Stockholding ..................................................................................... 2.46
Dai-ichi Mutual Life Insurance Co. .................................................................. 2.30
Tokio Marine & Nichido Fire Insurance Co., Ltd. ........................................... 2.22
Meiji Yasuda Life Insurance Co. ........................................................................ 1.49
Mizuho Corporate Bank, Ltd. ............................................................................ 1.45
Sumitomo Life Insurance Company. ................................................................. 1.40
* Percentage of equity ownership after exclusion of treasury stock.
Distribution by Type of Shareholder
Distribution by Number of Shares Held
Japanese financial institutions 44.11%
Foreign investors
27.31%
Japanese individuals and groups 21.56%
Japanese securities companies
2.34%
Other Japanese companies
4.68%
100,000 or more
10,000〜99,999
1,000〜9,999
Less than 1,000
80.53%
6.49%
12.56%
0.42%
page. 16 At a Glance
page. 74 Corporate Profile
1,402,616,332 shares
page. 18 Operating Segments
page. 75 Investors Information
TM: Trademark or registered trademark of Asahi Kasei Corporation, affiliated companies,
or third parties granting rights to Asahi Kasei Corporation or affiliated companies.
75
We the Asahi Kasei Group, through constant innovation and
advances based in science and the human intellect,
will contribute to human life and human livelihood.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this annual report with respect to Asahi Kasei’s estimated future revenues and profits, strategies, tenets, financial forecasts, and other statements
that are not historical facts are forward-looking statements. Such forward-looking statements are based on management’s judgments, predictions, and forecasts in light of
information currently available and involve many potential risks and uncertainties that could cause actual results to differ materially from the content of these statements.
Accordingly, undue reliance should not be placed on such forward-looking statements.
01
History of Diversification, Operating Structure
The Asahi Kasei Group is a selectively diversified enterprise group centered in chemicals,
with business extending to housing and semiconductors.
History of Diversification
A concerted drive to diversify into a broad
range of fields began in the 1950s. A rapid
pace of growth was sustained by successive
advances into new fields of business, which
were developed based on combinations of
new technology with the technology of
established businesses. When each business
began to mature, its growth would naturally
tend to slow. As this happened, there were
other businesses which were new and growing
quickly, ensuring that a high overall rate of
growth was maintained.
Nonwoven
fiber
Hollow-fiber
membranes
Spandex
Nonwoven
fiber
Maturing
Growth
Regenerated
fiber
Chemical
fertilizer
Explosives
Incubation
1923
Ammonia
Ammonium
sulfate
1924
Rayon
1931
BembergTM
1932
Explosives
Petrochemicals
Synthetic
fibers
Housing
Construction
materials
Electronics
Pharmaceuticals &
medical devices
1967
HebelTM
1972
Hebel HausTM
1953/1957
SaranTM fiber
Polystyrene
1959/1962
Acrylic fiber
Acrylonitrile
1964
Nylon fiber
Synthetic rubber
1972
Ethylene plant
1975
Artificial kidneys
1978
Hall elements
1981
Pharmaceuticals
business unit
Dry film resist
1983
LSIs
Nonwoven
Business Configuration
Following this period of growth through diversification, we underwent a structural transformation with the business
portfolio refocused with greater selectivity. Underperforming businesses were withdrawn, and resources were
concentrated on growth in businesses with clear competitive superiority. A breakdown of sales and operating profit in
our seven current operating segments is shown below.
Fiscal 2007 Sales by Segment
Fiscal 2007 Operating Profit by Segment
Services, Engineering and Others
2%
Construction Materials
2%
Services, Engineering and Others
4%
Chemicals
52%
Electronics Materials & Devices
16%
Fibers
5%
Pharma
9%
Homes
16%
Chemicals
48%
Construction Materials
3%
Electronics Materials & Devices
7%
Fibers
7%
Pharma
6%
Homes
23%
02
Operating Structure
Since October 2003 we have operated as a holding company with a wholly owned core operating company in each main
field of business. The holding company is focused on strategic planning & analysis, administration of resources,
oversight of management execution, and development of new businesses which extend beyond the scope of any single
operating segment. The core operating companies enjoy broad independence and autonomy to swiftly adapt and
respond to the distinct operating environment in their own segment of business. Corporate value for the group as a
whole is further enhanced through synergies among the core operating companies, and between the holding company
and each core operating company.
Segments,
Core Operating Companies
Businesses/Products
Chemicals
AsAhi KAsei CheMiCAls
Homes
AsAhi KAsei hoMes
Pharma
AsAhi KAsei PhArMA
Holding Company
Fibers
AsAhi KAsei CorporATioN
AsAhi KAsei Fibers
Electronics Materials
& Devices
AsAhi KAsei eMD
Construction
Materials
AsAhi KAsei ConstruCtion
MAteriAls
Services, Engineering
and Others
Chemicals & derivative
products
Polymer products
Specialty products
Hebel Haus™ unit homes
Hebel Maison™ apartments
Condominiums
Pharmaceuticals
APS™ polysulfone-membrane
dialyzers
Planova™ virus removal filters
Roica™ elastic polyurethane
filament
Bemberg™ regenerated cellulose Lamous™ artificial suede
LSIs
Sunfort™ dry film photoresist
Photomask pellicles
Hebel™ autoclaved lightweight
concrete (ALC)
Eazet™ piling system
Neoma™ high-performance
foam insulation
Engineering
Personnel staffing and
placement
03
Asahi Kasei Group Operations, Worldwide
Operations of the Asahi Kasei Group extend to many locations throughout the world.
The growth of these operations is a key element in the expansion of global businesses as part of
our Growth Action – 2010 strategic initiative.
04
ShiraoiMibuTomobeSakaiChibaFujiNagoyaGunmaSaitamaAgeoKawasakiOhitoWakayamaSuzukaOitaNobeokaShigaHozumiMoriyamaOnoChikushinoIwakuniMizushima SuzhouHangzhouNantongKoreaAsahi Kasei Plastics Singapore Pte. Ltd.Polyxylenol Singapore Pte. Ltd.Asahikasei Plastics (Thailand) Co., Ltd.Thai Asahi Kasei Spandex Co., Ltd.Asahi Kasei America, Inc.Asahikasei Plastics (America) Inc.Asahi Kasei Plastics North America, Inc.Sun Plastech Inc.Asahi Kasei Medical America Inc.Asahi Kasei Spandex America, Inc.AKM Semiconductor, Inc.Asahi Kasei Plastics Europe SA/NVAsahi Photoproducts (Europe) SA/NVAsahi Photoproducts (UK) Ltd.Asahi Kasei Medical Europe GmbHAsahi Pharma Spain, SLAsahi Kasei Spandex Europe GmbHAsahi Kasei Fibers Italy SRLAsahi Kasei Fibers Deutschland GmbHTong Suh Petrochemical Corp., Ltd.Asahi Kasei Adipic Acid (Korea) Co., Ltd.Delaglas Korea Corp.Asahi Kasei EMD Korea Corp.Holding CompanyChemicals segmentPharma segmentFibers segmentElectronics Materials & Devices segmentAsahi Kasei Plastics (Hong Kong) Co., Ltd.Asahi Chemical (HK) Ltd.Hong KongChinaThailandSingaporeFormosa Asahi Spandex Co., Ltd.Asahi Kasei EMD Taiwan Corp.Asahi-Schwebel (Taiwan) Co., Ltd.Asahi Kasei Wah Lee Hi-Tech Corp.TaiwanPT Nippisun IndonesiaIndonesiaEuropeTokyo head officeOsaka head officeAsahi Kasei Microza (Hangzhou) Co., Ltd.Asahi Kasei Medical (Hangzhou) Co., Ltd.Hangzhou Asahikasei Spandex Co., Ltd.Hangzhou Asahikasei Textiles Co., Ltd.Asahi Kasei BusinessManagement (Shanghai) Co., Ltd.Asahikasei Plastics (Shanghai) Co., Ltd. Asahikasei (Suzhou) PlasticsCompound Co., Ltd.Asahi Kasei ElectronicsMaterials (Suzhou) Co., Ltd.Asahi-DuPont POM (Zhangjiagang) Co., Ltd.Asahi Kasei PerformanceChemicals Corp.Japan ZhangjiagangShanghaiAmerica 05
ShiraoiMibuTomobeSakaiChibaFujiNagoyaGunmaSaitamaAgeoKawasakiOhitoWakayamaSuzukaOitaNobeokaShigaHozumiMoriyamaOnoChikushinoIwakuniMizushima SuzhouHangzhouNantongKoreaAsahi Kasei Plastics Singapore Pte. Ltd.Polyxylenol Singapore Pte. Ltd.Asahikasei Plastics (Thailand) Co., Ltd.Thai Asahi Kasei Spandex Co., Ltd.Asahi Kasei America, Inc.Asahikasei Plastics (America) Inc.Asahi Kasei Plastics North America, Inc.Sun Plastech Inc.Asahi Kasei Medical America Inc.Asahi Kasei Spandex America, Inc.AKM Semiconductor, Inc.Asahi Kasei Plastics Europe SA/NVAsahi Photoproducts (Europe) SA/NVAsahi Photoproducts (UK) Ltd.Asahi Kasei Medical Europe GmbHAsahi Pharma Spain, SLAsahi Kasei Spandex Europe GmbHAsahi Kasei Fibers Italy SRLAsahi Kasei Fibers Deutschland GmbHTong Suh Petrochemical Corp., Ltd.Asahi Kasei Adipic Acid (Korea) Co., Ltd.Delaglas Korea Corp.Asahi Kasei EMD Korea Corp.Holding CompanyChemicals segmentPharma segmentFibers segmentElectronics Materials & Devices segmentAsahi Kasei Plastics (Hong Kong) Co., Ltd.Asahi Chemical (HK) Ltd.Hong KongChinaThailandSingaporeFormosa Asahi Spandex Co., Ltd.Asahi Kasei EMD Taiwan Corp.Asahi-Schwebel (Taiwan) Co., Ltd.Asahi Kasei Wah Lee Hi-Tech Corp.TaiwanPT Nippisun IndonesiaIndonesiaEuropeTokyo head officeOsaka head officeAsahi Kasei Microza (Hangzhou) Co., Ltd.Asahi Kasei Medical (Hangzhou) Co., Ltd.Hangzhou Asahikasei Spandex Co., Ltd.Hangzhou Asahikasei Textiles Co., Ltd.Asahi Kasei BusinessManagement (Shanghai) Co., Ltd.Asahikasei Plastics (Shanghai) Co., Ltd. Asahikasei (Suzhou) PlasticsCompound Co., Ltd.Asahi Kasei ElectronicsMaterials (Suzhou) Co., Ltd.Asahi-DuPont POM (Zhangjiagang) Co., Ltd.Asahi Kasei PerformanceChemicals Corp.Japan ZhangjiagangShanghaiAmerica Strategic Management Initiatives
Having established a strong financial foundation through our previous management initiatives,
we embarked on a new phase of expansion and growth for the fiscal years 2006 through 2010
in our Growth Action – 2010 initiative, expanding global businesses and enhancing domestic
businesses to bring greater corporate value and brand strength.
Asahi Kasei’s operating profit*
Asahi Kasei’s operating profit*
Asahi Kasei’s operating profit*
Japan’s GDP
Japan’s GDP
Japan’s GDP
Growth Action – 2010
Growth Action – 2010
Growth Action – 2010
Fiscal 1960 = 100
Fiscal 1960 = 100
Fiscal 1960 = 100
Raising the share of sales in global businesses,
Raising the share of sales in global businesses,
Raising the share of sales in global businesses,
exceeding Japan’s GDP growth
exceeding Japan’s GDP growth
exceeding Japan’s GDP growth
Share of sales in global businesses
Share of sales in global businesses
Share of sales in global businesses
Fiscal 1995
Fiscal 1995
Fiscal 1995
Fiscal 2010 target
Fiscal 2010 target
Fiscal 2010 target
Growth through diversification
Growth through diversification
Growth through diversification
40％
40％
40％
60％
60％
60％
Fiscal 1960
Fiscal 1960
Fiscal 1960
1970
1970
1970
1980
1980
1980
1990
1990
1990
2005
2005
2005
*Three-year moving average, non-consolidated until fiscal 1980.
*Three-year moving average, non-consolidated until fiscal 1980.
*Three-year moving average, non-consolidated until fiscal 1980.
Selective Diversification and Structural Transformation
0.78
0.79
0.62
0.64
0.62
0.49
D/E ratio
Profit*, ¥ billion
Net income (loss), ¥ billion
0.54
96.0
74.3
51.2
17.4
20.5
25.2
95.6
80.4
61.6
45.7
5.2
27.7
0.40
104.7
Ishin-2000
Selectivity and focus
• Focus on competitive-superiority businesses
• Fostering next-generation growth drivers
• Divestment or closure of businesses with
low assets efficiency
56.5
59.7
• Stable financial foundation
Ishin-2000
Ishin-05
Fiscal 1998
1999
2000
2001
2002
2003
2004
2005
(66.8)
Ishin-05
Selective diversification
• Building on strengths
• Creation of cash flow
• Management speed and autonomy
*Operating profit prior to amortization of actuarial differences in retirement benefits.
06
Growth Action – 2010
We are advancing a business portfolio transformation for expansion and growth through strategic investment, with
the expansion of global businesses and the enhancement of domestic businesses as pillars of strategy, to obtain greater
corporate value and brand strength.
High growth businesses
Electronic materials Medical devices
Electronics devices
Chemical-based,
specialized-
function
Stable growth, stable earnings businesses
Housing, construction
materials, pharmaceuticals,
home-use products, etc.
Polymers
Including processed products
Monomers
Acrylonitrile, MMA,
styrene monomer, etc.
Enhancing domestic
businesses
Expanding global businesses
Long-term Investment
Strategic investment of ¥400 billion will be made over the five-year period,
raising total long-term investment in Growth Action – 2010 to ¥800 billion.
Fiscal 2003–2005
Fiscal 2006–2010 Plan
Maintenance
Expansion
Maintenance
Expansion
Expanding global
businesses
Enhancing
domestic
businesses
Fiscal 2010 Targets
Greater corporate value
and brand strength
Net sales
Operating profit
Net income
¥1,800 billion
¥150 billion
¥80 billion
Breakdown of Strategic Investment
Homes & Construction Materials
Pharma
Chemical-based
Electronics Materials
& Devices
¥ billion
Organic
M&A
(a) ¥70 to ¥80 billion/year
Renewing ethylene
center, etc.
蘇州
¥800 billion over 5 years = (a) × 5 +
strategic investment of ¥400 billion
Monomers
■ 旭化成（蘇州）複合塑料
■ 旭化成電子材料（蘇州）
Specialized-function
products
Electronics Materials &
Devices
New business creation
Enhancing domestic
businesses
20
40
40
50
40
30
–
–
50
100
–
–
Total
220
150
07
Consolidated Financial Highlights
Asahi Kasei Corporation and consolidated subsidiaries
Fiscal year beginning April 1
2007
2006
¥ billion
2005
2004
2003
US$ million*
2007
¥1,696.8
¥1,623.8
¥1,498.6
¥1,377.7
¥1,253.5
$16,968
Income before income taxes
and minority interest
105.6
114.9
407.8
127.7
120.5
399.8
127.8
126.5
69.9
82.9
74.0
56.2
68.6
84.4
71.6
52.4
371.1
108.7
104.2
94.5
59.7
66.3
69.4
51.5
367.2
115.8
112.9
91.1
56.5
68.5
71.5
50.7
329.3
60.9
53.6
54.8
27.7
86.4
64.4
48.4
1,209.5
1,195.8
1,125.5
1,067.9
1,011.4
487.3
428.0
373.2
309.8
242.2
¥1,425.4
666.2
¥1,459.9
645.7
¥1,376.0
594.2
¥1,270.1
511.7
¥1,249.2
450.5
$14,254
6,662
Fiscal year beginning April 1
2007
2006
¥
2005
2004
2003
¥ 50.01
¥ 49.00
¥ 42.46
¥ 40.16
¥ 19.62
476.39
13.00
461.50
12.00
424.34
10.00
365.43
8.00
321.41
6.00
U.S. dollar amounts in this annual report are translated from Japanese yen, for convenience only, at the rate of ¥100=US$1 as described in Note 4 of Notes to Consolidated
Financial Statements.
For the year
Net sales
Gross profit
Operating profit
Ordinary profit
Net income
Capital expenditure
Depreciation and amortization
R&D expenditures
Domestic sales
Overseas sales
At year-end
Total assets
Net worth†
Per share
Net income
Net worth‡
Cash dividends
*
4,078
1,277
1,205
1,056
699
829
740
562
12,095
4,873
US$*
2007
$0.50
4.76
0.13
† Net assets less minority interest in consolidated subsidiaries. Through the year beginning April 1, 2005, figures for shareholders’ equity shown.
‡ At fiscal year end.
Fiscal year beginning April 1
2007
2006
2005
2004
2003
Key indexes
Operating profit margin
Payout ratio
ROA
ROE
Net worth to total assets
D/E ratio
7.5%
26.0%
4.8%
10.7%
46.7%
0.32
7.9%
24.5%
4.8%
11.1%
44.2%
0.34
7.3%
23.6%
4.5%
10.8%
43.2%
0.40
8.4%
19.9%
4.5%
11.7%
40.3%
0.49
4.9%
30.6%
2.2%
6.4%
36.1%
0.62
Fiscal year beginning April 1
2007
2006
2005
2004
2003
Key operating factors
Naphtha price (¥/kL, domestic)
61,450
49,950
42,350
32,150
25,575
¥/US$ exchange rate
(market average)
114
117
113
108
113
08
Net Sales
¥ billion
2,000
1,696.8
1,623.8
1,498.6
1,500
1,000
500
0
Gross Profit,
Gross Profit Margin
¥ billion
600
24.8
24.6
24.0
400
371.1
399.8
407.8
200
0
%
30
20
10
0
Fiscal year
2005
2006
2007
Fiscal year
2005
2006
2007
Net Income, ROE
¥ billion
90
10.8
11.1
10.7
68.6
69.9
59.7
60
30
0
%
12.0
8.0
4.0
0
Gross profit, left scale
Gross profit margin, right scale
Total Assets,
Net Worth to Total Assets
¥ billion
1,500
1,459.9
1,425.4
1,376.0
%
60
1,000
43.2
44.2
46.7
40
500
0
20
0
Operating Profit,
Operating Profit Margin
¥ billion
180
7.9
7.5
7.3
127.8
127.7
120
108.7
60
0
Fiscal year
2005
2006
2007
Operating profit, left scale
Operating profit margin, right scale
Interest-Bearing Debt,
D/E Ratio
%
9.0
6.0
3.0
0
0.60
¥ billion
300
200
100
0
235.8
216.9
211.4
0.40
0.34
0.40
0.32
0.20
0
Fiscal year
2005
2006
2007
Net income, left scale
ROE, right scale
Fiscal year
2005
2006
2007
Total assets, left scale
Net worth to total assets, right scale
Fiscal year
2005
2006
2007
Interest-bearing debt, left scale
D/E ratio, right scale
Capital Expenditure,
Depreciation and Amortization
Net Income per Share,
Cash Dividends per Share
84.4
82.9
71.6
74.0
69.4
66.3
¥ billion
90
60
30
0
¥
60.0
13.0
50.0
49.0
12.0
42.5
10.0
40.0
20.0
0
15.0
10.0
5.0
0
Fiscal year
2005
2006
2007
Fiscal year
2005
2006
2007
Capital expenditure
Depreciation and amortization
Net income per share, left scale
Cash dividends per share, right scale
Domestic Sales,
Overseas Sales
¥ billion
1,500
1,125.5
1,195.8
1,209.5
428.0
1,000
373.2
500
0
600
487.3
400
200
0
Fiscal year
2005
2006
2007
Domestic sales, left scale
Overseas sales, right scale
09
To Our Shareholders
LEFT: Nobuo Yamaguchi, Chairman of the Board
RIGHT: Shiro Hiruta, President
Although economic expansion advanced in China and other developing
countries, the global economy was destabilized by continuing rises in feedstock
and fuel prices and by concerns about a slowdown in the US economy triggered
by the rise in subprime mortgage defaults. While the Japanese economy saw firm
corporate earnings and private sector capital investment, expansion slowed as an
effect of concern about the outlook for the global economy and a rapid rise in the
exchange value of the yen during the second half of the fiscal year. The operating
environment in fiscal 2007 thus remained a challenging one.
Our performance was especially strong in the Chemicals segment, as high
feedstock costs were reflected in high product prices. With consolidated net sales
and net income reaching new record highs, we raised dividends by ¥1 per share
to ¥13 per share. We will continue to endeavor to achieve higher earnings which
will enable further dividends increases.
We adopted a number of notable investment decisions during fiscal 2007
which will contribute to the growth of operations from fiscal 2008 onward,
enabling us to meet the performance targets of our Growth Action – 2010 mid-
term initiative. Investment decisions beginning in fiscal 2008 will be made with
an outlook beyond fiscal 2010, as we work to sustain the expansion accomplished
under Growth Action – 2010.
With respect to the improper acquisition of ministerial certification for fire-
resistance of certain soffit panels by one of the suppliers of components used in
our Hebel Haus™ homes, as came to light during fiscal 2007, we made a
commitment to the homeowners that we would perform remediation as quickly
as possible, and devoted every effort to addressing their concerns regarding the
integrity and performance of their homes. At the same time we have reinforced
our system of quality control to ensure against the recurrence of any similar
situation. In fiscal 2008, we began remediation work to restore the original fire-
resistance performance specification to all of the affected homes.
August 2008
10
Nobuo Yamaguchi
Chairman of the Board
Shiro Hiruta
President
Driving the Strategic Advance: Growth Action – 2010
Executing our strategies under Growth Action – 2010, we are
adapting to dramatic changes in the operating climate and
advancing the expansion and growth of the Asahi Kasei Group.
Shiro Hiruta
President
Expanding Global Businesses
We owe our emergence as a diversified chemicals manufacturer in large part to the
broad effort to expand and diversify in the 1950s, with operations generally oriented
toward the domestic Japanese market. Comparing our consolidated operating profit
and Japan’s GDP from the 1960s through the early 2000s, a loose correlation is
apparent. This indicates that our operations were broadly dependent on growth in
Japan’s economy, an economy which has matured and can’t be expected to mark rapid
growth moving forward.
A new phase of expansion and growth for the Asahi Kasei Group, therefore, required
a transformation not only of the management structure but also of the business
portfolio, with greater emphasis on operations with global potential. In our previous
management initiative we adopted the configuration of a holding company with core
operating companies, established a strong focus on cash-flow creation, and advanced the
transformation of our business portfolio as a selectively diversified enterprise group.
To achieve expansion and growth building on our renewed financial strength, we
launched Growth Action – 2010, a strategic business initiative for the fiscal years 2006–
2010, with the expansion of global businesses and the enhancement of domestic
businesses as the pillars of our strategy. Cash generated in stable growth, stable
earnings businesses is invested in high growth businesses as we advance the business
portfolio transformation for expansion and growth which exceeds the growth of the
Japanese economy.
Whereas in fiscal 1995 the ratio of sales between domestic businesses and global
businesses was 60/40, we set a goal to turn this around to 40/60 by fiscal 2010. The goal
was reached three years early, in fiscal 2007, an indication of the progress achieved in
transforming our business portfolio.
Financial Performance
Net sales
Operating profit
Ordinary profit
Net income
Fiscal 2005
Results
1,498.6
108.7
104.2
59.7
Fiscal 2006
Results
Fiscal 2007
Results
1,623.8
127.8
126.5
68.6
1,696.8
127.7
120.5
69.9
¥ billion
Fiscal 2010
Forecast
1,800.0
150.0
–
80.0
11
Driving the Strategic Advance: Growth Action – 2010
Raising Operating Profit by 40%, Investing ¥800 Billion
Fiscal 2010 performance goals with Growth Action – 2010 include consolidated sales
of ¥1,800 billion, a 20% rise from fiscal 2005, and operating profit of ¥150 billion,
a 40% rise. To achieve these goals we are augmenting our ordinary investment of
around ¥70–80 billion per year with up to ¥400 billion in strategic investment,
including funds for M&A and resources for increased dividends. Expansion of
operations through strategic investment is centered on monomers, specialized-
function chemical-based products, electronics materials and devices, and medical
devices. Over the five-year period this will raise total investment to some ¥800 billion.
Ordinary investment and strategic investment decisions adopted in fiscal 2006
combined for approximately ¥100 billion, and this was ¥150 billion in fiscal 2007.
In the current fiscal year, 2008, we plan to adopt decisions on ¥150 billion, and aim to
keep this pace up in fiscal 2009 onward. Maintaining this rate of investment, we are
not only on track to meet our fiscal 2010 performance targets, but are also looking
ahead to the next phase of expansion and growth up to fiscal 2015.
Fiscal 2007 Results, Fiscal 2008 Outlook
In fiscal 2007 we marked record-high sales and net income, as strong performance in
the Chemicals and Fibers segments more than made up for a tough year in the
Homes and Construction Materials segments, which were affected by weak domestic
demand and the construction slowdown following a revision of Japanese building
codes. We got particularly strong results from chemicals & derivative products, and
from high value-added products in globally competitive businesses where we have
been concentrating resources for expansion. Businesses with a global No. 1 or No. 2
market share now earn 40–50% of our operating profit.
Although the price of oil leapt sharply during the second half of fiscal 2007, the
negative effect on results was relatively modest. Unfortunately, we have to expect that
the effect of high feedstock and fuel costs will be much more severe in fiscal 2008.
We will do everything we can to cope with this dramatic shift in the operating climate
by raising product prices and expanding businesses in high value-added products
which are less directly affected by such costs.
Major Investments
Completed
in fiscal 2007
Segment
Chemicals
Homes
Pharma
Fibers
Project
Location
New plant for Duranate™ hexamethylene diisocyanate-based polyisocyanate China
New housing R&D center
Expansion of assembly plant for APS™ artificial kidneys
Japan
China
Installation of Roica™ production equipment at Asahi Kasei Spandex America plant US
New plant for Precisé™ nonwovens
Under construction Chemicals
Expansion of plant for Hipore™ microporous membrane
at fiscal 2007
year-end
Pharma
Expansion of plant for solution-polymerized styrene-butadiene rubber
New plant for APS™ artificial kidneys integrating spinning and assembly lines
New plant for Sepacell™ leukocyte reduction filters
Electronics
Materials & Devices
Fibers
Expansion of plant for photomask pellicles
Expansion of plant for Sunfort™ dry film photoresist
Expansion of plant for Roica™ spandex
Construction of advanced technology center
Japan
Japan
Japan
Japan
Japan
Japan
China
Thailand, Germany, US
Japan
12
Strategic Action, by Segment
The strategic position and actions we’re taking in each segment to achieve our fiscal
2010 goals are as follows.
Chemicals
Volume products, being chemicals & derivative products and polymer products, are
most directly affected by high feedstock and fuel costs. Short-term performance may
fluctuate greatly depending on the extent to which we can pass these costs on through
product price increases. Meanwhile, we will continue to confidently expand globally
competitive businesses. The joint venture with PTT and Marubeni for new
acrylonitrile (AN) and methyl methacrylate (MMA) plants in Thailand is a case in
point. We finalized the joint-venture agreement in March 2008, and plant start-up is
slated for late 2010. Even as construction progresses, we are looking ahead to the next
phase of expansion of our AN business, in line with global demand trends. Our goal
is to construct the next plant in the Middle East, making us the world’s largest AN
supplier. Other overseas plants for global businesses are also being studied.
We will continue to expand production capacity for specialty products with solid
growth prospects, including global market leaders such as ion-exchange membranes
for chlor-alkali and Hipore™ Li-ion rechargeable battery separators. To meet growing
demand in batteries for cell phones and laptop computers, we are adding capacity at
our Hipore™ plant in Moriyama, Shiga, and building a new Hipore™ plant in Hyuga,
Miyazaki. One area of great potential demand growth is in next-generation hybrid
electric vehicles, for which the adoption of Li-ion batteries is being evaluated. In
August 2007 we began commercial operation at a new plant in Nantong, China, for
Duranate™ hexamethylene diisocyanate-based polyisocyanate, which is used in high-
performance paints in automotive and other demanding applications. We will continue
to expand in many other fields where we have a healthy growth outlook, including the
development of overseas operations for water-treatment membranes and systems.
Homes
For order-built Hebel Haus™ unit homes, we are supplementing the network of model
home parks with a large increase in the number of “street-corner showrooms” in
major urban centers throughout Japan to elicit demand for rebuilding and secure a
stable base of new orders. We forecast solid growth in housing-related operations
13
Driving the Strategic Advance: Growth Action – 2010
such as remodeling, real estate, and financing, which provide services for Hebel Haus™
homeowners. With the October 2007 completion of our new housing R&D center in
Fuji, we are accelerating the development of new products, functions, and features.
Remediation work is advancing on all home units in which a supplier’s improperly
certified soffit panels were installed, as came to light in fiscal 2007.
Pharma
In May we launched sales of the Recomodulin™ anticoagulant and we are hiring more
medical representatives to help promote this new drug, which we developed in-
house. As part of our focus of management resources on our fields of focus,
primarily orthopedics, we consigned marketing and sales of the Famvir™ anti-herpes
agent, which was approved in April 2008, to Maruho Co., Ltd., which has
dermatology as a specialty. We continue to advance work to reinforce our
pharmaceutical product pipeline, including through the in-licensing of new drugs.
In medical devices-related businesses, which are a focus for expansion under
Growth Action – 2010, we will continue to increase production capacity for APS™
polysulfone-membrane artificial kidneys for hemodialysis, and advance the global
expansion of business through our marketing bases established in the US and
Europe. Expansion of business in therapeutic apheresis devices will also continue to
advance. At the same time we are transforming the operation, now centered on
devices for extracorporeal circulation, for development as a comprehensive leader in
blood-related healthcare systems. In October we will transfer ownership of Asahi
Kasei Kuraray Medical and Asahi Kasei Medical from Asahi Kasei Pharma to the
holding company, raising management efficiency for swifter decision-making and
resource allocation to better facilitate the sustained expansion and growth of these
operations. Of course we will retain our unique advantages as an enterprise group
encompassing both pharmaceutical and medical device businesses, with synergies
gained through mutual infrastructure utilization.
Fibers
We can expect that the operating climate will continue to be difficult, with high costs
for feedstock and fuel and the possibility for the supply/demand balance in certain
products to be temporarily upset by production capacity increases at competing
producers. The immediate priority will be raising product prices to overcome
14
inflated operating costs, and over the longer term we will advance the shift in our
business portfolio for greater focus on non-apparel, industrial materials applications.
For spandex, we established a global supply network with plants in Japan, Thailand,
China, Taiwan, the US, and Germany, and will be raising capacity and advancing the
development of specialty, high-function Roica™ grades. We are advancing
applications development for Precisé™, the totally new nonwoven launched in
September 2007, and will build this business as a new profit core. To accelerate the
development of additional new businesses, we will set up a fibers technology center
in autumn 2008 in Shiga, bringing R&D functions of the various divisions together in
a unified organization.
Electronics Materials & Devices
In devices, we will expand sales by reinforcing the overseas marketing network,
successively increase LSI fabrication capacity in line with demand growth, and develop
new products for use in a broader field of applications. The materials business will be
expanded with higher added value and increased production capacity for Sunfort™ dry
film photoresist, Pimel™ semiconductor buffer coat, photomask pellicles, and other
major products.
In April 2009 the electronics materials-related businesses of the holding company,
Asahi Kasei Chemicals, and Asahi Kasei EMD will be integrated in a new core operating
company. The combination of all the related technology and know-how throughout the
Asahi Kasei Group in a single strategic entity will enable a heightened level of growth
and development. Preparations are advancing for the market launch of new materials
for flexible printed circuits and flat panel displays, including up-front investments.
Construction Materials
Following a tough fiscal 2007 with the direct impact of suppressed construction activity
due to a revision of Japanese building codes, the challenge in fiscal 2008 will be high
material and fuel costs. To expand sales of our mainstay Hebel™ autoclaved lightweight
concrete panels while ensuring high product value, marketing will be advanced from a
customer-centric perspective. In foundation systems, the expansion of applications for
piles in civil engineering will be advanced to supplement conventional demand in the
construction of houses and small-scale buildings. Sales of Neoma™ high-performance
insulation panels will be expanded in industrial applications in addition to housing and
construction. The development of overseas business is being studied for this product
2003 2004 2005 2006 2007
line, which provides the highest level of thermal insulation available.
278
597
686
565
699
Return to Shareholders
Our unwavering goal is to obtain greater corporate value as we achieve our Growth
Action – 2010 targets through these and other strategic actions. Between fiscal 2003
and 2006 we raised dividends from ¥6 per share to ¥12 per share, and raised it again
in fiscal 2007, to ¥13. We will continue to perform strategic investments to sustain
profit growth and enable further continuous dividend increases. Although we don’t
employ a specific target for payout ratio, our goal is to maintain dividend payments
in the range of 25–30% of net income as part of our commitment to provide a
satisfactory return to shareholders.
Shareholder Returns
Strategic investment
(¥220 billion + M&A ¥150 billion)
Continuous
earnings increase
(6% p.a. for net income)
Continuous
dividends increase
(resources of ¥20–30 billion)
Share buybacks
Net Income,
Cash Dividends per Share
¥ billion
150
13
12
68.6
69.9
10
8
56.5
59.7
100
50
6
27.7
0
Fiscal year
2003 2004 2005 2006 2007
Net income, left scale
Cash dividends per share, right scale
¥
15
10
5
0
Dividend Payout Ratio
%
Fiscal year 2003
2004
2005
2006 2007
30.6 19.9
23.6 24.5 26.0
15
At a Glance
Segments, Core Operating Companies
Core Operating Company Directors*
Chemicals
Homes
Pharma
Fibers
Electronics Materials & Devices
Taketsugu Fujiwara
President & Representative Director,
Presidential Executive Officer
Director, Vice-Presidential Executive Officer
Keiji Kamei
Director, Primary Executive Officer
Masami Fujimori
Koji Fujiwara
Director, Primary Executive Officer
Katsuhiko Yamazoe Director, Primary Executive Officer
Director, Primary Executive Officer
Shigeru Mizutani
Director, Senior Executive Officer
Kyosuke Komiya
Director, Senior Executive Officer
Hajime Nagahara
Director, Senior Executive Officer
Tadashi Akaishi
Director, Senior Executive Officer
Yuji Kobayashi
Shingo Hatano
Tsuyoshi Shimizu
Morio Watanabe
Eisuke Ikeda
Masahito Hirai
Hiroshi Kobayashi
President & Representative Director,
Presidential Executive Officer
Director, Primary Executive Officer
Director, Senior Executive Officer
Director, Senior Executive Officer
Director, Senior Executive Officer
Director
Tsutomu Inada
Akio Kobayashi
Toshio Asano
Yasuyuki Yoshida
President & Representative Director,
Presidential Executive Officer
Director, Senior Executive Officer
Director, Senior Executive Officer
Director
Masaki Sakamoto
Ryo Matsui
Hidefumi Takai
President & Representative Director,
Presidential Executive Officer
Director, Primary Executive Officer
Director, Senior Executive Officer
Makoto Konosu
President & Representative Director,
Presidential Executive Officer
Director, Senior Executive Officer
Hideki Kobori
Katsuhiko Yamazoe Director, Senior Executive Officer
Koji Yamada
Director, Executive Officer
Construction Materials
Hiroshi Kobayashi
Fumio Nakagawa
Masafumi Funaki
Shingo Hatano
President & Representative Director,
Presidential Executive Officer
Director, Senior Executive Officer
Director, Senior Executive Officer
Director
Services, Engineering and Others
16
*As of April 1, 2008
Taketsugu Fujiwara
President & Representative Director,
Presidential Executive Officer
Keiji Kamei
Director, Vice-Presidential Executive Officer
Masami Fujimori
Director, Primary Executive Officer
Koji Fujiwara
Director, Primary Executive Officer
Katsuhiko Yamazoe Director, Primary Executive Officer
Shigeru Mizutani
Kyosuke Komiya
Hajime Nagahara
Tadashi Akaishi
Yuji Kobayashi
Director, Primary Executive Officer
Director, Senior Executive Officer
Director, Senior Executive Officer
Director, Senior Executive Officer
Director, Senior Executive Officer
Fiscal 2007 Composition of Net Sales,
Operating Profit*
Major Consolidated Subsidiaries
Main Businesses
Net sales
52%
Net sales
Net sales
52%
¥879.2 billion
52%
¥879.2 billion
Net sales
¥879.2 billion
52%
Net sales
¥879.2 billion
52%
Net sales
¥879.2 billion
52%
Net sales
¥879.2 billion
Net sales
52%
23%
Net sales
¥879.2 billion
Net sales
23%
¥386.2 billion
23%
¥386.2 billion
Net sales
¥386.2 billion
23%
Net sales
¥386.2 billion
23%
Net sales
¥386.2 billion
23%
Net sales
¥386.2 billion
Net sales
23%
6%
Net sales
¥386.2 billion
Net sales
6%
¥111.2 billion
6%
¥111.2 billion
Net sales
¥111.2 billion
6%
Net sales
¥111.2 billion
6%
Net sales
¥111.2 billion
6%
Net sales
¥111.2 billion
Net sales
6%
7%
Net sales
¥111.2 billion
Net sales
7%
¥114.1 billion
7%
¥114.1 billion
Net sales
¥114.1 billion
7%
Net sales
¥114.1 billion
7%
Net sales
¥114.1 billion
7%
Net sales
¥114.1 billion
Net sales
7%
7%
Net sales
¥114.1 billion
Net sales
7%
¥113.3 billion
7%
¥113.3 billion
Net sales
¥113.3 billion
7%
Net sales
¥113.3 billion
7%
Net sales
¥113.3 billion
7%
Net sales
¥113.3 billion
Net sales
7%
3%
Net sales
¥113.3 billion
Net sales
¥55.7 billion
3%
3%
¥55.7 billion
Net sales
¥55.7 billion
3%
¥55.7 billion
Net sales
3%
Net sales
¥55.7 billion
3%
Net sales
¥55.7 billion
3%
¥55.7 billion
Operating
profit
Operating
Operating
48%
profit
profit
48%
¥65.2 billion
Operating
48%
¥65.2 billion
profit
¥65.2 billion
Operating
48%
profit
¥65.2 billion
Operating
48%
profit
¥65.2 billion
Operating
48%
Operating
profit
¥65.2 billion
profit
Operating
48%
Operating
16%
profit
¥65.2 billion
profit
16%
¥21.4 billion
Operating
16%
¥21.4 billion
profit
¥21.4 billion
Operating
16%
profit
¥21.4 billion
Operating
16%
profit
¥21.4 billion
Operating
16%
Operating
profit
¥21.4 billion
profit
Operating
16%
Operating
9%
profit
¥21.4 billion
profit
9%
¥12.7 billion
Operating
9%
¥12.7 billion
profit
¥12.7 billion
9%
Operating
profit
¥12.7 billion
Operating
9%
profit
¥12.7 billion
Operating
9%
Operating
profit
¥12.7 billion
profit
Operating
9%
Operating
5%
profit
¥12.7 billion
profit
5%
¥7.2 billion
Operating
5%
¥7.2 billion
profit
¥7.2 billion
5%
Operating
profit
¥7.2 billion
Operating
5%
profit
¥7.2 billion
Operating
5%
Operating
profit
¥7.2 billion
profit
Operating
5%
Operating
16%
profit
¥7.2 billion
profit
16%
¥22.2 billion
Operating
16%
¥22.2 billion
profit
¥22.2 billion
16%
Operating
profit
¥22.2 billion
Operating
16%
profit
¥22.2 billion
Operating
16%
Operating
profit
¥22.2 billion
profit
Operating
16%
Operating
2%
profit
¥22.2 billion
profit
¥2.8 billion
2%
Operating
2%
¥2.8 billion
profit
¥2.8 billion
2%
Operating
¥2.8 billion
profit
Operating
2%
profit
¥2.8 billion
Operating
2%
profit
¥2.8 billion
2%
¥2.8 billion
Sanyo Petrochemical Co., Ltd.
Asahi Kasei Pax Corporation
Asahi Kasei Home Products Corporation
Japan Elastomer Co., Ltd.
Asahi Kasei Technoplus Co., Ltd.
Tong Suh Petrochemical Corp., Ltd.
Asahi Kasei Plastics Singapore Pte. Ltd.
Asahikasei Plastics (America) Inc.
Asahi Kasei Performance Chemicals Corp.
Asahi Kasei Jyuko Co., Ltd.
Asahi Kasei Mortgage Corp.
Asahi Kasei Reform Co., Ltd.
Asahi Kasei Real Estate, Ltd.
■ Organic and inorganic industrial chemicals, synthetic
resin, synthetic rubber, high-compound fertilizer,
coating materials, latex, pharmaceutical and food
additives, explosives, photopolymers and platemaking
systems, separation and ion-exchange membranes,
systems, and equipment.
■ Hebel Haus™ houses, Hebel Maison™ apartments,
condominiums, remodeling, real estate, residential land
development, financial services.
Asahi Kasei Medical Co., Ltd.
Asahi Kasei Kuraray Medical Co., Ltd.
Asahi Kasei N&P Co., Ltd.
Asahikasei Aime Co., Ltd.
Asahi Kasei Medical (Hangzhou) Co., Ltd.
■ Pharmaceuticals, pharmaceutical intermediates, feed
additives, diagnostic reagents, hemodialyzers and other
medical devices.
Kyokuyo Sangyo Co., Ltd.
Thai Asahi Kasei Spandex Co., Ltd.
Hangzhou Asahikasei Spandex Co., Ltd.
Asahi Kasei Spandex Europe GmbH
Asahi Kasei Spandex America, Inc.
Asahi Chemical (HK) Ltd.
Hangzhou Asahikasei Textiles Co., Ltd.
■ Roica™ elastic polyurethane filament (spandex), Eltas™
spunbond, Lamous™ artificial suede, Bemliese™ cupro
cellulosic nonwoven, Bemberg™ cupro cellulosic fiber,
polyester filament, Solotex™ polytrimethylene terephthalate
(PTT) fiber.
Asahi Kasei Electronics Materials (Suzhou)
Co., Ltd.
Asahi-Schwebel (Taiwan) Co., Ltd.
■ Pimel™ photosensitive polyimide precursor, Sunfort™
dry film photoresist, Hall elements, LSIs, glass fabric for
printed circuit boards, photomask pellicles.
Asahi Kasei Foundation Systems Corp.
■ Hebel™ autoclaved lightweight concrete, construction
piles, Neoma™ foam and other thermal insulation.
Net sales
2%
Net sales
Net sales
2%
¥37.0 billion
2%
¥37.0 billion
Net sales
¥37.0 billion
2%
Net sales
¥37.0 billion
2%
Net sales
¥37.0 billion
2%
Net sales
¥37.0 billion
2%
¥37.0 billion
Operating
profit
Operating
Operating
4%
profit
profit
4%
¥5.2 billion
Operating
4%
¥5.2 billion
profit
¥5.2 billion
4%
Operating
profit
¥5.2 billion
Operating
4%
profit
¥5.2 billion
Operating
4%
profit
¥5.2 billion
4%
*Before corporate expenses and eliminations
¥5.2 billion
Asahi Research Center Co., Ltd.
Asahi Finance Co., Ltd.
Asahi Kasei Engineering Co., Ltd.
Asahi Kasei Amidas Co., Ltd.
■ Plant, equipment, process engineering, employment
agency, think tank.
17
Operating Segment
Chemicals
With the basic ideal Creating the Future with Chemistry to guide
the advancement and growth of operations, all businesses have
been classified as those for strategic expansion and those for
stable earnings. Management resources are focused on
advancing the growth of strategic expansion businesses, while
stable earnings businesses are strengthened and enhanced to
heighten profitability.
Taketsugu Fujiwara
President, Asahi Kasei Chemicals
Major Products
Chemicals and derivative products
Ammonia, nitric acid, caustic soda, acrylonitrile (AN), styrene, adipic acid,
methyl methacrylate (MMA), polymethyl methacrylate (PMMA).
Polymer products
Suntec™ polyethylene (PE), Stylac™-AS styrene-acrylonitrile, Stylac™-ABS
acrylonitrile-butadiene-styrene, synthetic rubber and elastomer, styrene-
butadiene latex, Tenac™ polyacetal, Xyron™ modified polyphenylene ether
(mPPE), Leona™ nylon 66 polymer and filament.
Specialty products
Coating materials, Ceolus™ microcrystalline cellulose, explosives, explosion-bonded
metal clad, APR™ photosensitive resin, AFP™ photosensitive plates, printing plate
making systems, Microza™ UF and MF membranes and systems, Hipore™
microporous membrane, ion-exchange membranes and electrolysis systems, Saran
Wrap™ cling film, Ziploc™ storage bags, plastic film, sheet, and foam.
Growth Action – 2010
Each business is classified either as a strategic expansion business, with
management resources focused on achieving growth and high earnings, or as
a stable growth, stable earnings business, with efforts focused on
strengthening and enhancement to heighten profitability.
Strategic expansion businesses, characterized by the potential to attain
greater earnings and stronger market position through expansion of scale,
include AN, MMA, and synthetic rubber and elastomers. Those characterized
by the potential to attain growth through linkage with growing market
segments, building on established strengths, and extension into peripheral
fields, include battery/fuel cell materials and water treatment systems.
Stable earnings businesses, characterized by the potential to attain greater
added value and stable earnings growth through a leading position in
growing market segments, include polymers/compounds and performance
chemicals. Those characterized by the potential to maintain stable earnings
through a strengthened operational base and structure include
petrochemicals, basic chemicals, and ethylene center derivatives with the
exception of those marked for strategic expansion.
Net Sales
¥ billion
1,000
879.2
912.0
805.2
800
600
400
200
0
Fiscal year
2006*
2007
* Including Life & Living.
2008
Forecast
Operating Profit,
Operating Profit Margin
¥ billion
7.4
7.0
65.2
56.6
6.6
60.0
80
60
40
20
0
Fiscal year
2006*
2007
Operating profit, left scale
Operating profit margin, right scale
* Including Life & Living.
2008
Forecast
%
8.0
6.0
4.0
2.0
0
18
R&D
Technology development in line with the
basic ideal of Creating the Future with
Chemistry is directed toward the fields of
petrochemicals, electronics and optics, and
environment and energy.
The focus in petrochemicals and
monomers is on advances and innovations
in catalysts and chemical processes for
diversification of feedstocks, as with the
world’s first propane process for acrylonitrile
(AN) which was recently developed.
In electronics and optics, a wide range of
functional sheets and films are nearing
commercialization. Development in the field
of energy will be expanded from the base of
Hipore™ Li-ion rechargeable battery separator
technology to various materials for
distributed energy systems. In ecology,
development of water treatment materials
technology is advancing for expansion into
promising new markets. In polymers/
compounds and performance chemicals, the
focus is on obtaining higher added value.
The Year in Review
Sales increased by ¥74.0 billion (9.2%) from
a year ago to ¥879.2 billion and operating
profit increased by ¥8.7 billion (15.3%) to
¥65.2 billion.
Volume products operations were affected
by high feedstock costs, but operating profit
nevertheless increased with strong market
conditions for chemicals and derivative
products, particularly acrylonitrile, and with
polymer products performing well.
Operating profit from specialty products
grew with strong demand for Hipore™ Li-ion
rechargeable battery separator membranes
resulting in increased shipments and with
sales growth of ion-exchange membranes and
systems for chlor-alkali electrolysis.
Market Environment Outlook
for Fiscal 2008
Operations in chemicals/derivative products
and polymer products will remain challenging
due to increased feedstock and fuel costs. Focus
will be on the maintenance of appropriate
product pricing, energy conservation and other
operating cost reductions, and further
development of differentiated and specialized
polymer products.
In specialty products, businesses having
advantages in growing, high-end markets will
be expanded strategically, in line with emerging
dynamics such as shortened product lifecycles
and heightened emphasis on environmental
problems. Development of new specialty
products businesses will be accelerated.
19
Highlights
Launching ceremony for
AN/MMA project in
Thailand
Hipore™ Li-ion rechargeable
battery separators
Asahi Kasei Performance
Chemicals Corp.
Construction of AN and MMA plants in Thailand
Asahi Kasei Chemicals, PTT Plc., and Marubeni Corp. have agreed to construct acrylonitrile
(AN) and methyl methacrylate (MMA) plants in Thailand through a joint venture. AN is a
production material for acrylic fiber and ABS resin, which is used in home appliances, and
MMA is a production material for acrylic resin.
The new AN plant will employ the propane process, a world-leading development of Asahi
Kasei Chemicals, enabling the production of AN without the use of naphtha or other
petroleum-based feed and thus enhancing the competitiveness of the AN business. With the
world’s second largest AN production capacity, Asahi Kasei Chemicals is strengthening and
expanding its AN business as a focus for global growth under the Asahi Kasei Group’s
Growth Action – 2010 mid-term initiative. An additional AN plant in the Middle East that will
secure the company’s place as the world’s largest AN supplier is being studied.
The new MMA plant will achieve superior cost competitiveness through close integration
with the AN plant, enabling Asahi Kasei Chemicals to further expand its MMA business.
Expansion of Hipore™ production capacity
To meet strong demand growth, Asahi Kasei Chemicals will substantially expand its
production capacity for Li-ion rechargeable battery separators, increasing production capacity
in two phases at its existing plant in Moriyama, with start-up in fiscal 2008 and 2009, and
constructing a new plant in Hyuga, with start-up in early 2010.
Hipore™ separators currently hold a 50% share of the world market. Demand growth is
forecast to continue in cell phones, laptop computers, and other mobile IT products, and with
the adoption of Li-ion batteries in hybrid electric vehicles.
These capacity expansions will reinforce the world-leading market position for Hipore™,
as Asahi Kasei Chemicals fulfills its commitment as the market leader to maintain stable
supply growth.
Start-up of a new plant for Duranate™ in China
Asahi Kasei Performance Chemicals Corp., wholly owned subsidiary of Asahi Kasei
Chemicals, has completed construction of a new plant for Duranate™ hexamethylene
diisocyanate (HDI)-based polyisocyanate in China, and began operation in August 2007.
Duranate™, a curing agent for high-performance polyurethane coatings, is widely used in
automotive and architectural applications, with particularly strong demand growth in Asia.
The new plant will enable further expansion of the Duranate™ HDI-based curing agent
business.
20
Operating Segment
Homes
Marketing resources are focused on demand for rebuilding in
urban areas backed by the Long Life Home product strategy to
maintain and enhance customer satisfaction over the long term.
Shingo Hatano
President, Asahi Kasei Homes
Major Products
Hebel Haus™ houses, Hebel Maison™ apartments, condominiums, remodeling,
real estate, residential land development, home financing.
Growth Action – 2010
Marketing of order-built homes is focused on demand for home
rebuilding in major urban areas, as a high-earnings operational structure
is reinforced and expanded.
Specific actions include:
• Successive development of new products tailored to specific market
characteristics in different regions.
• Advancement of cost reductions through shared logistical networks with
other home builders.
• Productivity enhancements through reduced home construction time.
• Advanced development of technology to enhance the Long Life Home
product strategy.
Long-term customer relationships are maintained through the provision
of remodeling, real estate, and financial services.
Specific actions include:
• Expansion of real estate operations in brokerage of used Hebel Haus™
homes.
• Expansion of remodeling operations through high value-added services
for long-term maintenance and enhancement of home asset value.
• Establishment of stable earnings in home financing operations with
mortgage securitization and development of homeowners insurance
business.
• Development of new businesses utilizing proprietary technology,
know-how, and the asset value of Hebel Haus™ homes.
Net Sales
¥ billion
405.7
386.2
422.0
500
400
300
200
100
0
Fiscal year
2006
2007
2008
Forecast
Operating Profit,
Operating Profit Margin
¥ billion
%
9.0
27.5
26.0
6.8
21.4
6.2
6.0
5.5
30
20
10
0
Fiscal year
2006
2007
Operating profit, left scale
Operating profit margin, right scale
2008
Forecast
3.0
0
21
Operating Segment
Sales Trends of Home Segment
¥ billion
Orders Received
¥ billion
332.0
1.1
20.1
318.2
1.1
36.0
354.1
1.1
33.6
347.5
1.0
28.9
346.0
1.0
34.0
322.5
1.0
24.5
281.1
310.7
319.4
317.6
297.1
311.0
400
300
200
100
400
300
200
100
318.1
301.8
313.3
303.4
306.1
315.0
0
Fiscal year
03
04
05
06
07
08
Forecast
0
Fiscal year
03
04
05
06
07
08
Forecast
Others
Pre-built homes
Order-built homes
The Year in Review
Sales decreased by ¥19.5 billion (4.8%) from
a year ago to ¥386.2 billion and operating
profit decreased by ¥6.1 billion (22.3%) to
¥21.4 billion.
Operating profit from order-built and
pre-built homes decreased with the number
of deliveries of unit homes significantly
lower as an effect of fewer orders received
through the first half of 2007 and
postponement of delivery of some units due
to improper acquisition of ministerial
certification by a supplier of certain
components as came to light in late October
2007. New orders for order-built homes
increased by ¥2.7 billion from a year ago to
¥306.1 billion.
Operating profit from housing-related
operations increased with remodeling
operations performing well.
Market Environment Outlook
for Fiscal 2008
Grounds for optimism in the Japanese
economy are few, particularly in view of the
negative trends in share prices and in the US
economy. Although the inhibiting effect of
a revision of Japanese building codes is
expected to gradually pass, lacking clear
prospects for solid economic growth the
operating environment for housing will
remain challenging. Asahi Kasei Homes
will work to gain increased orders for
Hebel Haus™ homes by expanding the use of
“street-corner showrooms” throughout Japan
and strengthening its strategic focus on the
market for rebuilding. Recovery in
condominiums operations and growth in
housing-related operations are forecast.
R&D
R&D is focused on enhancing core
technologies. Shelter technology brings
greater safety and security through
earthquake resistance, seismic damping, and
fire resistance; greater long-term usability
through physical durability/evaluation,
systematic maintenance, and ease of
remodeling; enhanced livability through
thermal insulation, air circulation, and
sound barrier; and enhanced ecology
through recycling and incorporation of
greenery. Lifestyle technology brings greater
comfort, convenience, and satisfaction, while
evaluation/simulation technology is being
enhanced to enable buyers to more
intuitively appreciate the real-world effects of
variations and modifications to a home
design so that it is optimized to taste before
building. Additional research is focused on
the physiological and psychological aspects
of comfort, and how these can be utilized
through technological development to
achieve greater energy efficiency and
environmental compatibility in homes
optimized for health and comfort.
22
Highlights
Hebel Haus Frex™
with piloti garage
Hebel Haus Frex™ with piloti garage
A new Hebel Haus Frex™ series featuring a piloti garage was launched in August 2007, targeting
the market for home rebuilding in dense urban areas. The new series takes advantage of a
robust framing system to support the building on pilotis, opening the ground-level space for
use as a garage. Elevation of the living space provides more sunlight and natural ventilation, a
superior view, and greater security than is obtained in conventional ground-level construction
in an urban setting. This new series is part of the continuing development and expansion of
Long Life Home product designs for lasting comfort, quality, and security in urban living.
Housing R&D center
A new housing R&D center in Fuji was inaugurated in October 2007, supplanting and
expanding on the functions of the laboratory in Tokyo which had served as a base for housing
R&D. The new center provides an enhanced range of capabilities, with greater scale and more
advanced facilities. Its location in Fuji will foster synergies with the other Asahi Kasei Group
laboratories and research facilities at the same site for new business creation and R&D in a
broad range of fields. Advancing research on basic technologies for the Long Life Home
concept, the new R&D center will drive the development of next-generation products.
Housing R&D center in Fuji
Street-corner showrooms
The use of “street-corner showrooms” to promote Hebel Haus™ sales was extended to target
regions throughout Japan in April 2007. A street-corner showroom is a Hebel Haus™ built in a
residential neighborhood to serve as a model home for nearby residents to examine. A
building plot is purchased in a strategic location, and a home design which matches the
atmosphere and surroundings of the neighborhood is selected, with the construction process
open to observation by neighborhood residents from start to finish. This generates interest
among owners of older houses in the prospect of rebuilding, heightens awareness of Hebel
Haus™ design and quality characteristics, and facilitates rapport in the community with local
sales representatives. Street-corner showrooms are proving to be a vital complement to
conventional marketing activities, serving to elicit purchasing interest among potential
customers other than those who visit model home parks.
A Hebel Haus™ built as a
street-corner showroom
23
Operating Segment
Pharma
The pharmaceutical business is advancing as a specialized,
R&D-centered operation, with the field of orthopedics the
central focus of management resources. The medical device
business is directed toward the development of global
leadership in blood-related healthcare systems.
Tsutomu Inada
President, Asahi Kasei Pharma
Major Products
Elcitonin™, Bredinin™, Flivas™, Toledomin™, and other pharmaceuticals,
pharmaceutical intermediates, functional food additives, diagnostic reagents,
APS™ artificial kidneys, Sepacell™ leukocyte reduction filters, Cellsorba™ leukocyte
adsorption columns, Planova™ virus removal filters, contact lenses.
Growth Action – 2010
Pharmaceuticals:
Advancement as a specialized, R&D-centered operation, with management
resources focused on selected therapeutic fields. Expansion of operations
through structural reform and slim, robust management, building on
an established presence in selected therapeutic fields in the Japanese market.
In pharmaceutical intermediates and diagnostic reagents, structural reform is
advancing to enable global growth and expansion in selected fields of
competitive superiority.
Devices and systems:
Based on established leadership in devices for extracorporeal circulation,
the business is being transformed for development as a comprehensive leader
in blood-related healthcare systems, spanning from disease treatment to
preventive medicine and blood-based risk-factor analysis/diagnosis.
Over the longer term, healthcare systems will be developed in regenerative
medicine, the nervous system, and other fields.
Pharmaceutical Product Pipeline
Development stage
Approved on
January 25, 2008
Product
ART-123
(injection)
Approved on
April 16, 2008
AK-120
(oral)
Phase III
Phase II
Phase II
(overseas)
AT-877
(injection)
PTH
(injection)
AT-877
(oral)
KT-611
(oral)
ART-123
(injection)
24
Rho-kinase inhibitor Acute cerebral
Objective
New biologic Recombinant
Class
human
thrombomodulin
Antiviral
New
chemical
entity
Additional
indication
Additional
indication
Additional
indication
Additional
indication
New biologic Recombinant human
Synthetic human
parathyroid hormone
Rho-kinase inhibitor
α-1 blocker
thrombomodulin
Indication
Disseminated
intravascular
coagulation (DIC)
Herpes zoster
thrombosis
Osteoporosis
Pulmonary
hypertension
Neurogenic bladder
DIC in sepsis
Net Sales
¥ billion
127.0
111.2
104.5
150
120
90
60
30
0
Fiscal year
2006
2007
2008
Forecast
Operating Profit,
Operating Profit Margin
¥ billion
13.9
13.3
12.7
16.0
12.6
11.4
20
15
10
5
0
Fiscal year
2006
2007
Operating profit, left scale
Operating profit margin, right scale
2008
Forecast
%
20.0
15.0
10.0
5.0
0
The Year in Review
Sales increased by ¥6.8 billion (6.5%) from a
year ago to ¥111.2 billion and operating profit
decreased by ¥1.2 billion (8.6%) to ¥12.7 billion.
Sales of main pharmaceutical products,
notably Elcitonin™ calcitonin formulation, grew,
but operating profit from pharmaceutical
operations decreased with lower licensing
income and higher R&D expenditures.
Operating profit in devices operations
grew with increased domestic and overseas
shipments in each product line, most notably
in APS™ polysulfone-membrane artificial
kidneys following production capacity
expansion.
Market Environment Outlook
for Fiscal 2008
The environment for pharmaceuticals
operations will remain challenging, with
reduced reimbursement prices under Japanese
National Health Insurance and higher R&D
expenditures. Business will benefit from
increased sales of major products, the launch
of sale of Recomodulin™ recombinant
thrombomodulin alpha, and income from
licensing the sales rights to the Famvir™
antiviral for herpes zoster. The environment
for medical devices will also be challenging,
with reduced reimbursement prices, higher
costs for material inputs, and the effect of
a strong yen. Sales of APS™ artificial kidneys
will grow both in Japan and overseas,
particularly with a reinforced overseas sales
configuration. An expansion of health
insurance coverage to include hepatitis C will
contribute to sales growth in therapeutic
apheresis devices.
R&D
In pharmaceuticals, the focus is on new drug
development in the fields of orthopedics, the
central nervous system, and urology, and on
extension of market life through enhanced
product conformation. In medical devices,
developments are advancing in fields related
to hemodialysis, apheresis, leukocyte removal,
and virus removal. Next-generation fields
of research include autohemotherapy and
cell therapy.
Highlights
Recomodulin™ anticoagulant
APS™ artificial kidneys
Launch of Recomodulin™
Having gained Japanese regulatory approval for the production and sale of recombinant
thrombomodulin alpha for the treatment of disseminated intravascular coagulation, Asahi
Kasei Pharma (AKP) began selling the new drug under the brand Recomodulin™ in May 2008.
Developed by AKP, Recomodulin™ is the world’s first thrombomodulin formulation cloned by
genetic recombination technology. It features a novel mechanism of action which distinguishes
it from other available anticoagulants. AKP is increasing the number of medical
representatives handling Recomodulin™, both to expand sales and to enhance the gathering
and dissemination of information related to proper use, giving the highest priority to the safety
Strengthening medical devices-related operations
The dialyzer businesses of Kuraray Medical Inc. was integrated with that of Asahi Kasei
Medical, with integrated operation beginning in October 2007 as Asahi Kasei Kuraray Medical.
The company completed a new production facility for ethylene-vinyl alcohol copolymer
(EVOH) hollow-fiber membrane in Nobeoka, Miyazaki, in May 2008, and is now constructing
a new plant in Nobeoka with integrated spinning and assembly lines for APS™ polysulfone-
membrane artificial kidneys, with scheduled start-up in September 2008. Further expansions
of production capacity will be advanced to meet ongoing demand growth worldwide.
To better facilitate the sustained expansion and growth of medical device-related
operations with greater management efficiency for swifter decision-making and resource
allocation, the management structure for Asahi Kasei Kuraray Medical and Asahi Kasei
Medical, currently operated as subsidiaries of Asahi Kasei Pharma, will be reconfigured in
October 2008 with their transformation into direct subsidiaries of Asahi Kasei Corp., the
holding company for the Asahi Kasei Group.
25
Operating Segment
Fibers
The focus is on achieving growth by advancing a transformation
from a business structure centered on products for the Japanese
market for apparel through expansion of overseas business and
development of business in non-apparel, industrial-use
materials.
Masaki Sakamoto
President, Asahi Kasei Fibers
Major Products
Roica™ elastic polyurethane filament, Eltas™ spunbond, Lamous™ artificial suede,
and other nonwovens, Bemberg™ cupro cellulosic fiber, polyester filament.
Growth Action – 2010
Achieving continuous growth by advancing a transformation from a business
structure centered on products for the Japanese market for apparel through
expansion of overseas business, and research and development of business in
non-apparel, industrial-use materials. R&D is focused on driving the growth
of business in industrial-use materials to develop as a new core field of
operation.
Net Sales
¥ billion
122.0
114.1
106.6
150
120
90
60
30
For greater earnings in established businesses:
• Development and expansion in global markets and industrial materials.
• Full utilization of available resources to expand earnings. Proactive
investment for expansion.
• Establishment of new pricing structure through a shift of resources to high
earnings application fields and geographic regions.
• Continuous cost reduction.
0
Fiscal year
2006
2007
2008
Forecast
Operating Profit,
Operating Profit Margin
¥ billion
For expansion of new businesses:
• Expansion of Solotex™ polytrimethylene terephthalate (PTT) fiber business
in new application fields. Commercialization of Cyberlon™ polyketone
fiber business.
• Development of new businesses peripheral to established cellulosic fibers
and nonwovens businesses. Rapid scale-up to form new core business.
• Extension of business domain based on established technology and know-
how, in growth fields not limited to fiber production.
• Advancement of alliances and joint projects with partners within and
outside the Asahi Kasei Group.
7.2
6.3
6.0
4.9
4.2
3.9
8
6
4
2
0
Fiscal year
2006
2007
Operating profit, left scale
Operating profit margin, right scale
2008
Forecast
%
8.0
6.0
4.0
2.0
0
26
forecast in non-lining applications and in
overseas markets. Shipments of Lamous™ will
increase, mainly for car seats in the US and
Europe, and development will be advanced
for nonwovens.
R&D
R&D is focused on the development of new
materials and high value-added grades of
existing materials. R&D on new materials is
directed toward the development of unique
products which will elicit new demand. A
pilot plant for polyketone filament started up
at the beginning of 2006, with samples
supplied to users for evaluation. R&D on
existing materials is directed toward the
development of new high-value added grades
of Roica™ spandex, Bemberg™ cupro, and
nonwovens which meet market needs for
advanced performance.
The Year in Review
Sales increased by ¥7.4 billion (7.0%) from a
year ago to ¥114.1 billion and operating profit
increased by ¥3.1 billion (73.9%) to ¥7.2
billion.
Operating profit from elastic polyurethane
filament increased as overseas operations,
notably those in Europe and the US,
performed well with strong demand.
Operating profit from Bemberg™
regenerated cellulose fiber grew with
increased exports. Operating profit from
nonwovens operations decreased as operating
cost reductions could not overcome the large
effect of increased feedstock costs.
Market Environment Outlook
for Fiscal 2008
Demand for Roica™ elastic polyurethane
filament is forecast to remain firm, but the
operating environment will remain
challenging with high feedstock costs and
declining market prices. Processing costs for
Bemberg™ will increase and demand in Japan
will be weak, but increased sales volume is
Highlights
The November 2007 fashion
show featuring Bemberg™
Asahi Kasei’s plant complex
in Moriyama
Award for Fashion Design Creativity in China
Two of China’s leading fashion designers were honored as recipients of the Asahi Kasei Award
for Fashion Design Creativity in China, with fashion shows of apparel featuring Bemberg™
fabric held together with the award ceremonies in Beijing in November 2007 and March 2008.
The shows and awards, jointly held by Asahi Kasei and Asahi Kasei Fibers, received wide
coverage by the Chinese media—raising brand recognition for Asahi Kasei in China and
reinforcing a strong presence for Bemberg™ in the world of Chinese fashion and apparel.
Completion of plant for Precisé™ nonwoven
With the September 2007 completion of a large new production line at its Spunbond Plant in
Moriyama, Shiga, Asahi Kasei Fibers made a full-scale commercial launch of the Precisé™
nonwoven business.
Precisé™ is a new polyester nonwoven with a highly uniform structure of layers of filament
with different denier, providing outstanding barrier performance and functionality in wide
range of applications including filtration and separation, food packaging, and medical-use
products.
27
Operating Segment
Electronics Materials and Devices
Growth of a high-earnings operational structure is obtained
through leadership in the development of products for emerging
applications in each market segment for electronic materials and
electronic devices.
Makoto Konosu
President, Asahi Kasei EMD
Major Products
Pimel™ photosensitive polyimide precursor (PSPI), Sunfort™ dry film photoresist
(DF), photomask pellicles, Luminous™ plastic optical fiber, fine-pattern coils, LSIs,
Hall elements, glass fabric.
Growth Action – 2010
In electronic devices:
• Established LSI and sensor businesses are being expanded.
• New high-performance hybrid devices combining sensors and LSIs are
being developed.
• Marketing is being expanded world-wide.
• Continuous cost reduction.
In electronic materials:
• Industry-leading positions are being reinforced for Sunfort™ DFR, Pimel™
PSPI, and photomask pellicles for LCD panel production.
• Other core businesses including glass fabric are also being expanded.
• Development of new applications is being advanced, including materials for
flatpanel displays using established core technology in photosensitive
materials and materials for semiconductor packaging.
Net Sales
¥ billion
129.0
112.1
113.3
150
120
90
60
30
0
Fiscal year
2006
2007
2008
Forecast
Operating Profit,
Operating Profit Margin
¥ billion
22.6
22.2
20.2
20.5
19.6
15.9
24
18
12
6
0
Fiscal year
2006
2007
Operating profit, left scale
Operating profit margin, right scale
2008
Forecast
%
24.0
18.0
12.0
6.0
0
28
The Year in Review
Sales increased by ¥1.2 billion (1.0%) from a
year ago to ¥113.3 billion and operating profit
decreased by ¥0.4 billion (1.7%) to ¥22.2 billion.
Operating profit from electronics materials
increased as shipment volumes generally rose
with strong overseas demand, especially in China.
Operating profit from electronics devices
decreased with fewer shipments of LSIs and
lower product prices as an effect of inventory
adjustments in home electronics markets.
Market Environment Outlook
for Fiscal 2008
Given the deteriorating macroeconomic
climate, the operating environment is
expected to be challenging. Appropriate
capacity expansions for both materials and
devices will be performed in line with
medium-term demand growth forecasts.
To achieve Growth Action – 2010 targets,
development of differentiated, high value-
added products will be advanced together with
productivity enhancements to maintain and
heighten cost competitiveness.
R&D
Keeping pace with fast-moving
technological advances, R&D is directed
toward meeting needs and providing
solutions to problems identified through
interaction with the customer.
Developments in electronics devices
include combinations of sensor technology
with digital/analog mixed-signal LSI
technology for hybrid devices with unique
functions. Utilizing core technologies in
the design and synthesis of photopolymers
and in microfabrication, developments in
electronics materials include next-
generation semiconductor and package
substrate materials compatible with
emerging standards for fine pitch, high
density, and high transmission speeds.
Other high value-added product
developments being advanced include new
materials for flat-panel displays.
Highlights
Pellicle plant in Nobeoka
New production line for pellicles
Asahi Kasei EMD is constructing a production line for large photomask pellicles compatible
with the 10th-generation (10G) LCD panel production process in Nobeoka, Miyazaki, with
start-up in November 2008. Asahi Kasei EMD is the world’s de facto standard supplier of large
pellicles for LCD, which prevent the adherence of dust on photomasks during
photolithographic exposure. The new line will enable Asahi Kasei EMD to meet growing
demand for larger pellicles, maintaining its market-leading position.
New plant for Pimel™
In February 2008 Asahi Kasei EMD began operation of a new plant for Pimel™ photosensitive
polyimide precursor (PSPI) in Fuji, Shizuoka. Pimel™ is the world’s leading material for the
formation of semiconductor buffer coats. The market for semiconductor buffer coats is
forecast to grow with strong demand in cell-phone and home electronics applications. The
new plant will not only enable Asahi Kasei EMD to keep pace with demand growth, it will also
serve as a base for production of innovative new materials that meet emerging performance
demands in line with technological advances in the rapidly evolving semiconductor industry.
Pimel™ PSPI
29
Operating Segment
Construction Materials
With a reinforced commitment to customer focus, safety,
security, and comfort, operational reform is advancing for
heightened competitiveness of established businesses,
expansion and development of new business, and establishment
of new business models.
Hiroshi Kobayashi
President, Asahi Kasei Construction Materials
Major Products
Hebel™ autoclaved lightweight concrete (ALC) panels, steel-frame structural
components, piles and foundation systems, Neoma™ foam insulation panels.
Growth Action – 2010
Further enhancing competitiveness of the established businesses with growth
through the expansion and development of new businesses and the
establishment of new business models.
Enhancing competitiveness of established businesses:
• Ongoing operating cost reductions and enhanced product quality and
service to ensure stable profitability of the Hebel™ ALC business.
• Expansion and reinforcement of business for Hebel Powerboard™ and for
Eazet™ and ATT Column™ small-scale piles.
Expansion and development of new businesses:
• Wide-ranging study of new business opportunities, both domestic and
overseas.
• Swift commercialization of projects under development.
• Collaboration with Asahi Kasei Homes.
Establishment of new business models:
• Expansion of installation business for piles and foundation systems and for
ALC panels and other exterior wall products.
• Identification of new research projects based on customer needs.
• Intensified marketing of housing materials and insulation materials with
customer-focused solutions for builders and contractors.
Net Sales
¥ billion
60.8
55.7
63.0
70
60
50
40
30
20
10
0
Fiscal year
2006
2007
2008
Forecast
Operating Profit,
Operating Profit Margin
¥ billion
8.3
5.0
5.0
2.8
6
4
2
%
9.0
6.3
4.0
6.0
3.0
0
0
Fiscal year
2006
2007
Operating profit, left scale
Operating profit margin, right scale
2008
Forecast
30
The Year in Review
Sales decreased by ¥5.1 billion (8.4%) from a
year ago to ¥55.7 billion and operating profit
decreased by ¥2.3 billion (44.7%) to ¥2.8 billion.
Operating profit from building materials
and housing materials decreased with fewer
shipments of Hebel™ autoclaved lightweight
concrete (ALC) panels as an effect of the
decline in construction starts for unit homes
following a revision of building codes in Japan.
Development of new markets for Eazet™ piles
for small-scale construction advanced but
demand for large-scale piles decreased, and
operating profit from foundation systems
operations was on par with a year ago.
Operating profit from insulation materials also
decreased as an effect of the decline in new
housing starts, especially for wood-frame houses.
Market Environment Outlook
for Fiscal 2008
A recovery of construction starts in Japan is
forecast, enabling increased shipments of major
products. The challenge will be to swiftly raise
product prices to overcome the effect of
significantly elevated costs for fuel and materials
such as steel and cement. In the Hebel™ ALC
business, development of new applications and
high-value added products will be advanced
together with further reductions in operating
costs. In the Neoma™ foam insulation business,
the application range will be expanded in
transportation and other industrial fields as well
as in housing and construction, and enhanced
product functionality will be achieved with
composites of Neoma™ foam and other
materials. In the foundation systems business,
new markets for Eazet™ and ATT Column™ piles
will be developed in the fields of civil
engineering and seismic reinforcement.
R&D
The Neoma™ phenolic foam thermal
insulation business will be expanded through
developments to enhance production
efficiency and enable new composite product
variations. High performance materials for
housing, ecoefficient building foundation
systems, and Hebel™ ALC panels with
additional functions are under development.
Highlights
Civil engineering application
example: Pedestrian bridge
Fireproof wall configuration
JICE certification for Eazet™
The Japan Institute of Construction Engineering (JICE) issued a Construction Technology
Review and Certification (CTRC) for Eazet™ in spring 2007. The CTRC provides official
recognition of the Eazet™ piling system’s environmental performance for low-noise, low-
vibration installation in confined spaces with no soil disposal. Demand for piling systems with
these features is growing in civil engineering applications such as cell phone towers, pedestrian
bridges, and train-station elevators, in addition to the main application in home and building
foundations. With the issuance of the CTRC, the Eazet™ business gains new impetus for
growth in the field of civil engineering.
Neoma™ Spanwall fire-resistant insulation
One new high-performance composite product in the insulation panel lineup is Neoma™
Spanwall, composed of fire-resistant Neoma™ foam bonded to cement-board backing, for
use as insulation lining in fireproof metal walls. Featuring versatile compatibility with a
variety of metal wall designs, Neoma™ Spanwall meets the rising demand for fireproof
structures in a wide range of fields, including stores, shops, plants, and distribution
centers.
31
Operating Segment
Services, Engineering and Others
Major Products
Plant engineering, environmental engineering, personnel staffing and placement, think tank services.
Net Sales
¥ billion
37.0
35.0
28.9
40
30
20
10
0
Fiscal year
2006
2007
2008
Forecast
Operating Profit,
Operating Profit Margin
¥ billion
13.9
5.2
12.9
4.5
13.3
3.9
6
4
2
0
Fiscal year
2006
2007
Operating profit, left scale
Operating profit margin, right scale
2008
Forecast
%
15.0
10.0
5.0
0
The Year in Review
Sales increased by ¥8.1 billion (28.2%) from a year ago to ¥37.0 billion and
operating profit increased by ¥1.3 billion (33.6%) to ¥5.2 billion.
Operating profit from engineering increased with overseas plant engineering
operations performing well.
Market Environment Outlook for Fiscal 2008
With the slowdown in the US economy and the sharp rise in steel prices, there
is growing concern that the pace of capital investment in Japan may slacken.
While business related to the provision of services for Asahi Kasei Group
operations will remain strong, orders for services to non-Group customers will
be accepted with careful selectivity based on profitability.
R&D
Engineering developments in progress include a joint project for
next-generation automotive safety features and technology to inspect for
internal pipe corrosion.
Highlights
Health guidance materials
Health Guidance Business
Asahi Kasei Corp. began operation of a new business for the provision of
health guidance in June 2007, and Asahi Kasei Life Support Corp. was
established in April 2008 to advance the commercial development of this
business as a wholly owned subsidiary.
Beginning in April 2008, employee health insurance societies, local
governments which administer the National Health Insurance, and other
health insurers have a legal obligation to provide a specified array of physical
examinations and health guidance to insured individuals and their
dependents aged forty or older.
Asahi Kasei Life Support provides the specified health guidance on
consignment from insurers who chose to outsource this obligation. The
business builds on the internet-based personal diet management system
developed by Asahi Kasei, and an alliance with the Japan Dietetic Association
provides access to the services of a large number of registered dieticians
throughout Japan.
32
Toward Sustainable Growth
Contents
page. 34 Corporate Governance
page. 38 Corporate Social Responsibility
page. 40 Directors, Corporate Auditors, Executive Officers
33
Corporate Governance
The Asahi Kasei Group constantly endeavors to heighten
fast-moving and transparent management as essential for
maximum corporate value and greater earnings. The
effort for enriched and enhanced corporate governance is
ongoing, building on the October 2003 transformation to
a holding company configuration with separate execution
and oversight functions which established a management
framework with clear delineation of executive authority
and responsibility.
Corporate Governance System
Shareholders
Holding Company
Asahi Kasei
Board of Corporate Auditors
Board of Directors
Group Advisory Committee
Chairman of the Board
President
Strategic Management Council
CSR Council
Group staff functions
Strategic planning & analysis
Compliance & risk management
Resources administration
Development of new businesses
Internal Auditing
Internal Control
Core Operating
Companies,
Business Fields
Asahi Kasei
Chemicals
Asahi Kasei
Homes
Asahi Kasei
Pharma
Chemicals
Housing
Pharmaceuticals,
medical products
Asahi Kasei
Fibers
Fiber, textiles
Asahi Kasei
EMD
Electronics materials
and devices
Asahi Kasei
Construction
Materials
Construction
materials
(As of July 1, 2008)
Board of Directors
Oversees group management, and deliberates and decides
on basic group policy and strategy, and on substantive
proposals by the Strategic Management Council. The
Chairman of the holding company chairs meetings of the
Board of Directors. Meets once or twice per month.
Strategic Management Council
Deliberates and decides on substantive matters relating to
the operation of the holding company and of the group.
Its decisions are made by the President of the holding
company, who chairs meetings of the council, after
deliberation by the attending constituent members. Meets
twice per month.
34
Group Advisory Committee
The advisory body to the holding company Board of
Directors, composed of the Chairman and the President of
the holding company and outside advisors. Meets twice
per year.
Board of Corporate Auditors
Comprises four Corporate Auditors, of which two are
Outside Corporate Auditors. Corporate Auditors
exchange views, deliberate, and decide on substantive
matters relating to auditing. Meets at least once per quarter.
Executive Officer System
An executive officer system of management is employed at
the holding company and at each core operating company.
Authority and responsibility for the management of each
core operating company is held by the President and the
other Executive Officers of that company. Authority and
responsibility for the management of the holding company
and of the group is held by the President and the other
Executive Officers of the holding company.
The President of the holding company oversees the
executive management and performance of the core
Election of Outside Directors
operating companies and of their Presidents. The holding
company Board of Directors oversees the executive
management and performance of the holding company
President and of the group.
For both the holding company and the core operating
companies, the number of Directors and Executive
Officers is as small as possible. In all cases, the term of
office is one year, and management results and
performance are reviewed each fiscal year.
Three Outside Directors, Yuzo Seto, former President and
Representative Director of Asahi Breweries, Ltd., Yukiharu
Kodama, former Administrative Vice Minister of the
Ministry of International Trade and Industry, and Morio
Ikeda, former President and CEO of Shiseido Co., Ltd.
were elected at the 117th Ordinary General Meeting of
Shareholders held in June 2008. Outside Directors now
comprise 30% of the membership of the Board of Directors.
Internal Control System
Objectives for internal control include reliable financial
reporting, legal compliance, effective and efficient
operations execution, and safeguarding of assets. As a
market-listed company, beginning in fiscal 2008 Asahi
Kasei’s management is required by the Financial
Instruments and Exchange Law to assess the effectiveness
of internal controls for financial reporting, and to have
these assessments audited by independent CPAs or
auditing firms.
Internal Control was established in May 2008 as a
corporate organ dedicated to maintenance and
enhancement of our system for internal control, replacing
the Internal Control Project which had focused on the
design and development of the system since October 2005.
Audits
Internal Auditing is a corporate organ under the direct
authority of the President of the holding company. Each
year, Internal Auditing prepares plans for an internal audit
in accordance with basic corporate regulations for internal
audits, obtains the President’s approval for these plans, and
then performs the internal audit.
The Independent Auditors form a team of assistants for
performance of the audit in accordance with its audit
plan. The team mainly comprises certified public
accountants and junior accountants, and also includes
certified information systems accountants and other
specialist accountants.
In accordance with the audit policy adopted by the
Board of Corporate Auditors, each Corporate Auditor
attends meetings of the Board of Directors and audits
Directors in the discharge of their duties through
examination of business performance. The Corporate
Auditors Office provides staff to support Corporate
Auditors in their duties.
PricewaterhouseCoopers Aarata is contracted as the
Independent Auditors to perform financial audits in
accordance with the Commercial Code and Securities
Law. Partners of the Independent Auditors designated to
perform the audit for fiscal year 2007 were as follows.
• Katsunori Sasayama
• Takahiro Nakazawa
Internal Auditing, the Board of Corporate Auditors, and
the Corporate Auditors of core operating companies and
other subsidiaries regularly meet to confirm the
effectiveness of internal governance systems for legal
compliance and risk management. The Board of
Corporate Auditors provides counsel to the Independent
Auditors with respect to its audit plan, holds periodic
meetings with them, and receives the results of the
consolidated financial audit of Asahi Kasei.
35
Corporate Governance
Adoption of Shareholder Rights Plan
On April 23, 2008, the Asahi Kasei Board of Directors
established a basic corporate policy concerning the nature
of parties who would control the company’s financial and
operational decision. At the 117th Ordinary General
Meeting of Shareholders held on June 27, 2008, the
adoption of a Shareholder Rights Plan, comprising
measures in response to large acquisition of shares to
prevent control of the company’s financial and operational
decisions by inappropriate parties in light of this basic
corporate policy, was approved by the majority votes of
shareholders present.
Compliance
Corporate Ethics
Our Corporate Ethics – Basic Policy and Code of Conduct is
the standard and guide for ethical conduct throughout the
day-to-day work of each and every member of the Asahi
Kasei Group. It has been translated into English and
Chinese, and applies to all majority-held subsidiaries the
world over.
The purpose of the Shareholder Rights Plan is to secure
and heighten the company’s corporate value and the
common interest of shareholders in the event of a
purchase of 20% or more of the company’s shares, by
ensuring necessary and sufficient information and time for
shareholders to make proper judgment, by obtaining an
opportunity to negotiate with the purchasing party, and
otherwise. Please refer to the relevant news release at
www.asahi-kasei.co.jp/asahi/en/news/2008/e080423.html
for more details.
Protection of Personal Information
Asahi Kasei is committed to the proper handling and use
of personal information, in accordance with our basic
policy shown below. Education and training for all
employees includes the distribution of an information
security handbook which covers issues related to personal
information protection, is monitored by the Corporate
Ethics Committee.
Corporate Ethics – Basic Policy
Basic Policy for Protection of Personal Information
• Creating value, contributing to society
• Caring for environment, health, and safety
• Honoring law and norms of society
• Excluding subversive elements
• Respecting the individual
• Ensuring transparency
• Respecting information and intellectual property
• Practicing corporate ethics
• We handle personal information properly and in compliance with
the Personal Information Protection Law and other applicable
statutes, and in conformance with generally accepted norms
and standards.
• We ensure that personnel throughout the Asahi Kasei Group
thoroughly understand and faithfully comply with corporate
standards and regulations for the handling of personal information.
• We use personal information only for the specific purposes which
have been indicated or announced at the time of its receipt.
• We employ appropriate measures in the maintenance and
management of personal information to ensure against unauthorized
alteration, disclosure, and loss of personal information.
• We will respond in good faith to requests to confirm, revise, cease
using, or delete personal information.
36
Information Disclosure Policy
The Asahi Kasei Group has established an Information
Disclosure Policy, enhancing the management and
disclosure of corporate information to obtain greater
corporate value. Corporate regulations for information
disclosure based on this policy were adopted on July 1,
2008. The basic principles of the Information Disclosure
Policy are shown below.
• With our Basic Credo of “contributing to human life and
human livelihood through constant innovation and
advances based in science and the human intellect,” we
hold “progressing in concert with society, and honoring
the laws and standards of society as a good corporate
citizen” as a Guiding Precept. “Ensuring transparency”
Risk Management
Risk Management Committee
The Risk Management Committee was established under
the CSR Council in April 2005 to enhance the risk
management system for prevention of operational crises
and minimization of the effects of crises which occur. The
Board of Directors in March 2007 enacted Basic Risk
Management Regulations, effective April 1, 2007,
providing clear guidelines to heighten the capability and
effectiveness for risk management and emergency
response throughout the Asahi Kasei Group.
Role of Corporate Risk Management
is a fundamental element of our Corporate Ethics – Basic
Policy. We proactively engage in information disclosure
and communication based on these basic concepts.
• Corporate information is disclosed fairly, impartially,
accurately, and as swiftly as possible to stakeholders such as
customers, suppliers, shareholders, investors, employees,
and local communities, and to the general public.
• In our communication with stakeholders and with the
general public, we strive for dialog which fosters a
relationship of trust, promoting greater understanding of
the Asahi Kasei Group and its operations, to increase
brand strength and heighten corporate value.
Corporate Risk Management
Corporate Risk Management works with the various
divisions and departments to guide the proper response to
any major accidents, incidents, or problems which cause
significant damage to Asahi Kasei Group operations or
which may foreseeably cause Asahi Kasei Group
operations to have adverse effects on the general public.
In fiscal 2007, Corporate Risk Management coordinated
the response to the improper acquisition of fire-resistance
certification by a supplier of soffit panels used in our
housing products, and provided guidance to personnel
traveling abroad on business or stationed abroad.
Corporate
Risk Management
Information disclosure through
Corporate Communications
Direction and guidance
Stakeholders
Employees
Emerging crisis
Fact checking,
coordination
Typhoon, earthquake,
or other natural disaster;
industrial accident causing
pollution or injury; terrorism;
infectious disease; product
safety incident, etc.
Response
Responsible division
or department
37
Corporate Social Responsibility
CSR at the Asahi Kasei Group
CSR in Action
We believe that CSR is achieved through the sustainable
expansion of operations effecting increased corporate
value, enabling fulfillment of the needs and expectations
of our various stakeholders, in accordance with our basic
tenets of contribution to human life and human livelihood
through constant innovation and advances based in
science and the human intellect.
CSR Fundamentals
Based in an understanding of the effects of our operations
on the global environment and the global community,
efforts and actions related to CSR are based in our four
CSR Fundamentals: Compliance, Respect for Employee
Individuality, Responsible Care*, and Corporate
Citizenship.
Asahi Kasei Group CSR
The
employee
Employee
fulfillment
The
community
Community
outreach
The
environment
Environmental
protection
The
customer
Customer
satisfaction
Sustainable increase
in corporate value
The
shareholder
Shareholder
returns
The
supplier
Fair business
dealings
The local
economy
Local economic
participation
Business operations
CSR Fundamentals
Compliance
Respect for Employee
Individuality
Responsible Care
Corporate Citizenship
* Responsible Care represents the commitment and initiative to secure and improve safety and environmental protection at every step of the product life-cycle
through the individual determination and responsibility of each firm producing and handling chemical products. As of October 2007, fifty-three countries
throughout the world have a Responsible Care program.
38
Framework for Advancement
The CSR Council, formed in April 2005 with the holding
company President serving as chair, formulates CSR policy
and guides the CSR effort throughout the Asahi Kasei
Group. Specific CSR initiatives are implemented by the
committees under the authority of the CSR Council,
including the Corporate Ethics Committee to ensure
regulatory compliance and the Responsible Care
Committee to guide efforts for environment, health, and
safety. The Risk Management Committee formulates the
response to contingencies such as a major earthquake.
The Community Fellowship Committee promotes and
coordinates the effort for outreach and fellowship in each
local community where we operate.
President
Csr Council
• Formulation of unified policy and
action plans
• Guidance and counsel for the
subordinate committees
• Preparation of reports
• Monitoring of independent evaluation
• Disclosure of CSR information
Corporate ethics
Committee
Advancement of ethics education and
operation of compliance hotline
Market Compliance
Committee
Compliance with Antimonopoly Law and
prevention of violation
export Control
Committee
Compliance with export-related
regulations and prevention of violation
responsible Care
Committee
Environmental preservation, product
safety, physical integrity and safe
operation, workplace safety, hygiene, and
health, and community outreach
risk Management
Committee
Crisis prevention and damage
minimization
Community Fellowship
Committee
Advancement of community fellowship
activities
Environmental Technology Seminar in China
In July 2007 we were invited to co-host a seminar for
environmental technology at the Great Hall of the People
in Beijing, commemorating the 35th anniversary of the
establishment of diplomatic relations between China and
Japan. Environmental challenges and water treatment
technology were in focus at the seminar, with a lively
exchange of opinions among the attendants.
A “Beijing Declaration” on sustainable growth through
international cooperation in harmony with the
environment was adopted, and Asahi Kasei proposed the
establishment of a fund to support the advancement and
development of environmental technology in China by
combining Chinese and Japanese know-how in the field.
The environmental technology seminar in Beijing
39
Directors, Corporate Auditors, Executive Officers
(As of June 27, 2008)
Nobuo Yamaguchi
Chairman of the Board &
Representative Director
Shiro Hiruta
President & Representative
Director, Presidential
Executive Officer
Ichiro Itoh
Director, Vice-Presidential Executive
Officer
Strategy; Accounting & Finance; Compliance
Kiyoshi Tsujita
Director, Senior Executive
Officer
Human Resources; Compliance
Katsuhiko Sato
Director, Senior Executive
Officer
Procurement
Yuji Mizuno
Director, Executive Officer
Legal & General Affairs; Compliance
Yoshio Hayashi
Director, Executive Officer
ESH; PL; R&D
Yuzo Seto
Outside Director
Yukiharu Kodama
Outside Director
Morio Ikeda
Outside Director
Yuji Tsuchiya
Auditor
Katsuhiko Yamazoe
Senior Executive Officer
Tsutomu Inada
Executive Officer
Kenji Nakamae
Auditor
Masanori Mizunaga
Lead Executive Officer
Haruyuki Yoneda
Executive Officer
Kazuo Tezuka
Outside Auditor
Hiroo Kato
Outside Auditor
Toshikatsu Sunami
Lead Executive Officer
Shoichiro Tonomura
Executive Officer
Yutaka Shibata
Executive Officer
40
Financial Section
Contents
page. 42 Consolidated Eleven-Year Summary
page. 44 Management’s Discussion and Analysis
page. 50 Risk Analysis
page. 52 Consolidated Balance Sheets
page. 54 Consolidated Statements of Income
page. 55 Consolidated Statements of Changes in Net Assets
page. 56 Consolidated Statements of Cash Flows
page. 57 Notes to Consolidated Financial Statements
page. 71 Report of Independent Auditors
41
Consolidated Eleven-Year Summary
Asahi Kasei Corporation and consolidated subsidiaries
For the year ended March 31
Net sales
Chemicals
Life & Living a
Chemical and Chemical-related
Chemicals and Plastics
Homes
Housing and Construction Materials
Pharmab
Fibersb
Electronics Materials & Devicesb
Construction Materials
Special Products and Services
Electronics
Membranes and Systems
Biotechnology and Medical Products
Speciality Products
Foods and Liquors
Engineering and Othersb
2008
2007
2006
2005d
2004
2003e
2003
2002
2001f
2001
2000
1999
1998g
1998
¥1,696,789
¥1,623,791
¥1,498,620
¥1,377,697
¥1,253,534
¥1,193,614
¥1,193,614
¥1,195,393
¥1,269,415
¥1,269,415
¥1,194,462
¥1,171,845
¥1,281,675
¥1,281,675
Millions of yen, except where noted
879,235
–
–
–
752,632
52,558
660,402
51,942
570,182
59,149
453,707
59,813
–
–
–
–
–
–
–
–
386,227
405,695
404,539
375,755
361,273
–
111,232
114,072
113,267
55,732
–
104,474
106,639
112,094
60,818
–
105,842
89,704
102,859
56,512
–
103,933
91,518
93,024
59,908
–
105,965
101,514
82,484
60,622
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Services, Engineering and Othersb
37,024
28,881
26,821
24,228
28,156
57,565
60,234
Domestic sales
Overseas sales
Operating profit
Ordinary profit
Income (loss) before income taxes
Net income (loss)
Net income (loss) per share, yen
Capital expenditure
Depreciation and amortization
R&D expenditures
Cash dividends per share, yen
As of March 31
Total assets
Inventories
Property, plant and equipment
Investments and other assets
Net worthc
Net worth per share, yen
Net worth/total assets, %
Number of employees
1,209,452
1,195,751
1,125,454
1,067,893
1,011,366
1,006,810
1,086,219
1,086,219
1,044,630
1,009,439
1,127,590
1,127,590
487,337
127,656
120,456
105,599
69,945
50.01
82,911
73,983
56,170
13.00
428,040
127,801
126,507
114,883
68,575
49.00
84,413
71,646
52,426
12.00
373,166
108,726
104,166
94,481
59,668
42.46
66,310
69,399
51,467
10.00
309,804
115,809
112,876
91,141
56,454
40.16
68,479
71,531
50,715
8.00
242,168
60,932
53,643
54,820
27,672
19.62
86,387
64,408
48,420
6.00
2008
2007
2006
2005
2004
2003
2003
2002
2001
2001
2000
1999
1998
1998
¥1,425,367
¥1,459,922
¥1,376,044
¥1,270,057
¥1,249,206
¥1,212,374
¥1,212,374
¥1,193,011
¥1,240,008
¥1,240,008
¥1,180,372
¥1,185,249
¥1,206,872
¥1,206,872
272,372
424,193
234,873
c
666,244
476.39
46.7
23,854
240,006
426,959
281,502
c
645,655
461.50
44.2
23,715
214,062
414,368
284,390
594,211
424.34
43.2
23,030
202,521
419,969
223,958
511,726
365.43
40.3
23,820
181,609
428,302
226,825
450,451
321.41
36.1
25,011
a. The Life & Living segment was combined with the Chemicals segment in the year ended March 31, 2008.
b. For continuity, figures for business categories which were renamed are shown on the same line.
• Through the year ended March 31, 2003: Figures shown as Pharma are those for the previous Health Care sector, figures shown as Fibers are those for the previous Fibers and Textiles sector, figures
shown as Electronics Materials & Devices are those for the previous Electronics sector, and figures shown as Services, Engineering and Others are those for the previous Liquors, Services and Others
sector.
• With the divestment of foods operations, the “foods and liquors” and “engineering and services” segments are combined as “engineering and others.” Through the year ended March 31, 1999, figures
shown as “engineering and others” are those for the previous “engineering and services” segment.
c. Net assets less minority interest in consolidated subsidiaries. Though the year ended March 31, 2006, figures for shareholders’ equity shown.
d. For comparison purposes, results for the year ended March 31, 2005 are recalculated to reflect the April 2005 transfer of Leona™ nylon 66 filament operations from the Fibers segment to the Chemicals
e.
segment.
For comparison purposes, results by business category for the year ended March 31, 2003 are recalculated in accordance with the revised categories for the year ended March 31, 2004, which are aligned
with the core operating companies in the holding company configuration adopted in October 1, 2003.
• The “fabricated home products” segment of the Chemical and Chemical-related sector is separated to an independent Life & Living segment. The remainder of the Chemical and Chemical-related sector
is reclassified as the Chemicals segment.
• The Housing and Construction Materials sector is separated into the Homes segment and the Construction Materials segment.
42
477,581
440,698
449,470
383,654
105,463
110,551
71,579
408,474
98,686
125,908
64,062
433,440
95,481
134,791
95,999
430,934
379,677
375,048
400,420
373,874
433,440
412,954
372,649
425,553
424,532
134,791
139,181
148,277
181,542
181,542
270,250
262,650
275,871
274,160
424,673
52,908
320,553
105,463
110,551
71,579
63,101
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
44,786
981,064
212,550
61,555
50,389
44,786
981,064
212,550
61,555
50,389
(100,869)
(100,869)
(66,791)
(66,791)
(47.63)
(47.63)
93,985
60,808
49,311
6.00
93,985
60,808
49,311
6.00
176,788
427,188
198,697
407,639
290.92
33.6
25,730
176,788
427,188
198,697
407,639
290.92
33.6
25,730
–
–
–
–
–
–
–
–
–
–
–
–
45,664
39,849
10,679
5,180
3.61
74,826
60,676
49,574
6.00
180,826
415,193
181,618
496,826
353.16
41.6
26,227
–
–
–
–
–
–
–
–
–
–
–
–
96,024
86,747
50,318
25,177
17.45
69,188
62,222
49,768
6.00
196,510
419,168
176,177
516,013
357.70
41.6
26,695
96,228
18,307
95,481
80,653
17,967
93,460
60,234
70,570
–
–
–
–
–
–
–
–
–
–
96,024
86,747
50,318
25,177
17.45
69,188
62,222
49,768
6.00
196,510
419,168
176,177
516,013
357.70
41.6
26,695
–
–
–
–
–
–
–
–
–
–
74,323
85,853
39,615
20,525
14.23
63,213
63,629
50,015
6.00
181,771
416,881
127,013
476,159
330.07
40.3
26,580
–
–
–
–
–
–
–
66,212
18,133
88,050
90,068
13,408
–
–
51,237
42,443
37,525
17,392
12.06
70,461
63,845
56,844
6.00
193,691
435,005
132,251
464,339
321.88
39.2
29,263
–
–
–
–
–
–
–
63,235
20,828
82,703
88,478
18,916
–
–
62,814
56,271
40,264
20,809
14.43
74,981
67,117
57,023
6.00
198,651
424,499
141,388
455,250
315.64
37.7
27,792
–
–
–
–
–
–
–
–
–
301,727
62,337
82,703
33,593
88,478
34,616
62,814
56,271
40,264
20,809
14.43
74,981
67,117
57,023
6.00
198,651
424,499
141,388
455,250
315.64
37.7
27,792
188,583
183,196
183,196
149,832
162,406
154,085
154,085
Services, Engineering and Othersb
37,024
28,881
26,821
24,228
28,156
1,209,452
1,195,751
1,125,454
1,067,893
1,011,366
For the year ended March 31
Net sales
Chemicals
Life & Living a
Chemical and Chemical-related
Chemicals and Plastics
Housing and Construction Materials
Homes
Pharmab
Fibersb
Electronics Materials & Devicesb
Construction Materials
Special Products and Services
Electronics
Membranes and Systems
Biotechnology and Medical Products
Speciality Products
Foods and Liquors
Engineering and Othersb
Domestic sales
Overseas sales
Operating profit
Ordinary profit
Income (loss) before income taxes
Net income (loss)
Net income (loss) per share, yen
Capital expenditure
Depreciation and amortization
R&D expenditures
Cash dividends per share, yen
As of March 31
Total assets
Inventories
Property, plant and equipment
Investments and other assets
Net worthc
Net worth per share, yen
Net worth/total assets, %
Number of employees
879,235
752,632
52,558
660,402
51,942
570,182
59,149
453,707
59,813
386,227
405,695
404,539
375,755
361,273
111,232
114,072
113,267
55,732
104,474
106,639
112,094
60,818
105,842
89,704
102,859
56,512
103,933
91,518
93,024
59,908
105,965
101,514
82,484
60,622
–
–
–
–
–
–
–
–
–
–
428,040
127,801
126,507
114,883
68,575
49.00
84,413
71,646
52,426
12.00
240,006
426,959
281,502
645,655
461.50
44.2
23,715
–
–
–
–
–
–
–
–
–
–
373,166
108,726
104,166
94,481
59,668
42.46
66,310
69,399
51,467
10.00
214,062
414,368
284,390
594,211
424.34
43.2
23,030
–
–
–
–
–
–
–
–
–
–
309,804
115,809
112,876
91,141
56,454
40.16
68,479
71,531
50,715
8.00
202,521
419,969
223,958
511,726
365.43
40.3
23,820
–
–
–
–
–
–
–
–
–
–
242,168
60,932
53,643
54,820
27,672
19.62
86,387
64,408
48,420
6.00
181,609
428,302
226,825
450,451
321.41
36.1
25,011
–
–
–
–
–
–
–
–
–
–
–
487,337
127,656
120,456
105,599
69,945
50.01
82,911
73,983
56,170
13.00
272,372
424,193
234,873
666,244
476.39
46.7
23,854
2008
2007
2006
2005d
2004
2003e
2003
2002
2001f
2001
2000
1999
1998g
1998
¥1,696,789
¥1,623,791
¥1,498,620
¥1,377,697
¥1,253,534
¥1,193,614
¥1,193,614
¥1,195,393
¥1,269,415
¥1,269,415
¥1,194,462
¥1,171,845
¥1,281,675
¥1,281,675
Millions of yen, except where noted
–
–
–
–
–
–
477,581
440,698
449,470
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
424,673
52,908
–
–
320,553
–
–
–
383,654
105,463
110,551
71,579
63,101
–
–
–
–
–
–
–
105,463
110,551
71,579
–
–
–
–
–
–
–
–
44,786
981,064
212,550
61,555
50,389
44,786
981,064
212,550
61,555
50,389
(100,869)
(100,869)
(66,791)
(66,791)
(47.63)
(47.63)
93,985
60,808
49,311
6.00
93,985
60,808
49,311
6.00
–
–
408,474
98,686
125,908
64,062
–
–
433,440
95,481
134,791
95,999
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
430,934
379,677
375,048
400,420
373,874
–
–
–
–
–
433,440
412,954
372,649
425,553
424,532
–
–
–
–
–
134,791
139,181
148,277
181,542
181,542
–
–
–
–
–
–
–
–
270,250
262,650
275,871
274,160
96,228
18,307
95,481
–
–
80,653
17,967
93,460
–
–
60,234
70,570
66,212
18,133
88,050
–
90,068
13,408
–
63,235
20,828
82,703
–
88,478
18,916
–
–
–
301,727
62,337
–
82,703
33,593
88,478
34,616
–
57,565
60,234
–
–
1,006,810
1,086,219
1,086,219
1,044,630
1,009,439
1,127,590
1,127,590
188,583
183,196
183,196
149,832
162,406
154,085
154,085
45,664
39,849
10,679
5,180
3.61
74,826
60,676
49,574
6.00
96,024
86,747
50,318
25,177
17.45
69,188
62,222
49,768
6.00
96,024
86,747
50,318
25,177
17.45
69,188
62,222
49,768
6.00
74,323
85,853
39,615
20,525
14.23
63,213
63,629
50,015
6.00
51,237
42,443
37,525
17,392
12.06
70,461
63,845
56,844
6.00
62,814
56,271
40,264
20,809
14.43
74,981
67,117
57,023
6.00
62,814
56,271
40,264
20,809
14.43
74,981
67,117
57,023
6.00
2008
2007
2006
2005
2004
2003
2003
2002
2001
2001
2000
1999
1998
1998
¥1,425,367
¥1,459,922
¥1,376,044
¥1,270,057
¥1,249,206
¥1,212,374
¥1,212,374
¥1,193,011
¥1,240,008
¥1,240,008
¥1,180,372
¥1,185,249
¥1,206,872
¥1,206,872
176,788
427,188
198,697
407,639
290.92
33.6
25,730
176,788
427,188
198,697
407,639
290.92
33.6
25,730
180,826
415,193
181,618
496,826
353.16
41.6
26,227
196,510
419,168
176,177
516,013
357.70
41.6
26,695
196,510
419,168
176,177
516,013
357.70
41.6
26,695
181,771
416,881
127,013
476,159
330.07
40.3
26,580
193,691
435,005
132,251
464,339
321.88
39.2
29,263
198,651
424,499
141,388
455,250
315.64
37.7
27,792
198,651
424,499
141,388
455,250
315.64
37.7
27,792
f.
• The Health Care sector is renamed the Pharma segment.
• The Fibers and Textiles sector is renamed the Fibers segment.
• The Electronics sector is renamed the Electronics Materials & Devices segment.
• With the divestment of liquors operations, the Liquors, Services and Others sector is renamed the Services, Engineering and Others segment.
For comparison purposes, results by business category for the year ended March 31, 2001 are recalculated in accordance with the revised categories for the year ended March 31, 2002.
• Operations of the “membranes and systems” segment combine with the Chemicals and Plastics sector to form the Chemical and Chemical-related sector.
• The “electronics” segment is reclassified as the Electronics sector.
• Operations of the “biotechnology and medical products” segment are reclassified as the Health Care sector.
• The remaining operations comprise the Liquors, Services and Others sector, in place of the “engineering and others” segment.
g. For comparison purposes, results by business category for the year ended March 31, 1998 are recalculated in accordance with the revised categories for the year ended March 31, 1999.
• Photopolymer and explosives operations are transferred from the Special Products and Services sector to the Chemicals and Plastics sector.
• Artificial fish reef operations are transferred from the Special Products and Services sector to the Housing and Construction Materials sector.
• Within the Special Products and Services sector, functional membrane operations are transferred from the “speciality products” segment to the “membranes and systems” segment, and ion-exchange
product operations are transferred from the “engineering and services” segment to the “membranes and systems” segment.
43
Management’s Discussion and Analysis
Fiscal 2007 (April 1, 2007 – March 31, 2008)
Overview of Fiscal 2007 Consolidated Results
Operating Environment
lion, but decreased as a percentage of net sales by 0.2 percent-
Although economic expansion advanced in China and other
age points to 16.5% due to the higher rate of growth in net
developing countries, the global economy was destabilized by
sales. Operating profit as a percentage of net sales increased
continuing rises in feedstock and fuel prices and by concerns
by 0.4 percentage points to 7.5%.
about a slowdown in the US economy triggered by the rise in
subprime mortgage defaults. While the Japanese economy
Non-operating Income and Expenses, Ordinary Profit
saw firm corporate earnings and private sector capital invest-
Net non-operating expenses were ¥7.2 billion, ¥5.9 billion
ment, expansion slowed as an effect of concern about the
higher than the ¥1.3 billion of a year earlier. As a result,
outlook for the global economy and a rapid rise in the
ordinary profit decreased by ¥6.1 billion to ¥120.5 billion, a
exchange value of the yen during the second half of the fiscal
4.8% decline.
year. The operating environment in fiscal 2007 thus
remained a challenging one.
Special Gains and Losses
Net sales, Operating Profit
Special gains of ¥4.3 billion included a ¥3.4 billion gain on sale
of investment securities. Special losses of ¥19.2 billion included
Consolidated net sales grew by ¥73.0 billion from a year ago
a ¥6.8 billion loss on sale disposal of property, plant, and equip-
to ¥1,696.8 billion, a 4.5% increase. Sales growth was greatest
ment and a ¥4.8 billion impairment loss. The net special loss of
in chemicals operations, as high feedstock costs were
¥14.9 billion was ¥3.2 billion higher than a year earlier.
reflected in high product prices.
Operating profit decreased by ¥0.1 billion to ¥127.7 billion,
Net Income
a 0.1% decline. By segment, lower operating profit was most
With ordinary profit of ¥120.5 billion and the net special loss
notable in Homes, as an effect of decreased deliveries, and in
of ¥14.9 billion, income before income taxes and minority
Construction Materials, as an effect of the construction slow-
interests was ¥105.6 billion. Currently payable income taxes
down following a revision of Japanese building codes, but
of ¥34.6 billion and deferred income tax obligation of ¥0.5
operating profit growth in the Chemicals and Fibers seg-
billion combined for an income tax expense of ¥35.0 billion.
ments helped keep the overall decline to a minimum. As a
Minority interest in income of consolidated subsidiaries was
percentage of net sales, cost of sales increased by 0.6 percent-
¥0.6 billion. As a result, net income grew by ¥1.4 billion to
age points to 76.0%, largely due to increases in the cost of
¥69.9 billion, a 2.0% increase, and net income per share
naphtha and other feedstocks. SG&A increased by ¥8.2 bil-
increased by ¥1.01 to ¥50.01 from the ¥49.00 of a year earlier.
Net Sales
¥ billion
Operating Profit,
Operating Profit Margin
%
¥ billion
SG&A,
SG&A Ratio
¥ billion
2,000
1,500
1,000
500
0
Fiscal year
2005
2006
2007
44
150
120
90
60
30
0
Fiscal year 2005
2006
2007
10
8
6
4
2
0
300
240
180
120
60
0
Fiscal year
2005
2006
2007
Operating profit, left scale
Operation profit margin, right scale
SG&A, left scale
SG&A ratio, right scale
%
20
16
12
8
4
0
Net Income,
Net Income per Share
¥ billion
80
60
40
20
0
Fiscal year
2005
2006
2007
Net income, left scale
Net income per share, right scale
¥
60
45
30
15
0
Results by Segment
Operating Segments
Homes
Six operating segments correspond to the core operating
Sales decreased by ¥19.5 billion (4.8%) from a year ago to
companies, and the Services, Engineering and Others seg-
¥386.2 billion and operating profit decreased by ¥6.1 billion
ment comprises the remainder of operations. With the April
(22.3%) to ¥21.4 billion.
1, 2007, merger of Asahi Kasei Life & Living with Asahi Kasei
Operating profit from order-built and pre-built homes
Chemicals, the Life & Living segment was combined with the
decreased with the number of deliveries of unit homes signi-
Chemicals segment. For comparison purposes, results for the
ficantly lower as an effect of fewer orders received through
year-ago period in the Chemicals segment have been revised
the first half of 2007 and postponement of delivery of some
to include those in the Life & Living segment.
units due to improper acquisition of ministerial certification
Chemicals
by a supplier of certain components as came to light in late
October 2007. New orders for order-built homes increased
Sales increased by ¥74.0 billion (9.2%) from a year ago to
by ¥2.7 billion from a year ago to ¥306.1 billion.
¥879.2 billion and operating profit increased by ¥8.7 billion
Operating profit from housing-related operations increased
(15.3%) to ¥65.2 billion.
with remodeling operations performing well.
Volume products operations were affected by high feed-
stock costs, but operating profit nevertheless increased with
Pharma
strong market conditions for chemicals and derivative prod-
Sales increased by ¥6.8 billion (6.5%) from a year ago to
ucts, particularly acrylonitrile, and with polymer products
¥111.2 billion and operating profit decreased by ¥1.2 billion
performing well.
(8.6%) to ¥12.7 billion.
Operating profit from specialty products grew with strong
Sales of main pharmaceutical products, notably Elcitonin™
demand for Hipore™ Li-ion rechargeable battery separator
calcitonin formulation, grew, but operating profit from phar-
membranes resulting in increased shipments and with sales
maceutical operations decreased with lower licensing income
growth of ion-exchange membranes and systems for chlor-
and higher R&D expenditures.
alkali electrolysis.
ROE
%
15
10
5
Chemicals
¥ billion
1,000
¥ billion
%
80
8
750
500
250
Homes
¥ billion
500
400
300
200
100
60
6
40
4
20
2
0
¥ billion
%
30
10
24
8
18
6
12
4
6
2
0
0
Fiscal year
2005
2006
2007
0
Fiscal year
2005
2006*
2007
0
Fiscal year
2005
2006
2007
Net sales, left scale
Operating profit, right scale (upper)
Operating profit margin, right scale (lower)
Net sales, left scale
Operating profit, right scale (upper)
Operating profit margin, right scale (lower)
*Including Life & Living.
45
Operating profit in devices operations grew with increased
Construction Materials
domestic and overseas shipments in each product line, most
Sales decreased by ¥5.1 billion (8.4%) from a year ago to
notably in APS™ polysulfone-membrane artificial kidneys
¥55.7 billion and operating profit decreased by ¥2.3 billion
following production capacity expansion.
(44.7%) to ¥2.8 billion.
Fibers
Operating profit from building materials and housing
materials decreased with fewer shipments of Hebel™ auto-
Sales increased by ¥7.4 billion (7.0%) from a year ago to
claved lightweight concrete (ALC) panels as an effect of the
¥114.1 billion and operating profit increased by ¥3.1 billion
decline in construction starts following a revision of building
(73.9%) to ¥7.2 billion.
codes in Japan.
Operating profit from elastic polyurethane filament
Development of new markets for Eazet™ piles for small-
increased as overseas operations, notably those in Europe and
scale construction advanced but demand for large-scale piles
the US, performed well with strong demand.
decreased, and operating profit from foundation systems
Operating profit from Bemberg™ regenerated cellulose fiber
operations was on par with a year ago. Operating profit from
grew with increased exports. Operating profit from nonwo-
insulation materials decreased as an effect of the decline in
vens operations decreased as operating cost reductions could
new housing starts, especially for wood-frame houses.
not overcome the large effect of increased feedstock costs.
Services, Engineering and Others
Electronics Materials & Devices
Sales increased by ¥8.1 billion (28.2%) from a year ago to
Sales increased by ¥1.2 billion (1.0%) from a year ago to
¥37.0 billion and operating profit increased by ¥1.3 billion
¥113.3 billion and operating profit decreased by ¥0.4 billion
(33.6%) to ¥5.2 billion.
(1.7%) to ¥22.2 billion.
Operating profit from engineering increased with overseas
Operating profit from electronics materials increased as
plant engineering operations performing well.
shipment volumes generally rose with strong overseas
demand, especially in China.
Operating profit from electronics devices decreased with
fewer shipments of LSIs and lower product prices as an effect
of inventory adjustments in home electronics markets.
Pharma
¥ billion
150
120
90
60
30
Fibers
¥ billion
120
¥ billion
%
15
15
Electronics Materials &
Devices
¥ billion
¥ billion
%
12
12
9
9
6
6
3
3
0
90
60
30
0
Fiscal year
2005
2006
2007
150
120
90
60
30
8
8
6
6
4
4
2
2
0
¥ billion
%
30
25
24
20
18
15
12
10
6
5
0
0
Fiscal year
2005
2006
2007
0
Fiscal year
2005
2006
2007
Net sales, left scale
Operating profit, right scale (upper)
Operating profit margin, right scale (lower)
Net sales, left scale
Operating profit, right scale (upper)
Operating profit margin, right scale (lower)
Net sales, left scale
Operating profit, right scale (upper)
Operating profit margin, right scale (lower)
46
Geographical Information
Current liabilities increased by ¥9.8 billion (2.0%) to ¥513.4
Geographic segment information is not shown because over
billion. While commercial paper increased by ¥55.0 billion,
90% of total sales were from operations domiciled in Japan
notes and accounts payable, trade, decreased by ¥31.8 billion
and over 90% of total assets were located in Japan.
as the previous year’s closing date fell on a bank holiday and
Overseas Sales
the closing date of the year under review came during a
maintenance turnaround in Chemicals.
Overseas sales increased, largely in Chemicals, by ¥59.3 bil-
Long-term liabilities decreased by ¥65.0 billion (21.5%) to
lion to ¥487.3 billion, a 13.9% increase and a 2.3 percentage
¥237.8 billion, with a ¥35.0 billion decrease in bonds.
point increase to 28.7% of consolidated net sales.
Interest-bearing debt decreased by ¥5.5 billion to ¥211.4
Liquidity and Capital Resources
Financial Position
billion as repayment of bonds and borrowings exceeded the
value of commercial paper issued.
Net assets increased by ¥20.6 billion (3.2%) from the
Total assets at fiscal year end were ¥1,425.4 billion, ¥34.6 bil-
¥653.5 billion of a year ago to ¥674.2 billion. With net
lion (2.4%) lower than a year earlier.
income of ¥69.9 billion, dividend payments were ¥18.2 billion
Current assets increased by ¥17.1 billion (2.4%) to ¥740.1
and net unrealized gain on securities decreased by ¥28.7 bil-
billion. Inventories increased by ¥32.4 billion, largely in
lion. Net worth per share increased by ¥14.89 to ¥476.39.
Chemicals and Homes. Cash on hand and in banks
Net worth/total assets increased from 44.2% to 46.7%, and
decreased by ¥18.6 billion.
debt-to-equity ratio decreased slightly to 0.32.
Fixed assets decreased by ¥51.6 billion (7.0%) to ¥685.3
billion. Tangible fixed assets decreased by ¥2.8 billion as
depreciation and amortization combined with loss on dis-
posal of property, plant and equipment exceeded the value of
investment in plant and equipment. Intangible fixed assets
decreased by ¥2.2 billion, and the market value of investment
securities decreased by ¥50.7 billion.
Construction Materials
¥ billion
¥ billion
%
Services, Engineering and
Others
¥ billion
¥ billion
%
90
60
30
0
Fiscal year
2005
2006
2007
6
9
4
6
2
3
0
40
30
20
10
0
Fiscal year
2005
2006
2007
8
16
6
12
4
8
2
4
0
Net sales, left scale
Operating profit, right scale (upper)
Operating profit margin, right scale (lower)
Net sales, left scale
Operating profit, right scale (upper)
Operating profit margin, right scale (lower)
47
Capital Expenditure
Notable capital expenditure by operating segment was as
Capital expenditure was primarily for new and expanded
follows:
production plant and equipment in long-term growth fields.
• Chemicals: New facility for production of Duranate™ hexameth-
Investments were also made for rationalization, modification,
ylene diisocyanate-based polyisocyanate; plant modification,
maintenance, and IT systems to bring greater product reli-
rationalization, and maintenance.
ability and cost reductions. Capital expenditure by operating
• Homes: New R&D center, construction system modification,
segment shown below is for tangible and intangible fixed
rationalization, and maintenance.
assets, combined, before consumption tax.
• Pharma: Expansion of capacity for assembly of APS™ polysulfone-
Totals for the year
(¥ million)
Compared to
previous year (%)
Chemicals
Homes
Pharma
Fibers
34,344
7,451
10,007
9,255
Electronics Materials & Devices
17,018
Construction Materials
Services, Engineering and Others
Combined
2,507
793
81,375
Corporate assets and eliminations
1,536
Consolidated
82,911
74.6
275.9
174.9
145.5
104.8
108.9
104.3
101.6
35.7
98.2
membrane artificial kidneys in China, new facility for production
of ethylene-vinyl alcohol copolymer hollow-fiber membrane,
expansion of capacity for assembly of Planova™ virus removal fil-
ters; plant modification, rationalization, and maintenance.
• Fibers: Production capacity expansion for Roica™ elastic polyure-
thane filament in the US and Thailand, new facility for production
of Precisé™ polyester nonwoven; plant modification, rationaliza-
tion, and maintenance.
• Electronics Materials & Devices: Production capacity expansion
for Pimel™ photosensitive polyimide precursor; plant modification,
rationalization, and maintenance.
• Construction Materials: Plant modification, rationalization, and
maintenance.
• Services, Engineering and Others: IT systems, rationalization,
labor-saving, and maintenance.
• Corporate assets: Corporate research facilities; maintenance.
Interest-Bearing Debt,
D/E Ratio
¥ billion
Capital Expenditure,
Depreciation and Amortization
¥ billion
Total Assets, Net Worth
Net Worth to Total Assets
¥ billion
1,500
1,000
500
%
50
40
30
20
10
400
300
200
100
0
Fiscal year
2005
2006
2007
0
Fiscal year
2005
2006
2007
0
Fiscal year
2005
2006
2007
Total assets
Net worth
Interest-bearing debt, left scale
D/E ratio, right scale
48
1.00
100
0.75
0.50
0.25
0.00
75
50
25
0
Fiscal year
2005
2006
2007
Capital expenditure
Depreciation and amortization
Cash Flows
Cash flows from investing activities
Free cash flows were ¥3.8 billion as cash generated, princi-
Cash used included ¥68.8 billion for acquisition of tangible
pally operating profit and depreciation and amortization,
fixed assets for continuing expansion of competitively supe-
exceeded cash used, principally for acquisition of fixed assets
rior operations and enhancement of overall competitiveness
and investment securities. Cash flows from financing activi-
and ¥7.4 billion for acquisition of intangible fixed assets.
ties, principally for payment of dividends, were a net ¥22.3
Cash generated from sales of investment securities aggre-
billion cash used. After including ¥0.1 billion cash and cash
gated ¥10.2 billion. Net cash used in investing activities was
equivalents held by newly consolidated subsidiaries, cash and
¥69.1 billion, ¥12.2 billion less than a year earlier.
cash equivalents at fiscal year end were ¥83.0 billion, ¥18.7
billion less than a year earlier.
Cash flows from financing activities
A net ¥3.8 billion was used to repay interest-bearing debt such
Cash flows from operating activities
as borrowings and bonds. A further ¥18.2 billion was used for
Increased inventories, notably in Chemicals and Homes,
payment of parent-company dividends. A net ¥22.3 billion was
resulted in ¥33.3 billion cash used. Decreases in notes and
used in financing activities, ¥13.7 billion less than a year earlier.
accounts payable, trade, with the previous year’s closing date
falling on a bank holiday, resulted in ¥30.6 billion cash used.
Income tax payments were ¥45.6 billion. Income before
income taxes and minority interest generated ¥105.6 billion,
while depreciation and amortization generated ¥74.0 billion.
Net cash generated from operating activities was ¥72.9 billion,
¥55.5 billion less than a year earlier.
Free Cash Flows
Cash Flows
¥ billion
¥ billion
50
40
30
20
10
200
100
0
0
Fiscal year
2005
2006
2007
–100
Fiscal year
2005
2006
2007
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
49
Risk Analysis
Operating risks and non-operating risks which may influence
investor decisions are described below. The management
maintains awareness of the possibility that these scenarios may
emerge, and measures to avoid their emergence and to mini-
mize their impact on corporate performance in the event that
they do emerge are implemented to the fullest possible extent.
The description of risks given here includes elements
which may emerge in the future, but being based on current
evaluations as this report is being prepared it does not
include risks which could not be foreseen at this time.
Crude Oil and Naphtha Prices
Operating costs in operations based on petrochemicals are
affected by prices for crude oil and naphtha. If crude oil and
naphtha prices rise, selling prices for products derived from
these feedstocks must be increased in a timely manner to
maintain sufficient price spreads. Price spreads may dimin-
ish, thereby affecting our consolidated performance and
financial condition.
Exchange Rate Fluctuation
Operations based overseas maintain accounts in the local
currency where they operate. The yen value of items carried
in these accounts is affected by the rate of exchange at the
time of conversion to yen. Although measures such as cur-
rency exchange hedges are utilized to minimize the short-
term effects of exchange rate fluctuations, such fluctuations
may exceed the foreseeable range over the short to long term,
thereby affecting our consolidated performance and financial
condition.
Overseas Operations
Overseas operations may face a variety of risks which cannot
be foreseen, including the existence or emergence of econom-
ically unfavorable circumstances due to legal and regulatory
changes, vulnerability of infrastructure, difficulty in hiring/
retaining qualified employees, or other factors, and social or
political instability due to terrorism, war, or other factors.
Overseas operations may be impaired by such scenarios,
thereby affecting our consolidated performance and business
plans.
Housing-Related Tax Policy, Interest Rate Fluctuation
Operations in the Homes segment are affected by Japanese
tax policies as they relate to home acquisition and by fluctua-
tions in Japanese interest rates. Changes in Japanese tax pol-
icy, including consumption taxes, or fluctuations in Japanese
interest rates may result in diminished housing demand,
thereby affecting our consolidated performance and financial
condition.
Profitability of Electronics-Related Businesses
The electronics industry is characterized by sharp market
cycles. The profitability of electronics-related businesses may
decline significantly in a relatively short time, thereby affect-
ing our consolidated performance and financial condition.
Because products in this field rapidly become obsolete, the
timely development and commercialization of leading-edge
devices and materials is required. New product development
may be delayed, or demand fluctuations may exceed expecta-
tions, thereby affecting our consolidated performance and
financial condition.
Pharmaceuticals and Medical Devices
Pharmaceutical and medical device businesses may be signif-
icantly affected by government measures to curtail health
care expenditure or other changes in government policy.
Unforeseeable side effects or complications may emerge, sig-
nificantly affecting these businesses. The pharmaceutical
business additionally faces the possibility that product
approval may be withdrawn as a result of Japan’s reexamina-
tion system, and that competition may intensify as a result of
the market entry of generics. For pharmaceuticals and medi-
cal devices under development, regulatory approval may fail
to be obtained, market demand may be lower than expected,
and the national reimbursement prices may be lower than
expected. Such scenarios may affect our consolidated perfor-
mance and financial condition.
50
Industrial Accidents and Natural Disasters
The occurrence of a significant industrial accident or natural
disaster at a plant or elsewhere may result in a loss of public
trust, the emergence of costs associated with accident
response, including compensation, and the emergence of
costs associated with plant shutdown, including opportunity
loss and compensation to customers, thereby affecting our
consolidated performance and financial condition.
Intellectual Property, Product Liability, and Legal
Regulation
An unfavorable ruling may emerge in a dispute relating to
intellectual property, a product defect resulting in a large-
scale recall and compensation whose costs exceed insurance
coverage may emerge, and detrimental legal and regulatory
changes may emerge in any country where we operate. Such
scenarios may affect our consolidated performance and
financial condition.
Irrecoverable Credits
Credits extended to customers may become irrecoverable to
an unforeseeable extent, necessitating additional losses or
allowances to be recorded in financial accounts, and thereby
affecting our consolidated performance and financial
condition.
51
Consolidated Balance Sheets
Asahi Kasei Corporation and consolidated subsidiaries
March 31, 2008 and 2007
ASSETS
Current assets:
Cash on hand and in banks (Note 6)
Notes and accounts receivable, trade
Marketable securities (Notes 6 and 7)
Inventories
Deferred income taxes (Note 11)
Other current assets
Allowance for doubtful accounts
Total current assets
Fixed assets:
Property, plant and equipment, net of accumulated depreciation
(Notes 8 and 9) –
Buildings
Machinery and equipment
Land
Construction in progress
Other
Subtotal
Intangible fixed assets –
Goodwill
Other
Subtotal
Investments and other assets –
Investment securities (Note 7)
Long-term receivables
Deferred income taxes (Note 11)
Other
Allowance for doubtful accounts
Subtotal
Total fixed assets
Total assets
The accompanying notes are an integral part of these statements.
52
2008
Millions of yen
2007
Thousands of
U.S. dollars
(Note 4)
2008
¥ 82,903
298,788
303
272,372
26,130
61,239
(1,660)
740,075
¥ 101,514
300,386
400
240,006
26,650
55,831
(1,791)
722,995
$ 829,035
2,987,883
3,028
2,723,718
261,299
612,390
(16,598)
7,400,754
159,951
165,220
54,096
29,339
15,588
424,193
158,953
174,775
55,192
21,935
16,103
426,959
1,599,510
1,652,196
540,955
293,385
155,882
4,241,928
5,707
20,519
26,226
6,045
22,421
28,466
57,067
205,192
262,259
190,991
4,703
12,777
26,514
(113)
234,873
241,696
4,636
10,479
24,768
(78)
281,502
1,909,908
47,035
127,770
265,143
(1,126)
2,348,729
685,292
736,927
6,852,916
¥1,425,367
¥1,459,922
$14,253,670
LIABILITIES AND NET ASSETS
Liabilities:
Current liabilities –
Notes and accounts payable, trade
Short-term borrowings (Note 9)
Commercial Paper (Note 9)
Current portion of long-term debt (Note 9)
Accrued income taxes
Deferred income taxes (Note 11)
Accrued expenses
Advances received
Allowance for repairs
Allowance for after-care of products (Note 2 (d) iii))
Other current liabilities
Total current liabilities
Long-term liabilities –
Long-term debt (Note 9)
Deferred income taxes (Note 11)
Accrued pension and severance costs (Note 10)
Allowance for repairs
Customers’ guarantee deposits
Other long-term liabilities
Total long-term liabilities
Total liabilities
Net assets:
Shareholders’ equity:
Common stock –
Authorized – 4,000,000,000 shares
Issued and outstanding – 1,402,616,332 shares
Capital surplus
Retained earnings (Note 20)
Treasury stock, at cost
(2008 – 4,080,805 shares, 2007 – 3,570,390 shares)
Total shareholders’ equity
Valuation, translation adjustments, and others
Net unrealized gain on securities
Net deferred profit on hedges
Revaluation surplus (Note 12)
Cumulative translation adjustments
Total valuation, translation adjustments, and others
Minority interest in consolidated subsidiaries
Total net assets
Commitments and contingent liabilities (Notes 16 and 21)
2008
Millions of yen
2007
Thousands of
U.S. dollars
(Note 4)
2008
¥ 155,120
34,116
55,000
34,104
9,730
58
108,947
49,718
4,716
6,018
55,885
513,413
88,187
9,155
117,130
2,078
18,935
2,314
237,798
751,211
¥ 186,900
51,273
–
36,555
18,232
–
103,155
48,874
4,506
3,401
50,674
503,570
129,074
26,210
126,266
–
18,660
2,632
302,842
806,412
$ 1,551,199
341,164
550,000
341,039
97,296
579
1,089,471
497,181
47,163
60,184
558,855
5,134,130
881,872
91,547
1,171,295
20,775
189,353
23,139
2,377,981
7,512,111
103,389
79,427
432,246
103,389
79,396
380,515
1,033,885
794,268
4,322,457
(2,019)
613,042
(1,544)
561,755
(20,187)
6,130,422
51,091
11
873
1,226
53,201
7,912
674,156
79,823
58
1,106
2,913
83,900
7,855
653,510
510,915
112
8,729
12,257
532,013
79,124
6,741,559
Total liabilities and net assets
The accompanying notes are an integral part of these statements.
¥1,425,367
¥1,459,922
$14,253,670
53
Consolidated Statements of Income
Asahi Kasei Corporation and consolidated subsidiaries
Years ended March 31, 2008 and 2007
Net sales (Note 18)
Cost of sales (Note 13)
Gross profit
Selling, general and administrative expenses (Note 13)
Operating profit (Note 18)
Non-operating income:
Interest income
Dividend income
Equity in net earnings of unconsolidated subsidiaries and affiliates
Insurance recoveries
Other
Total non-operating income
Non-operating expenses:
Interest expense
Loss on disposal of inventories
Foreign exchange loss, net
Other
Total non-operating expenses
Ordinary profit
Special gains:
Gain on sale of investment securities (Note 7)
Gain on sale of property, plant and equipment
Gain on change in equity
Total special gains
Special losses:
Loss on devaluation of investment securities
Loss on disposal of property, plant and equipment
Impairment loss (Note 14)
Charge for environmental countermeasures
Charge for remediation of homes delivered in previous years
(Note 2 (d) iii))
Restructuring charges (Notes 14 and 15)
Total special losses
Income before income taxes and minority interest
Income taxes (Note 11) – currently payable
– deferred (obligation)/benefit
Minority interest in income of consolidated subsidiaries
Net income
Per share data:
Net income (Note 22) – Basic
– Diluted
Cash dividends
The accompanying notes are an integral part of these statements.
54
2008
¥1,696,789
1,288,965
407,824
280,168
127,656
Millions of yen
2007
¥1,623,791
1,224,041
399,750
271,949
127,801
Thousands of
U.S. dollars
(Note 4)
2008
$16,967,890
12,889,649
4,078,241
2,801,680
1,276,562
879
3,188
3,757
941
3,335
12,100
4,202
2,658
5,428
7,012
19,300
120,456
3,432
309
559
4,300
1,027
6,821
4,802
2,239
508
2,507
2,647
4,558
2,861
13,081
4,118
4,381
289
5,588
14,376
126,507
1,516
919
657
3,091
701
9,073
189
–
8,786
31,882
37,566
9,408
33,354
120,996
42,015
26,582
54,279
70,121
192,998
1,204,560
34,323
3,091
5,587
43,001
10,267
68,209
48,017
22,387
3,000
1,269
19,157
105,599
(34,555)
(450)
(649)
¥ 69,945
–
4,751
14,715
114,883
(42,247)
(3,553)
(508)
¥ 68,575
30,000
12,690
191,570
1,055,991
(345,551)
(4,499)
(6,487)
$ 699,453
Yen
U.S. dollars
(Note 4)
2008
¥50.01
¥ –
¥13.00
2007
¥49.00
¥ –
¥12.00
2008
$0.50
$ –
$0.13
Consolidated Statements of Changes In Net Assets
Asahi Kasei Corporation and consolidated subsidiaries
Years ended March 31, 2008 and 2007
Shareholders’ equity
Valuation, translation adjustments, and others
Common
stock
Capital
surplus
Retained
earnings
(Note 20)
Treasury
stock
at cost
Total
shareholders’
equity
Net
unrealized
gain on
securities
Net
deferred
profit on
hedges
Revaluation
surplus
(Note 12)
Cumulative
translation
adjustments
Total
valuation,
translation
adjustments,
and others
Minority
interest in
consolidated
subsidiaries
Total
net
assets
¥103,389
¥79,396
¥380,515
¥(1,544) ¥561,755
¥ 79,823
¥ 58
¥1,106
¥ 2,913
¥ 83,900
¥7,855 ¥653,510
Millions of yen
(18,188)
69,945
(26)
(18,188)
69,945
(26)
(542)
98
(542)
67
31
(18,188)
69,945
(26)
(542)
98
(28,732)
(47)
(233)
(1,687)
(30,699)
57
(30,642)
–
¥103,389
31
51,731
¥79,427 ¥432,246
(475)
51,287
¥(2,019) ¥613,042
(28,732)
¥ 51,091
(47)
¥ 11
(233)
¥ 873
(1,687)
¥ 1,226
(30,699)
¥ 53,201
57
20,646
¥7,912 ¥674,156
Shareholders’ equity
Valuation, translation adjustments, and others
Common
stock
Capital
surplus
Retained
earnings
(Note 20)
Treasury
stock
at cost
Total
shareholders’
equity
Net
unrealized
gain on
securities
Net
deferred
profit on
hedges
Revaluation
surplus
(Note 12)
Cumulative
translation
adjustments
Total
valuation,
translation
adjustments,
and others
Minority
interest in
consolidated
subsidiaries
Total
net
assets
¥103,389
¥79,433 ¥342,450 ¥(17,311) ¥507,960
¥85,384
¥ –
¥ 966
¥ (99)
¥86,251
¥6,917 ¥601,128
Millions of yen
(6,999)
(6,998)
(228)
68,575
22
(1)
20
18
(55)
(16,325)
(634)
21
16,380
(6,999)
(6,998)
(228)
68,575
22
(1)
20
(634)
39
–
(6,999)
(6,998)
(228)
68,575
22
(1)
20
(634)
39
–
–
¥103,389
(37)
53,795
¥79,396 ¥380,515 ¥ (1,544) ¥561,755
15,767
38,065
(5,561)
58
140
3,012
(2,351)
938
(1,413)
(5,561)
¥79,823
58
¥ 58
140
¥ 1,106
3,012
¥2,913
(2,351)
¥83,900
938
52,382
¥7,855 ¥653,510
Thousands of U.S. dollars (Note 4)
Shareholders’ equity
Valuation, translation adjustments, and others
Common
stock
Capital
surplus
Retained
earnings
(Note 20)
Treasury
stock
at cost
Total
shareholders’
equity
Net
unrealized
gain on
securities
Net
deferred
profit on
hedges
Revaluation Cumulative
translation
adjustments
surplus
(Note 12)
Total
valuation,
translation
adjustments,
and others
Minority
interest in
consolidated
subsidiaries
Total
net
assets
$1,033,885
$793,962 $3,805,146 $(15,441) $5,617,553 $ 798,232
$ 584
$11,055 $ 29,125 $ 838,996 $78,554 $6,535,103
(181,881)
699,453
(262)
305
(5,421)
675
(181,881)
699,453
(262)
(5,421)
980
(181,881)
699,453
(262)
(5,421)
980
(287,317)
(472)
(2,327)
(16,868) (306,983)
569
(306,415)
Balance at March 31, 2007
Changes during the fiscal year
Dividends
Net income
Decrease due to merger
Purchase of treasury stock
Disposal of treasury stock
Net increase (decrease) in
net assets others than
shareholders’ equity
Total changes during
the fiscal year
Balance at March 31, 2008
Balance at March 31, 2006
Changes during the fiscal year
Year-end dividend
Interim dividend
Bonuses to directors and
corporate auditors
Net income
Increase due to newly
consolidated subsidiaries
Decrease due to newly
consolidated subsidiaries
Increase due to unconsolidated
subsidiaries and affiliates
for which the equity
method is newly applies
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Net increase (decrease) in
net assets others than
shareholders’ equity
Total changes during
the fiscal year
Balance at March 31, 2007
Balance at March 31, 2007
Changes during the fiscal year
Dividends
Net income
Decrease due to merger
Purchase of treasury stock
Disposal of treasury stock
Net increase (decrease) in
net assets others than
shareholders’ equity
Total changes during
the fiscal year
Balance at March 31, 2008
–
(287,317)
$1,033,885 $794,268 $4,322,457 $(20,187) $6,130,422 $ 510,915
517,310
512,869
(4,746)
305
(472)
$ 112
(2,327)
206,456
$ 8,729 $ 12,257 $ 532,013 $79,124 $6,741,559
(16,868) (306,983)
569
The accompanying notes are an integral part of these statements.
55
Consolidated Statements of Cash Flows
Asahi Kasei Corporation and consolidated subsidiaries
Years ended March 31, 2008 and 2007
Cash flows from operating activities:
Income before income taxes and minority interest
Depreciation and amortization
Impairment loss
Amortization of goodwill
Amortization of negative goodwill
Increase in allowance for repairs
Increase in allowance for after-care of products
Decrease in accrued pension and severance costs
Interest and dividend income
Interest expense
Equity in net earnings of unconsolidated subsidiaries and affiliates
Gain on sale of investment securities
Loss on devaluation of investment securities
Gain on sale of property, plant and equipment
Loss on disposal of property, plant and equipment
Increase in notes and accounts receivable, trade
Increase in inventories
Increase (decrease) in notes and accounts payable, trade
Increase in accrued expenses
Increase (decrease) in advances received
Other
Subtotal
Interest and dividend income, received
Interest expense, paid
Income taxes, paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments for purchase of time deposits
Proceeds from maturity of time deposits
Payments for purchase of marketable securities
Proceeds from sale of marketable securities
Payments for acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for acquisition of intangible fixed assets
Payments for purchase of investment securities
Proceeds from sale of investment securities
Proceeds from sale of consolidated subsidiaries
Payments for loan receivables
Collections of loan receivables
Other
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from short-term borrowings
Repayment of short-term borrowings
Proceeds from issuance of commercial paper
Repayment of commercial paper
Proceeds from long-term loans
Repayment of long-term loans
Repayment of bonds
Payments for purchase of treasury stock
Proceeds from sale of treasury stock
Dividends paid by parent company
Dividends paid to minority interests in consolidated subsidiaries
Other
Net cash used in financing activities
Millions of yen
2007
Thousands of
U.S. dollars
(Note 4)
2008
¥ 114,883
71,646
189
824
(196)
(3,500)
97
(6,701)
(3,015)
4,118
(2,647)
(1,516)
701
(919)
9,073
(26,425)
(23,005)
51,605
3,015
(85)
(14,931)
173,209
4,941
(4,210)
(45,508)
128,432
(192)
473
(14)
1
(77,357)
2,976
(4,872)
(3,003)
2,557
–
(5,655)
4,195
(456)
(81,347)
39,760
(36,293)
150,000
(150,000)
8,337
(10,456)
(23,000)
(501)
40
(13,991)
(135)
216
(36,025)
$1,055,991
739,830
48,017
4,780
(1,713)
22,873
26,169
(92,106)
(40,668)
42,015
(37,566)
(34,323)
10,267
(3,091)
68,209
(1,045)
(332,954)
(305,711)
61,204
5,526
(61,678)
1,174,028
56,131
(44,966)
(455,718)
729,474
(146)
88
–
428
(688,220)
10,258
(73,838)
(21,153)
102,312
9,985
(97,476)
83,328
(16,913)
(691,348)
270,574
(451,472)
750,000
(200,000)
25,852
(92,584)
(340,000)
(5,507)
893
(181,741)
(1,445)
2,131
(223,300)
2008
¥105,599
73,983
4,802
478
(171)
2,287
2,617
(9,211)
(4,067)
4,202
(3,757)
(3,432)
1,027
(309)
6,821
(104)
(33,295)
(30,571)
6,120
553
(6,168)
117,403
5,613
(4,497)
(45,572)
72,947
(15)
9
–
43
(68,822)
1,026
(7,384)
(2,115)
10,231
998
(9,748)
8,333
(1,691)
(69,135)
27,057
(45,147)
75,000
(20,000)
2,585
(9,258)
(34,000)
(551)
89
(18,174)
(145)
213
(22,330)
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents held by newly consolidated subsidiaries
Cash and cash equivalents at end of year (Note 6)
(219)
(18,736)
101,719
50
¥ 83,033
643
11,703
86,390
3,625
¥ 101,719
(2,186)
(187,360)
1,017,187
504
$ 830,331
The accompanying notes are an integral part of these statements.
56
Notes to Consolidated Financial Statements
Asahi Kasei Corporation and consolidated subsidiaries
1. Major policies for preparing the consolidated financial statements
The consolidated financial statements, which are filed with the
Ltd. (Korea), Sanyo Petrochemical Co., Ltd., Asahi Kasei Kuraray
Japanese Ministry of Finance (hereinafter called the “MOF”) as
Medical Co., Ltd., and Asahi Kasei Medical Co., Ltd. Material
required by the Financial Instruments and Exchange Law in Japan,
inter-company transactions and accounts have been eliminated.
are prepared in accordance with accounting principles generally
Investments in unconsolidated subsidiaries and 20% to 50%
accepted in Japan, which are different in certain respects from the
owned companies in which the Company exercises significant influ-
application and disclosure requirements of International Financial
ence are accounted for, with minor exceptions due to materiality,
Reporting Standards. The accompanying consolidated financial
using the equity method of accounting. There were 50 such uncon-
statements are a translation of those filed with the MOF and incor-
solidated subsidiaries and 20% to 50% owned companies to which
porate certain modifications to enhance foreign readers’ under-
the equity method is applied at March 31, 2008 (53 at March 31,
standing of the financial statements. In addition, the notes to the
2007), including Asahi Kasei Metals Ltd., Asahi Kasei Finechem Co.,
consolidated financial statements include certain financial informa-
Ltd., and Asahi Organic Chemicals Industry Co., Ltd.
tion which is not required under the disclosure regulations in Japan,
Certain subsidiaries results are reported in the consolidated
but is presented herein as additional information. In addition, certain
financial statements using a December 31 or a February 29 year-
reclassifications of previously reported amounts have been made to
end. Material differences in inter-company transactions and
conform to current classifications. Such modifications or reclassifi-
accounts arising from the use of different fiscal year-ends are appro-
cations have no effect on net income or retained earnings.
priately adjusted for through consolidation procedures.
The excess of the cost over the underlying net equity of invest-
Consolidation and investments in affiliated companies
ments in subsidiaries and affiliated companies accounted for using
The consolidated financial statements consist of the accounts of the
the equity method of accounting is allocated to identifiable assets
parent company and 106 subsidiaries (111 subsidiaries at March 31,
and liabilities based on fair values at the date of acquisition. The
2007, hereinafter collectively referred to as the “Company”) which,
unassigned residual value of the excess of the cost over the underly-
with minor exceptions due to materiality, are all majority and wholly
ing net equity is recognized as goodwill or negative goodwill. The
owned companies, including 6 core operating companies (Asahi Kasei
Company amortizes goodwill and negative goodwill using the
Chemicals Corp., Asahi Kasei Homes Corp., Asahi Kasei Pharma
straight-line method over the estimated period of benefit over a five
Corp., Asahi Kasei Fibers Corp., Asahi Kasei EMD Corp., and Asahi
or twenty-year period, with the exception of minor amounts, which
Kasei Construction Materials Corp.), Tong Suh Petrochemical Corp.
are charged to income in the year of acquisition.
2. Significant accounting policies
(a) Cash and cash equivalents
(d) Significant allowances
For cash flow statement purposes, cash and cash equivalents include
i) Allowance for doubtful accounts
all highly liquid investments, generally with original maturities of
Estimates of the unrecoverable portion of receivables, generally
three months or less, which are readily convertible to known
based on historical rates and for specific receivables of particular
amounts of cash and are so near maturity that they present an insig-
concern based on individual estimates of recoverability, are
nificant risk of changes in value due to changes in interest rates.
recognized as allowance for doubtful accounts.
(b) Inventories
ii) Allowance for repairs
Inventories are principally stated at the lower of average cost or
The portion of foreseeable repair expenses deemed to correspond
market value. Residential lots and dwellings for sale are stated at
to normal wear and tear of plant and equipment as of the closing
specifically identified costs.
date of the consolidated fiscal period is recognized as allowance
(c) Fixed assets and depreciation/amortization
for repairs.
Property, plant and equipment are stated at cost. Significant renew-
iii) Allowance for after-care of products
als and improvements are capitalized at cost, while maintenance
Estimates of product warranty expenses based on historical rates
and repairs are charged to income as incurred. Depreciation is pro-
and the amount required for remediation of deficient eave
vided for under the declining-balance method for property, plant
assembly specification are recognized as allowance for after-care
and equipment, except for buildings which are depreciated using
the straight-line method, at rates based on estimated useful lives of
of products.
(addendum)
the assets, principally ranging from five to sixty years for buildings
During the fiscal year ended March 31, 2008, it was ascertained
and from four to twenty-two years for machinery and equipment.
that it was necessary to perform remediation work to restore a
Intangible fixed assets, including software for internal use, are
deficient eave assembly specification on certain order-built
amortized using the straight-line method over the estimated useful
homes delivered by Asahi Kasei Homes Corp., a subsidiary of the
lives of the assets. The estimated useful life of software for internal
company. The amount of ¥3,000 million (US$30,000 thousand)
use is mainly five years.
estimated for the cost of this remediation work is recorded as
57
charge for remediation of homes delivered in previous years
ii) Derivative financial instruments
under special losses in the consolidated statements of income and
All derivatives are stated at fair value. Gains or losses arising from
is included in allowance for after-care of products in the consoli-
changes in fair value are charged or credited to income for the
dated balance sheets.
period in which they arise, except for derivatives that are desig-
The cost of remediation work required in relation to improper
nated as hedging instruments. Gains or losses arising from
acquisition by Nichias Corp. of ministerial certification for soffit
changes in fair value of these qualifying hedges are deferred as
panels procured by Asahi Kasei Homes Corp. which came to light
“Net deferred profit on hedges” to be offset against gains or losses
during the fiscal year ended March 31, 2008, is not expected to
of the underlying hedged assets and liabilities.
have any effect the on the consolidated financial statements for
the year ended March 31, 2008, as the full amount will be claimed
from Nichias Corp.
(g) Taxes
Accrued income taxes are stated at the estimated amount payable for
corporation, enterprise, and inhabitant taxes. The asset and liability
(e) Accrued pension and severance costs
approach is used to recognize deferred tax assets and liabilities for the
Accrued pension and severance costs at March 31, 2008 and 2007,
expected future tax consequences of temporary differences between
represent the estimated present value of projected benefit obliga-
the carrying amounts and the tax bases of assets and liabilities.
tions in excess of the fair value of the plan assets. Unrecognized
The Company has elected to file its return under the consolidated
prior service costs are amortized on a straight-line basis primarily
tax filing system.
over ten years. Unrecognized actuarial gains/losses, resulting from
variances between actual results and economic estimates or actuarial
(h) Leases
Under Japanese accounting practices, financing leases must be
assumptions, are amortized on a straight-line basis primarily over
capitalized by the lessee except for those leases that do not transfer
the following ten years.
ownership of the leased asset to the lessee as part of the lease. Such
Provision is made for lump-sum indemnities to directors and
exceptions can be accounted for either as financing leases or operat-
corporate auditors equal to the estimated liability calculated under
ing leases with an appropriate footnote disclosure.
the internal rules of the Company.
(f) Financial instruments
i) Securities
Securities are classified into four categories; trading securities,
held-to-maturity debt securities, equity securities of unconsoli-
Periodic lease charges for financing leases entered into by the par-
ent company and its Japanese subsidiaries, where lessors retain the
ownership of the leased assets, are charged to income as incurred.
(i) Translation of foreign currencies
Foreign currency receivables and payables are translated into
dated subsidiaries and affiliates, and other securities. At March
Japanese yen at the exchange rates prevailing at the balance sheet
31, 2008 and 2007, the Company did not have trading securities
date. Resulting gains and losses are charged or credited to income
or held-to-maturity debt securities.
for the period.
Equity securities of unconsolidated subsidiaries and affiliates
Assets, liabilities, and income and expenses of foreign subsidiar-
are accounted for, with minor exceptions due to materiality,
ies and 20% to 50% owned companies accounted for using the
using the equity method of accounting.
equity method of accounting are translated into Japanese yen at
Other securities whose fair values are readily determinable are
year-end exchange rates. Shareholders’ equity of foreign subsidiaries
carried at fair value with net unrealized gains or losses included
and 20% to 50% owned companies is translated into Japanese yen at
as a component of net assets, net of related taxes. Other securities
the historical exchange rates. The translation differences in Japanese
whose fair values are not readily determinable are stated at cost.
yen amounts arising from the use of different rates are recognized as
In cases where any significant decline in the realizable value is
cumulative translation adjustments in the balance sheets.
assessed to be other than temporary, the cost of other securities is
A portion of the cumulative translation adjustments is allocated
devalued by the impaired amount and is charged to income.
to “Minority interest in consolidated subsidiaries” and the
Realized gains and losses are determined using the average cost
Company’s portion is presented as a separate component of net
method and are reflected in the income statement.
assets in the balance sheets.
3. Changes in significant accounting policies
Change in method of depreciation of tangible fixed assets
ble fixed assets acquired on or after April 1, 2007, in accordance
Due to a revision of the Corporation Tax Law (effected by Law No.
with the revised Corporation Tax Law.
6 of 2007 (Law Partially Revising the Income Tax Law, Etc.), prom-
The effect of this change for the year ended March 31, 2008, is that
ulgated on March 30, 2007, and by Cabinet Ordinance No. 83 of
operating profit, ordinary profit, and income before income taxes
2007 (Cabinet Ordinance Partially Revising the Income Tax Law,
and minority interests are each ¥2,141 million (US$21,413 thousand)
Etc.), promulgated on March 30, 2007), the parent company and its
lower than they would have been under the previous method of
Japanese subsidiaries, beginning with the fiscal year ended March
depreciation. The effect by industry segment is shown in Note 18.
31, 2008, adopted a change in the method of depreciation of tangi-
58
(addendum)
Law, are depreciating the difference between 5% of the purchase
Due to a revision of the Corporation Tax Law (effected by Law No.
price and the memorandum price using the straight-line method
6 of 2007 (Law Partially Revising the Income Tax Law, Etc.), prom-
over five years, and recognizing this as a component of depreciation
ulgated on March 30, 2007, and by Cabinet Ordinance No. 83 of
expense.
2007 (Cabinet Ordinance Partially Revising the Income Tax Law,
The effect of this for the year ended March 31, 2008, is that oper-
Etc.), promulgated on March 30, 2007), the parent company and its
ating profit, ordinary profit, and income before income taxes and
Japanese subsidiaries, beginning with the fiscal year in which the
minority interests are each ¥1,909 million (US$19,086 thousand)
residual value of an asset purchased on or before March 31, 2007,
lower than they would otherwise have been. The effect by industry
reaches 5% of the purchase price through application of the method
segment is shown in Note 18.
of depreciation in effect prior to the revision of the Corporation Tax
4. United States dollar amounts
The U.S. dollar amounts presented in the financial statements are
U.S. dollars. As the amounts shown in U.S. dollars are for convenience
included solely for the convenience of readers. These translations
only, and are not intended to be computed in accordance with generally
should not be construed as representations that the Japanese yen
accepted translation procedures, the approximate current exchange rate
amounts actually represent, or have been or could be converted into
of ¥100=US$1 prevailing on March 31, 2008, has been used.
5. Derivative financial instruments
The Company operates internationally, giving rise to exposure to mar-
expense from adverse fluctuations in foreign currency exchange and
ket risks from fluctuations in foreign currency exchange and interest
interest rates. The related differentials to be paid or received under
rates. In the normal course of its risk management efforts, the
the interest rate swap agreements are recognized in interest expense
Company uses a variety of derivative financial instruments, which
over the terms of the agreements. Currency swap agreements are
include foreign currency forward exchange contracts, interest rate swap
accounted for in a manner similar to that used for foreign currency
agreements and currency swap agreements, to reduce its exposures. In
forward exchange contracts. Interest rate swap agreements for
accordance with the Company’s policy, these financial instruments are
housing loan securitization transactions are used to reduce interest
utilized solely for hedging purposes and the Company does not hold or
volatility risk between the time of execution of housing loans and
issue financial instruments for trading or speculation purposes.
the time of execution of their securitization.
The Company has entered into foreign currency forward
The Company does not anticipate any credit loss from nonperfor-
exchange contracts with banks as hedges against receivables and pay-
mance by the counter-parties to foreign currency forward exchange
ables denominated in foreign currencies. As these foreign currency
contracts, interest rate swap agreements, or currency swap agreements.
forward exchange contracts are utilized solely for hedging purposes,
Hedging accounting is applied for all derivative financial instruments
the resulting gains or losses are offset against foreign exchange gains
of the Company other than those for housing loan securitization, with
or losses on the underlying hedged assets and liabilities.
gains or losses arising from changes in fair value deferred as “Net
Interest rate swap agreements and currency swap agreements are
deferred profit on hedges” to be off-set against foreign exchange gains
used to limit the Company’s exposure to losses in relation to interest
or losses on the underlying hedged assets and liabilities.
The fair value of the housing loan securitization transactions as of March 31, 2008, is as follows:
Classification
Items
Dealings other than
market dealings
Interest rate swap
receipt change/
payment fixation
Amount of contract
(Amount of contract over 1 year)
Fair value
Profit (loss) from valuation
Millions of yen
2008
¥1,700
–
(46)
(46)
Thousands of
U.S. dollars
2008
$17,000
–
(459)
(459)
59
6. Cash and cash equivalents
Reconciliation of cash and cash equivalents on the consolidated statements of cash flows to the amounts disclosed on the balance sheets at
March 31 is as follows:
Cash on hand and in banks
Time deposits with deposit term of over 3 months
Money market funds, medium-term government bond funds, and others included
in marketable securities
Cash and cash equivalents
7. Marketable securities and investment securities
(a) Other securities with available fair value
Millions of yen
2008
2007
Thousands of
U.S. dollars
2008
¥82,903
¥101,514
$829,035
(170)
(192)
(1,705)
300
397
3,001
¥83,033
¥101,719
$830,331
The aggregate cost, carrying amount which was identical to fair value, and gross unrealized gains and losses of debt and equity securities classi-
fied as other securities for which fair values were available at March 31 are as follows:
Securities with unrealized gains:
Equity securities
Securities with unrealized losses:
Equity securities
Debt securities
Securities with unrealized gains:
Equity securities
Securities with unrealized losses:
Equity securities
Debt securities
Securities with unrealized gains:
Equity securities
Securities with unrealized losses:
Equity securities
Debt securities
Cost
2008
Carrying amount
Unrealized gains (losses)
Millions of yen
¥37,310
¥123,847
¥86,537
3,943
23
3,966
3,261
23
3,283
(683)
–
(683)
¥41,276
¥127,130
¥85,854
Cost
2007
Carrying amount
Unrealized gains (losses)
Millions of yen
¥39,675
¥173,612
¥133,937
802
23
825
629
23
652
(173)
–
(173)
¥40,500
¥174,264
¥133,764
Cost
2008
Carrying amount
Thousands of U.S. dollars
Unrealized gains (losses)
$373,096
$1,238,468
$865,371
39,435
230
39,655
32,606
230
32,836
$412,761
$1,271,303
(6,829)
–
(6,829)
$858,542
Losses on devaluation of other securities whose fair values are readily determinable for the year ended March 31, 2008, total ¥404 mil-
lion (US$4,038 thousand).
60
(b) The realized gains and losses on the sale of other securities during the year ended March 31 are as follows:
Selling amount
Gain on sales of securities
Loss on sales of securities
2008
¥8,673
3,278
–
Millions of yen
2007
¥1,310
832
0
(c) The carrying amounts of other securities for which fair values were not readily determinable at March 31 are as follows:
Equity investment in funds
Equity investment in nonpublic companies
(d) Redemption schedules for maturity of debt securities at March 31 are as follows:
2008
¥5,001
6,980
Millions of yen
2007
¥10,001
6,996
Thousands of
U.S. dollars
2008
$86,726
32,782
–
Thousands of
U.S. dollars
2008
$50,006
69,801
Millions of yen
Debt securities:
Government and municipal bonds
Corporate bonds
Debt securities:
Government and municipal bonds
Debt securities:
Government and municipal bonds
Corporate bonds
8. Accumulated depreciation
Accumulated depreciation at March 31 is comprised of the following:
Buildings
Machinery and equipment
Other
2008
Due within
one year
Due after one
year, within
five years
Due after
five years,
within ten years
Due after
more than
ten years
¥5
–
¥5
¥ 9
120
¥129
¥–
–
¥–
¥–
–
¥–
Millions of yen
2007
Due within
one year
Due after one
year, within
five years
Due after
five years,
within ten years
Due after
more than
ten years
¥5
¥5
¥9
¥9
¥2
¥2
¥–
¥–
Thousands of U.S. dollars
2008
Due within
one year
Due after one
year, within
five years
Due after
five years,
within ten years
Due after
more than
ten years
$50
–
$50
$ 91
1,200
$1,291
$–
–
$–
$–
–
$–
Millions of yen
2008
2007
Thousands of
U.S. dollars
2008
¥ 217,434
¥ 213,372
$ 2,174,341
958,159
88,320
935,316
85,842
9,581,586
883,198
¥1,263,913
¥1,234,530
$12,639,125
61
9. Borrowings
Short-term borrowings at March 31, 2008 and 2007, represent loans, principally from commercial paper and banks. The weighted average
interest rates on these borrowings are 1.31% in 2008 and 1.84% in 2007.
Long-term debt at March 31, 2008 and 2007, is comprised of the following:
Loans, principally from banks and insurance companies, due 2008 to 2018
with weighted average interest rates of 2.72% (short-term portion)
and 1.95% (long-term portion):
Secured
Unsecured
Unsecured 1.02% to 2.15% yen bonds due 2007 to 2009
Unsecured 1.0% to 1.8% step up coupon Euro yen bonds due 2011
Unsecured 0.29% to 2.83% Euro yen bonds due 2007 to 2009
Unsecured US$1.9% to 3.5% reversal dual currency Euro yen bonds due 2007 to 2013
Less: Portion due within one year
The aggregate annual maturities of long-term debt after March 31, 2008, are as follows:
Years ending March 31
2009
2010
2011
2012 and thereafter
Millions of yen
2008
2007
Thousands of
U.S. dollars
2008
¥ 870
¥ 1,003
$ 8,698
71,421
35,000
–
4,000
11,000
80,626
45,000
10,000
17,000
12,000
714,213
350,000
–
40,000
110,000
122,291
(34,104)
165,629
(36,555)
1,222,911
(341,039)
¥ 88,187
¥129,074
$ 881,872
Millions of yen
Thousands of
U.S. dollars
¥ 34,104
$ 341,039
37,828
15,456
34,903
378,281
154,558
349,032
¥122,291
$1,222,911
A summary of assets pledged as collateral for short-term loans and long-term debt at March 31, 2008, is as follows:
Property, plant and equipment
10. Accrued pension and severance costs
Millions of yen
Thousands of
U.S. dollars
¥774
$7,740
Upon terminating employment, employees of the parent company
employment occurs. Certain foreign subsidiaries have defined bene-
and its major subsidiaries in Japan are entitled, under most circum-
fit pension plans or defined contribution plans.
stances, to lump-sum severance indemnities and/or pension pay-
The obligation for these severance indemnity benefits is provided
ments determined by reference mainly to their current basic rate of
for through accruals, contributory funded defined benefit pension
pay and length of service. Additional benefits may be granted to
plans, contributory funded defined benefit enterprise pension plans
employees depending on the conditions under which termination of
and non-contributory funded tax-qualified pension plans.
Information on accrued severance and pension costs at March 31, 2008 and 2007, is as follows:
Projected benefit obligations
Fair value of plan assets
Unrecognized actuarial gains/losses
Unrecognized prior service costs
Prepaid pension cost
Retirement benefits for employees
Retirement benefits for directors and corporate auditors
Accrued pension and severance costs
Millions of yen
2008
2007
Thousands of
U.S. dollars
2008
¥(297,343)
¥(302,528)
$(2,973,432)
190,955
215,846
1,909,552
(106,388)
(86,682)
(1,063,880)
2,639
(7,009)
(5,374)
(25,630)
(8,403)
(4,648)
26,389
(70,093)
(53,745)
(116,133)
(125,364)
(1,161,329)
(997)
(902)
(9,967)
¥(117,130)
¥(126,266)
$(1,171,295)
Note: The figures in the above table do not include additional benefit payables amounting to ¥310 million (US$3,100 thousand) and ¥82 million at March 31, 2008 and 2007, respectively.
The amounts are recorded as part of current liabilities on the consolidated balance sheets at March 31, 2008 and 2007.
62
Net periodic pension and severance costs for employees for the years ended March 31, 2008 and 2007, include the following components:
Service cost (*1)
Interest cost
Expected return on plan assets
Amortization of unrecognized actuarial gains/losses
Amortization of unrecognized prior service costs
Net pension and severance costs
Millions of yen
2007
¥ 8,775
7,385
(5,229)
(2,380)
(1,393)
Thousands of
U.S. dollars
2008
$ 88,562
73,253
(52,893)
(28,142)
(13,932)
2008
¥ 8,856
7,325
(5,289)
(2,814)
(1,393)
¥ 6,685
¥ 7,157
$ 66,848
*1: The figures in the above table do not include the contributions made by employees.
*2: In addition to the above costs, additional benefits amounting to ¥1,303 million (US$13,029 thousand) and ¥782 million were charged to income for the year ended March 31, 2008
and 2007, respectively.
The assumptions used in the calculation of the above information are as follows:
Discount rate
Expected rate of return on plan assets
2008
2007
2.5%
2.5%
2.5%
2.5%
Method of attributing the projected benefits to periods of employee service
Straight-line basis
Straight-line basis
Amortization of unrecognized prior service costs
Amortization of unrecognized actuarial gains/losses
Mainly 10 years
Mainly 10 years
Mainly 10 years
Mainly 10 years
11. Taxes
Income taxes applicable to the parent company and subsidiaries in Japan include (1) corporation tax, (2) enterprise tax, and (3) inhabitants tax.
Significant components of the deferred tax assets and liabilities at March 31 are as follows:
Deferred tax assets:
Accrued pension and severance costs
Accrued bonuses
Loss on disposal of property, plant and equipment
Tax loss carryforwards
Unrealized gain on fixed assets and others
Impairment loss
Devaluation of inventories
Allowance for repairs
Allowance for after-care of products
Accrued enterprise tax
Devaluation of investment securities
Charge for environmental countermeasures
Depreciation
Allowance for doubtful accounts
Other
Subtotal deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized gains on securities
Reserve for fixed assets reduction
Reserve for special depreciation
Other
Total deferred tax liabilities
Millions of yen
2008
2007
Thousands of
U.S. dollars
2008
¥ 46,847
¥ 50,524
$ 468,468
8,722
6,826
5,795
4,354
3,897
2,817
2,644
2,501
1,409
1,401
874
551
476
8,741
97,854
(11,770)
86,084
(37,484)
(14,235)
(537)
(4,134)
8,612
7,080
4,674
4,107
2,060
3,387
–
–
2,401
1,094
–
353
375
12,561
97,226
(9,997)
87,229
(56,513)
(14,995)
(1,070)
(3,732)
87,221
68,260
57,948
43,537
38,974
28,173
26,437
25,009
14,087
14,006
8,737
5,512
4,756
87,412
978,538
(117,697)
860,841
(374,837)
(142,349)
(5,367)
(41,345)
(56,390)
(76,310)
(563,899)
Net deferred tax assets (liabilities)
¥ 29,694
¥ 10,919
$ 296,943
63
Reconciliation of the differences between the statutory tax rate and the effective income tax rate for the year ended March 31 is as follows:
2007
2008
Statutory tax rate
40.7%
Statutory tax rate
Increase (reduction) in taxes resulting from:
Increase (reduction) in taxes resulting from:
Non-deductible expenses and
non-taxable income
Equalization of inhabitants taxes
R&D expenses deductible from income taxes
Amortization of goodwill
Equity in earnings of unconsolidated
subsidiaries and affiliates
Difference of tax rates for foreign subsidiaries
Other
Effective income tax rate
2.7
0.4
(4.7)
0.2
(1.5)
(3.3)
(1.3)
33.2%
Non-deductible expenses and
non-taxable income
Equalization of inhabitants taxes
R&D expenses deductible from income taxes
Amortization of goodwill
Equity in earnings of unconsolidated
subsidiaries and affiliates
Other
Effective income tax rate
40.7%
2.0
0.4
(3.9)
0.1
(0.9)
1.5
39.9%
In Japan, the consumption tax system is designed so that all goods and services are taxed at a flat rate of 5% unless specified otherwise.
Assets, liabilities, and profit and loss accounts are stated net of consumption tax
12. Revaluation surplus
A revaluation surplus is recorded by a consolidated foreign subsidiary, based on the applicable laws.
13. Selling, general and administrative expenses
Major components of selling, general and administrative expenses are as follows:
Freight and storage
Salaries and benefits
Research and development (*)
Rent
Millions of yen
2008
2007
Thousands of
U.S. dollars
2008
¥35,086
¥34,287
$350,860
89,729
39,618
28,566
87,819
37,307
28,392
897,288
396,178
285,659
(*) The aggregate amounts of research and development expenses included in manufacturing costs and selling, general and administrative expenses for the years ended March 31, 2008
and 2007, are ¥56,170 million (US$561,697 thousand) and ¥52,426 million, respectively.
14. Impairment loss
Grouping of operating assets is based on managerial accounting cat-
March 31, 2007, the book value of machinery and equipment with
egories, with consideration given to production process, geographic
no specific prospect for conversion of use and of land with dimin-
location, and domain of authority for making investment decisions.
ished market value was reduced to the recoverable amount, result-
Idle assets are recorded separately in each fixed assets class.
ing in a special loss of ¥189 million as impairment loss and ¥1,659
In the fiscal year ended March 31, 2008, the book value of
million as a restructuring charge.
machinery and equipment with no specific prospect for conversion
Recoverable amount for machinery and equipment was taken as
of use and of land with diminished market value was reduced to the
disposable value less cost of disposal, and that for land was taken as
recoverable amount, resulting in a special loss of ¥4,802 million
net selling price mainly based on the appraisal value as determined
(US$48,017 thousand) as impairment loss. In the fiscal year ended
by a real estate appraiser.
64
15. Restructuring charges
Major components of the restructuring charges are as follows:
Loss on disposal and devaluation of assets and others
Impairment of fixed assets
Loss on liquidation of subsidiaries and others
16. Leases
Millions of yen
2007
¥2,577
1,659
516
¥4,751
Thousands of
U.S. dollars
2008
$11,229
–
1,461
$12,690
2008
¥1,123
–
146
¥1,269
Periodic lease charges for the Company’s financing leases, where
The future lease payments under the Company’s financing leases
lessors retain the ownership of the leased assets, are charged to
and non-cancelable operating leases at March 31, including
income. Such lease charges are ¥4,628 million (US$46,278 thou-
amounts representing interest, are as follows:
sand) and ¥4,551 million for the years ended March 31, 2008 and
2007, respectively.
Due within one year
Due after one year
Millions of yen
2007
¥ 4,287
5,770
¥10,057
Thousands of
U.S. dollars
2008
$37,608
43,591
$81,199
2008
¥3,761
4,359
¥8,120
The leased assets under the Company’s financing leases, where lessors retain ownership of the leased assets, are accounted for as operating
leases by the Company. If the leases had been capitalized, then the cost of the assets and the related accumulated amortization, computed using
the straight-line method over the term of the lease, at March 31, 2008 and 2007, would have been as follows:
Buildings
Machinery and equipment
Other tangible fixed assets
Intangible fixed assets – other
Buildings
Machinery and equipment
Other tangible fixed assets
Intangible fixed assets – other
2008
Accumulated
amortization
Cost
Millions of yen
Thousands of
U.S. dollars
2008
Net amount
Net amount
¥15,191
¥8,421
¥6,770
$67,697
457
1,837
527
258
972
242
199
866
285
1,992
8,656
2,854
¥18,012
¥9,892
¥8,120
$81,199
2007
Accumulated
amortization
¥8,027
327
1,051
358
¥9,762
Millions of yen
Net amount
¥ 8,674
225
958
200
¥10,057
Cost
¥16,701
553
2,008
558
¥19,819
The amortization amount of the leased assets, computed using the straight-line method over the term of the leases, are ¥4,628 million
(US$46,278 thousand) and ¥4,551 million for the years ended March 31, 2008 and 2007, respectively.
No impairment loss is allocated to the leased assets.
65
17. Transactions under common control, etc.
Transactions under common control, etc. for the fiscal year ended
Asahi-Schwebel Co., Ltd., and Asahi Kasei Electronics Co., Ltd. on
March 31, 2008, are as follows.
December 4, 2006, concerning separation by absorption of the sales
1) Merger of Asahi Kasei Chemicals Corp. and Asahi Kasei Life &
and development operations of Asahi Kasei Microsystems Co., Ltd.,
Living Corp.
Asahi-Schwebel Co., Ltd., and Asahi Kasei Electronics Co., Ltd., and
Based on a resolution of the Company’s Board of Directors dated
Separation Agreements were concluded between Asahi Kasei EMD
October 31, 2006, resolutions concerning merger by absorption
Corp. and each of these subsidiaries on the same date.
were adopted at meetings of the Board of Directors of both Asahi
The Separation Agreements were then approved at extraordinary
Kasei Chemicals Corp., and Asahi Kasei Life & Living Corp., con-
general meetings of shareholders of each relevant company on
solidated subsidiaries of the Company, on January 16, 2007, and a
January 22, 2007, and as a result Asahi Kasei EMD Corp. absorbed
Merger Agreement was concluded between the two companies on
Asahi Kasei Microsystems Co., Ltd., Asahi-Schwebel Co., Ltd., and
the same date.
Asahi Kasei Electronics Co., Ltd. in separation.
The Merger Agreement was then approved at extraordinary gen-
(1) Outline of business combination
eral meetings of shareholders of both companies on March 1, 2007,
i.
Names of combining entities
and as a result Asahi Kasei Chemicals Corp. absorbed Asahi Kasei
Asahi Kasei Microsystems Co., Ltd., Asahi-Schwebel Co., Ltd.,
Life & Living Corp. in merger.
(1) Outline of business combination
i.
Names of combining entities
and Asahi Kasei Electronics Co., Ltd. with Asahi Kasei EMD
Corp.
ii. Nature of business
Asahi Kasei Chemicals Corp., Asahi Kasei Life & Living Corp.
Asahi Kasei Microsystems Co., Ltd.: Electronics.
ii. Nature of business
Asahi Kasei Chemicals Corp.: Chemicals.
Asahi-Schwebel Co., Ltd.: Electronics.
Asahi Kasei Electronics Co., Ltd.: Electronics.
Asahi Kasei Life & Living Corp.: Household products.
Asahi Kasei EMD Corp.: Electronics.
iii. Statutory form of business combination
iii. Statutory form of business combination
Merger by absorption with Asahi Kasei Chemicals Corp. as
Separation by absorption of Asahi Kasei Microsystems Co.,
the surviving company.
Ltd., Asahi-Schwebel Co., Ltd., and Asahi Kasei Electronics
iv. Name of company after business combination
Co., Ltd. each with Asahi Kasei EMD Corp.
Asahi Kasei Chemicals Corp.
v. Outline of transaction
iv. Name of company after business combination
No change for Asahi Kasei Microsystems Co., Ltd., Asahi-
This merger combining the diverse management resources
Schwebel Co., Ltd., Asahi Kasei Electronics Co., Ltd., or Asahi
held by both Asahi Kasei Chemicals Corp., and Asahi Kasei
Kasei EMD Corp.
Life & Living Corp., by maximizing synergies to accelerate the
v. Outline of transaction
further strengthening and expansion of the household
In this separation by absorption, the sales and development
consumer products business and the polymer processing busi-
functions were separated from Asahi Kasei Microsystems Co.,
ness, was performed as a merger by absorption with Asahi
Ltd., Asahi-Schwebel Co., Ltd., and Asahi Kasei Electronics
Kasei Chemicals Corp., as the surviving company.
Co., Ltd. and absorbed by Asahi Kasei EMD Corp. to integrate
(2) Outline of the accounting treatment implemented
electronics operations under unified management for swifter
This merger was accounted for as a transaction under common
business operation.
control based on the Accounting Standard for Business
(2) Outline of the accounting treatment implemented
Combinations issued by the Business Accounting Council in Japan
This merger was accounted for as a transaction under common
and the Accounting Standard for Business Divestitures (Accounting
control based on the Accounting Standard for Business
Standard No. 7) and Guidance on Accounting Standard for
Combinations issued by the Business Accounting Council in Japan
Business Combinations and Accounting Standard for Business
and the Accounting Standard for Business Divestitures (Accounting
Divestitures (Accounting Standard Guidance No. 10) issued by the
Standard No. 7) and Guidance on Accounting Standard for
Accounting Standards Board of Japan.
Business Combinations and Accounting Standard for Business
Divestitures (Accounting Standard Guidance No. 10) issued by the
2) Separation by absorption of Asahi Kasei Microsystems Co.,
Accounting Standards Board of Japan.
Ltd., Asahi-Schwebel Co., Ltd., and Asahi Kasei Electronics Co.,
Ltd. to Asahi Kasei EMD
Resolutions were adopted at meetings of the Board of Directors
of Asahi Kasei EMD Corp., a consolidated subsidiary of the
Company, and its subsidiaries Asahi Kasei Microsystems Co., Ltd.,
66
18. Business segment information
(1) Industry segments
Sales and operating profit (loss) for the year ended March 31:
Sales:
Chemicals
Homes
Pharma
Fibers
2008
Electronics
Materials &
Devices
Construction
Materials
Services,
Engineering
and
Others
Corporate
expenses
and
Combined
eliminations Consolidated
Millions of yen
Customers
¥879,235
¥386,227
¥111,232
¥114,072
¥113,267
¥55,732
¥37,024
¥1,696,789 ¥ – ¥1,696,789
Intersegment
Total
14,081
86
6
2,120
1,045
11,742
27,534
56,613
(56,613)
–
893,316
386,313
111,238
116,192
114,312
67,474
64,559
1,753,402
(56,613)
1,696,789
Operating expenses
828,098
364,933
98,560
108,972
92,081
64,690
59,407
1,616,741
(47,608)
1,569,133
Operating profit (loss)
¥ 65,218
¥ 21,380
¥ 12,678
¥ 7,220
¥ 22,230
¥ 2,784 ¥ 5,151
¥ 136,661 ¥ (9,005) ¥ 127,656
Sales:
Chemicals
Homes
Pharma
Fibers
2007
Electronics
Materials &
Devices
Construction
Materials
Services,
Engineering
and
Others
Corporate
expenses
and
Combined
eliminations Consolidated
Millions of yen
Customers
¥805,190
¥405,695
¥104,474
¥106,639
¥112,094
¥60,818
¥28,881
¥1,623,791 ¥ –
¥1,623,791
Intersegment
Total
12,264
315
8
1,870
1,210
12,465
29,305
57,437
(57,437)
–
817,454
406,011
104,483
108,509
113,303
73,283
58,186
1,681,228
(57,437)
1,623,791
Operating expenses
760,899
378,502
90,610
104,356
90,682
68,246
54,331
1,547,626
(51,635)
1,495,990
Operating profit (loss)
¥ 56,555
¥ 27,509
¥ 13,873
¥ 4,153
¥ 22,622
¥ 5,037
¥ 3,855
¥ 133,602 ¥ (5,801) ¥ 127,801
Sales:
Chemicals
Homes
Pharma
Fibers
2008
Electronics
Materials &
Devices
Construction
Materials
Services,
Engineering
and
Others
Corporate
expenses
and
Combined
eliminations Consolidated
Thousands of U.S. dollars
Customers
$8,792,350 $3,862,268 $1,112,325 $1,140,717 $1,132,671 $557,316 $370,243 $16,967,890 $ – $16,967,890
Intersegment
140,807
859
56
21,201
10,446
117,419
275,344
566,132
(566,132)
–
Total
8,933,157 3,863,127 1,112,381 1,161,918 1,143,118 674,735 645,586 17,534,022 (566,132)
16,967,890
Operating expenses
8,280,981 3,649,326
985,601 1,089,718
920,814 646,896
594,075 16,167,411
(476,082)
15,691,329
Operating profit (loss)
$ 652,176 $ 213,801 $ 126,780 $ 72,200 $ 222,304 $ 27,839 $ 51,512 $ 1,366,611 $ (90,050) $ 1,276,562
Chemicals
Homes
Pharma
Fibers
2008
Electronics
Materials &
Devices
Construction
Materials
Services,
Engineering
and
Others
Corporate
assets
and
Combined
eliminations Consolidated
Millions of yen
Identifiable assets
¥618,877
¥213,846
¥142,774
¥113,251
¥122,310
¥44,993 ¥332,164 ¥1,588,214 ¥(162,847) ¥1,425,367
Depreciation and
amortization
Impairment loss
37,122
2,690
6,102
–
–
–
Capital expenditure
34,344
7,451
10,007
5,727
3,753
9,255
13,902
1,049
17,018
3,138
–
2,507
792
–
793
69,474
4,802
81,375
4,509
–
1,536
73,983
4,802
82,911
67
Chemicals
Homes
Pharma
Fibers
2007
Electronics
Materials &
Devices
Construction
Materials
Services,
Engineering
and
Others
Corporate
assets
and
Combined
eliminations Consolidated
Millions of yen
Identifiable assets
¥640,992
¥212,739
¥120,926
¥115,575
¥123,764
¥55,141 ¥317,537 ¥1,586,674 ¥(126,751) ¥1,459,922
Depreciation and
amortization
Impairment loss
36,086
2,383
164
–
Capital expenditure
46,024
2,701
6,553
1,659
5,722
5,302
13,357
3,040
–
–
–
6,362
16,234
2,301
735
–
760
67,456
1,823
80,104
4,191
25
4,308
71,646
1,848
84,413
Chemicals
Homes
Pharma
Fibers
2008
Electronics
Materials &
Devices
Construction
Materials
Services,
Engineering
and
Others
Corporate
assets
and
Combined
eliminations Consolidated
Thousands of U.S. dollars
Identifiable assets
$6,188,772 $2,138,456 $1,427,742 $1,132,505 $1,223,096 $449,930 $3,321,635 $15,882,138 $(1,628,468) $14,253,670
Depreciation and
amortization
Impairment loss
371,220
26,905
61,022
57,272
139,020
31,381
7,917
694,738
45,092
739,830
–
–
–
37,528
10,488
–
–
48,017
–
48,017
Capital expenditure
343,440
74,508
100,067
92,550
170,185
25,069
7,928
813,748
15,360
829,107
Note 1) The Company’s industry segments are aggregated into seven segments based primarily upon similarities of products, services, and economic characteristics.
Chemicals −
The Company produces, processes and sells chemicals and derivative products (such as ammonia, nitric acid, caustic soda, acrylonitrile, styrene monomer, methyl methacrylate
(MMA) monomer, PMMA resin, high-compound fertilizers, and adipic acid), polymer products (such as Suntec™ polyethylene (PE), Stylac™-AS (styrene-acrylonitrile), Stylac™-
ABS (acrylonitrile-butadiene-styrene), synthetic rubber, Tenac™ polyacetal, Xyron™ modified polyphenylene ether (mPPE), and Leona™ nylon 66 polymer and filament),
specialty products (such as coating materials, latex, Ceolus™ microcrystalline cellulose, explosives, explosion-bonded metal clad, APR™ photosensitive resin and printing plate
making systems, Microza™ UF and MF membranes and systems, Hipore™ microporous membrane, ion-exchange membranes and electrolysis systems, Saran Wrap™ cling film,
Ziploc™ storage bags, and plastic films, sheets, and foams).
Homes −
The Company builds Hebel Haus™ custom-built pre-fabricated homes and Hebel Maison™ apartments, and operates related businesses such as condominiums, remodeling, real
estate, residential land development, and home financing.
Pharma −
The Company produces and sells pharmaceuticals (such as Elcitonin™, Bredinin™, Flivas™, and Toledomin™), pharmaceutical intermediates, and diagnostics reagents. The Company also
manufactures APS™ artificial kidneys, Sepacell™ leukocyte reduction filters, Cellsorba™ leukocyte adsorption columns, Planova™ virus removal filters, and contact lenses.
Fibers −
The Company produces and sells Roica™ elastic polyurethane filament, nonwoven fabrics (such as Eltas™ spunbond and Lamous™ artificial suede), Bemberg™ cuprammonium
rayon, and polyester filament.
Electronics Materials & Devices −
The Company produces and sells Pimel™ photosensitive polyimide, Sunfort™ dry-film photoresist (DF), photomask pellicles, LSIs, Hall elements, and glass fabric.
Construction Materials −
The Company produces and sells autoclaved lightweight concrete (ALC) panels (such as Hebel™), piles, Neoma™ foam insulation panels, and artificial fish reefs.
Services, Engineering and Others −
The Company provides plant engineering, environmental engineering, personnel staffing and placement, and think tank services.
Note 2) Change in industry segments
On April 1, 2007, Asahi Kasei Life & Living Corp., a wholly owned subsidiary, was merged into Asahi Kasei Chemicals Corp., a wholly owned subsidiary. Accordingly, as a result
of re-evaluation of the Company’s industry segment configuration, the Life & Living segment was combined with the Chemicals segment based on the similarity of product
types and characteristics and the unification of the organization. For comparison purposes, results for the fiscal year ended March 31, 2007, in the Chemicals segment have been
revised to include those in the Life & Living segment.
Note 3) Change in method of depreciation of tangible fixed assets
Due to a revision of the Corporation Tax Law (effected by Law No. 6 of 2007 (Law Partially Revising the Income Tax Law, Etc.), promulgated on March 30, 2007, and by
Cabinet Ordinance No. 83 of 2007 (Cabinet Ordinance Partially Revising the Income Tax Law, Etc.), promulgated on March 30, 2007), the parent company and its Japanese
subsidiaries, beginning with the fiscal year ended March 31, 2008, adopted a change in the method of depreciation of tangible fixed assets acquired on or after April 1, 2007, in
accordance with the revised Corporation Tax Law.
The effect of this change for the year ended March 31, 2008, is that operating expenses are higher than they would have been under the previous method of depreciation by
¥742 million (US$7,419 thousand) in the Chemicals segment, ¥49 million (US$490 thousand) in the Homes segment, ¥131 million (US$1,314 thousand) in the Pharma segment,
¥154 million (US$1,538 thousand) in the Fibers segment, ¥865 million (US$8,645 thousand) in the Electronics Materials & Devices segment, ¥91 million (US$912 thousand) in
the Construction Materials segment, ¥12 million (US$115 thousand) in the Services, Engineering and Others segment, and ¥98 million (US$980 thousand) in corporate
expenses and eliminations, with operating profit (loss) correspondingly lower (higher) in each case.
(addendum)
Due to a revision of the Corporation Tax Law (effected by Law No. 6 of 2007 (Law Partially Revising the Income Tax Law, Etc.), promulgated on March 30, 2007, and by
Cabinet Ordinance No. 83 of 2007 (Cabinet Ordinance Partially Revising the Income Tax Law, Etc.), promulgated on March 30, 2007), the parent company and its Japanese
subsidiaries, beginning with the fiscal year in which the residual value of an asset purchased on or before March 31, 2007, is reduced to 5% of the purchase price through
application of the method of depreciation in effect prior to the revision of the Corporation Tax Law, are depreciating the difference between 5% of the purchase price and the
memorandum price using the straight-line method over five years, and recognizing this as a constituent of depreciation.
The effect of this for the year ended March 31, 2008, is that operating expenses are higher than they would have been under the previous method of depreciation by ¥877
million (US$8,766 thousand) in the Chemicals segment, ¥26 million (US$256 thousand) in the Homes segment, ¥181 million (US$1,809 thousand) in the Pharma segment,
¥205 million (US$2,047 thousand) in the Fibers segment, ¥401 million (US$4,013 thousand) in the Electronics Materials & Devices segment, ¥115 million (US$1,153 thousand)
in the Construction Materials segment, ¥36 million (US$356 thousand) in the Services, Engineering and Others segment, and ¥68 million (US$684 thousand) in corporate
expenses and eliminations, with operating profit (loss) correspondingly lower (higher) in each case.
68
Note 4) Corporate operating expenses included in “Corporate expenses and eliminations” for the year ended March 31, 2008 and 2007, amount to ¥16,149 million (US$161,493
thousand) and ¥14,325 million, respectively.
Note 5) Corporate assets such as surplus funds (cash on hand and in banks), long-term-investment funds (investment securities etc.) and land etc. included in “Corporate assets
and eliminations” as of the year ended march 31, 2008 and 2007, amount to ¥413,698 million (US$4,136,977 thousand) and ¥433,000 million, respectively.
(2) Geographic areas
Total sales and assets of consolidated subsidiaries located in countries or regions outside of Japan as of and for the years ended March 31,
2008 and 2007, are not significant.
(3) Overseas sales
Overseas sales for the years ended March 31, 2008 and 2007, are as follows:
East Asia
2008
Others
Total
East Asia
2007
Others
Total
East Asia
2008
Others
Total
Overseas sales
¥287,862
¥199,475
¥ 487,337
¥245,276
¥182,764
¥ 428,040
$2,878,619
$1,994,747 $ 4,873,366
Millions of yen
Thousands of U.S. dollars
Consolidated
net sales
Percentage of
consolidated
net sales (%)
–
–
1,696,789
–
–
1,623,791
–
–
16,967,890
17.0%
11.8%
28.7%
15.1%
11.3%
26.4%
Note 1) Geographical distance is considered in the classification of country or area.
Major countries or areas included in each category are as follows;
Note 2)
East Asia: China, Korea, and Taiwan
Others: Southeast Asia (except East Asia), U.S.A., Europe, and others.
Overseas sales represent the sales of the Company to countries and areas outside of Japan.
Note 3)
19. Related party transactions
There were no transactions for the year ended March 31, 2008, between the Company and related parties.
Transactions for the year ended March 31, 2007, between the Company and related parties are as follows:
Type of
related
parties
Corporate
Auditor
Name
Yuichiro
Miyake
Occupation
Attorney
Equity
ownership in
the Company
0.0%
Nature of
transactions
Attorney’s fees
(*2)
Amount (*1)
Millions of yen
58
*1: Not including consumption tax.
*2: Amounts of attorney’s fees were determined using a reasonable method of calculation based on guidelines formerly issued by the Japan Federation of Bar Associations and other
standards.
20. Appropriation of retained earnings
Appropriations of retained earnings are not accrued in the financial
Directors. Retained earnings at March 31, 2008, include amounts rep-
statements for the period to which they relate, but are recorded in the
resenting final cash dividends of ¥9,791 million (US$97,911 thou-
subsequent accounting period after approval by the Board of
sand) which were approved at the Board meeting held on May 8,
21. Contingent liabilities
Contingent liabilities at March 31, 2008 and 2007, arising in the ordinary course of business are as follows:
Notes discounted
Loans guaranteed
Commitment for guarantees
Letters of awareness
Millions of yen
2007
¥ 141
11,185
2,363
235
Thousands of
U.S. dollars
2008
$ 2,077
97,369
17,384
2,672
2008
¥ 208
9,737
1,738
267
¥11,950
¥13,924
$119,502
The parent company and certain of its subsidiaries and affiliates are defendants in several pending lawsuits. However, based upon the
information currently available to both the Company and its legal counsel, management of the Company believes that any damages from such
lawsuits will not have a material effect on the Company’s consolidated financial statements.
69
22. Reconciliation of the differences between basic and diluted net income per share
Reconciliation of the differences between basic and diluted net income per share for the years ended March 31, 2008 and 2007, is as follows:
Net income
Amount not allocated to the common stock
Net income allocated to the common stock
Effect of dilutive securities
Net income allocated to the common stock for computation of
diluted net income per share
Weighted-average shares
Effect of dilutive securities
Weighted-average shares for computation of diluted net income per share
Basic net income per share
Diluted net income per share
Millions of yen
2008
2007
Thousands of
U.S. dollars
2008
¥69,945
¥68,575
$699,453
–
–
–
¥69,945
¥68,575
$699,453
–
–
–
¥69,945
¥68,575
$699,453
Thousands of
shares
2008
2007
1,398,704
1,399,462
–
–
1,398,704
1,399,462
2008
¥50.01
¥ –
2007
¥49.00
¥ –
Yen
U.S. dollars
2008
$0.50
$ –
As the Company had no dilutive securities at March 31, 2008 and 2007, the Company does not disclose diluted net income for the years
ended March 31, 2008 and 2007.
70
71
Major Subsidiaries and Affiliates
As of April 1, 2008
Company
Chemicals Segment
Asahi Kasei Chemicals Corp.*
Sanyo Petrochemical Co., Ltd.*
Asahi Kasei Pax Corp.*
Asahi Kasei Epoxy Co., Ltd.*
Asahi Kasei Home Products Corp.*
Asahi Kasei Metals Ltd.
Asahi Kasei Finechem Co., Ltd.
Asahi Kasei Geotechnologies Co., Ltd.
Asahi SKB Co., Ltd.
Asahi Kasei Clean Chemical Co., Ltd.
Asahi Kasei Technoplus Co., Ltd.*
Japan Elastomer Co., Ltd.*
Sundic Inc.
Wacker Asahikasei Silicone Co., Ltd.
Okayama Chemical Co., Ltd.
Kayaku Japan Co., Ltd.
PS Japan Corp.
Chisso Asahi Fertilizer Co., Ltd.
Asahi Organic Chemicals Industry Co., Ltd.
Asahikasei Plastics (America) Inc.*
Asahi Kasei Plastics North America, Inc.*
Sun Plastech Inc.*
Tong Suh Petrochemical Corp., Ltd.*
Asahi Kasei Chemicals Korea Co., Ltd.
Delaglas Korea Corp.
Asahikasei Plastics (Shanghai) Co., Ltd.
Asahikasei (Suzhou) Plastics
Compound Co., Ltd.
Asahi-DuPont POM (Zhangjiagang) Co., Ltd.
Asahi Kasei Performance Chemicals Corp.*
Asahi Kasei Microza (Hangzhou) Co., Ltd.*
Asahi Kasei Plastics (Hong Kong) Co., Ltd.
Asahi Kasei Plastics Singapore Pte. Ltd.*
Polyxylenol Singapore Pte. Ltd.*
Asahikasei Plastics (Thailand) Co., Ltd.
PT Nippisun Indonesia
Asahi Kasei Plastics Europe SA/NV*
Asahi Photoproducts (Europe) SA/NV*
Asahi Photoproducts (UK) Ltd.*
Homes Segment
Asahi Kasei Homes Corp.*
Asahi Kasei Jyuko Co., Ltd.*
Asahi Kasei Mortgage Corp.*
Asahi Kasei Reform Co., Ltd.*
Asahi Kasei Real Estate, Ltd.*
Main products/business line
Paid-in capital
(million)
Equity interest
(%)
Chemicals
Benzene, ethylene
Packaging products and solutions
Epoxy resin
Cling film, other household products
Aluminum paste
Specialty chemicals
Sale of industrial explosives, civil engineering materials
Shotgun cartridges
Water treatment equipment, environmental chemicals
Processing and sale of plastic and fiber
Synthetic rubber
Biaxially oriented polystyrene sheet
Silicone
Caustic soda, chlorine
Industrial explosives
Polystyrene
Fertilizer
Synthetic resin, fabricated plastic products
Compounded performance resin operations
Coloring and compounding of performance resin
Sale of purging compound
Acrylonitrile, sodium cyanide
Adipic acid, microporous membrane
PMMA sheet for light-guide plates
Sale of performance resin
Coloring and compounding of performance resin
Polyacetal
High-performance HDI-based polyisocyanate
Industrial membranes and systems
Sales of performance resin
Performance resin
PPE powder
Coloring and compounding of performance resin
Coloring and compounding of styrenic resin
Sale of compounded performance resin
Sale of photopolymer, printing plate making systems
Sale of photopolymer, printing plate making systems
Housing
Steel frames
Financial services
Home maintenance and remodeling
Home leasing, real estate brokerage
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
US$
US$
US$
W
W
W
CNY
CNY
US$
CNY
CNY
HK$
US$
US$
B
US$
€
€
₤
¥
¥
¥
¥
¥
3,000
2,000
490
300
250
250
175
132
100
100
160
1,000
1,050
1,050
1,000
60
5,000
305
5,000
17.8**
21.7**
1.0
50,642
1,500
5,000
18
50
32.0
149
29
20
46.0
35.0
140
6.3
5.0
3.4
0.3
3,250
2,820
500
250
200
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
99.4
75.0
50.0
50.0
50.0
50.0
45.0
35.0
29.9
100.0
100.0
100.0
100.0
100.0
60.0
100.0
51.0
50.0
100.0
100.0
100.0
100.0
70.0
100.0
25.7
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
* Consolidated subsidiary
** Including capital reserve
72
Main products/business line
Paid-in capital
(million)
Equity interest
(%)
Company
Pharma Segment
Asahi Kasei Pharma Corp.*
Asahi Kasei Medical Co., Ltd.*
Asahi Kasei N&P Co., Ltd.*
Asahikasei Aime Co., Ltd.*
Asahi Kasei Kuraray Medical Co., Ltd.*
Asahi Kasei Medical America Inc.
Asahi Kasei Medical (Hangzhou) Co., Ltd.*
Asahi Kasei Medical Europe GmbH
Asahi Pharma Spain, SL
Fibers Segment
Asahi Kasei Fibers Corp.*
Kyokuyo Sangyo Co., Ltd.*
Asahi Kasei AGMS Corp.*
DuPont-Asahi Flash Spun Products Co., Ltd.
Solotex Corp.
Asahi Kasei Spandex America, Inc.*
Hangzhou Asahikasei Spandex Co., Ltd.*
Hangzhou Asahikasei Textiles Co., Ltd.*
Formosa Asahi Spandex Co., Ltd.
Asahi Chemical (HK) Ltd.*
Thai Asahi Kasei Spandex Co., Ltd.*
Asahi Kasei Spandex Europe GmbH*
Asahi Kasei Fibers Italy SRL*
Asahi Kasei Fibers Deutschland GmbH
Electronics Materials & Devices Segment
Asahi Kasei EMD Corp.*
Asahi Kasei Microsystems Co., Ltd.*
Asahi-Schwebel Co., Ltd.*
Asahi Kasei Electronics Co., Ltd.*
AKM Semiconductor, Inc.*
Asahi Kasei EMD Korea Corp.
Asahi Kasei Electronics
Materials (Suzhou) Co., Ltd.*
Asahi Kasei EMD Taiwan Corp.
Asahi Kasei Wah Lee Hi-Tech Corp.*
Asahi-Schwebel (Taiwan) Co., Ltd.*
Construction Materials Segment
Pharmaceuticals, medical products
Medical devices, medical systems
Functional food ingredients
Contact lenses
Hemodialyzers, therapeutic apheresis devices
Sale of medical devices, medical systems
Hemodialyzers
Sale of medical devices, medical systems
Pharmaceuticals
¥
¥
¥
¥
¥
US$
CNY
€
€
¥
Fiber, textiles
Processing and sale of fiber, textiles
¥
Computerized grading, marking, and pattern-making systems ¥
¥
Flash spun
¥
Polytrimethylene terephthalate fiber
US$
Spandex
CNY
Spandex
CNY
Warp-knit spandex textiles
NT$
Spandex
HK$
Promotion and marketing of fiber and textiles
B
Spandex
€
Spandex
€
Sale of spandex and cupro cellulosic fiber
€
Sale of artficial suede
Electronics materials and devices
LSIs
Glass fabric
Hall elements
Sale of LSIs
Sale of pellicles
Dry film photoresist
Sale of pellicles
Dry film photoresist
Glass fabric
Asahi Kasei Construction Materials Corp.*
Asahi Kasei Foundation Systems Corp.*
Construction materials
Installation of piles
Services, Engineering and Others Segment
Asahi Research Center Co., Ltd.*
Asahi Finance Co., Ltd.*
Asahi Kasei Engineering Co., Ltd.*
Asahi Kasei Trading Co., Ltd.*
Sun Trading Co., Ltd.*
Asahi Kasei Amidas Co., Ltd.*
AJS Inc.
Asahi Kasei America, Inc.*
Asahi Kasei Business Management
(Shanghai) Co., Ltd.
* Consolidated subsidiary
** Including capital reserve
Information and analysis
Investment, finance
Plant, equipment, process engineering
Sale of Asahi Kasei products
Sale of Asahi Kasei products
Employment agency, consulting
Computer software, IT systems
Business support services
Business support services
3,000
200
495
480
800
0.5
163
0.2
0.1
3,000
80
50
450
250
10.2
132
78
801
65
850
14.6**
3.0
0.3
3,000
50
50
50
2.9
820
181
1.0
49
326
3,000
200
3,000
800
400
98
94
80
800
0.1
100.0
100.0
100.0
100.0
93.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
50.0
50.0
100.0
100.0
82.5
50.0
100.0
60.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
80.6
51.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
49.0
100.0
3.0
100.0
73
¥
¥
¥
¥
US$
W
CNY
NT$
NT$
NT$
¥
¥
¥
¥
¥
¥
¥
¥
¥
US$
US$
Asahi Kasei Corporation
May 21, 1931
¥103,388,521,767
23,854 (Consolidated)
791 (Non-consolidated)
Core Operating Companies
Asahi Kasei Chemicals*
1-105 Kanda Jinbocho, Chiyoda-ku
Tokyo 101-8101, Japan
Phone: +81-3-3296-3200
Asahi Kasei Homes
1-24-1 Nishi-shinjuku, Shinjuku-ku
Tokyo 160-8345, Japan
Phone: +81-3-3344-7111
Asahi Kasei Pharma*
1-105 Kanda Jinbocho, Chiyoda-ku
Tokyo 101-8101, Japan
Phone: +81-3-3296-3600
Asahi Kasei Fibers
1-2-6 Dojimahama, Kita-ku
Osaka 530-8205, Japan
Phone: +81-6-6347-3600
Asahi Kasei EMD*
1-23-7 Nishi-shinjuku, Shinjuku-ku
Tokyo 160-0023, Japan
Phone: +81-3-6911-2700
Asahi Kasei Construction Materials*
2-12-7 Higashi-shinbashi, Minato-ku
Tokyo 105-0021, Japan
Phone: +81-3-5473-5251
* The Tokyo Head Office of Asahi Kasei Corp. and the Head Office of Asahi Kasei
Pharma moved to Kanda Jinbocho in May 2008. The Head Office of Asahi Kasei
Chemicals moved to Kanda Jinbocho in June 2008. The Head Offices of Asahi Kasei
Construction Materials and Asahi Kasei EMD will move to Kanda Jinbocho
in September 2008 and November 2008, respectively.
Corporate Profile
As of March 31, 2008
Company Name
Date of Establishment
Paid-in Capital
Employees
Asahi Kasei Group Offices
Asahi Kasei Corporation
Tokyo Head Office*
1-105 Kanda Jinbocho, Chiyoda-ku
Tokyo 101-8101, Japan
Phone: +81-3-3296-3000
Fax: +81-3-3296-3161
Osaka Head Office
1-2-6 Dojimahama, Kita-ku
Osaka 530-8205, Japan
Phone: +81-6-6347-3111
Fax: +81-6-6347-3077
Beijing Office
Room 1407
New China Insurance Tower
No.12 Jian Guo Men Wai Avenue
Chao Yang District
Beijing 100022, China
Phone: +86-10-6569-3939
Fax: +86-10-6569-3938
Shanghai Office
Room 2321
Shanghai Central Plaza
381 Huaihai Zhong Road
Shanghai 200020, China
Phone: +86-21-6391-6111
Fax: +86-21-6391-6686
Asahi Kasei America, Inc.
535 Madison Avenue, 33rd Floor
New York, NY 10022, USA
Phone: +1-212-371-9900
Fax: +1-212-371-9050
74
Contents
page. 02
History of
Diversification,
Operating Structure
page. 04
Asahi Kasei Group
Operations, Worldwide
page. 06
Strategic Management
Initiatives
page. 08 Consolidated Financial Highlights
page. 10 To Our Shareholders
page. 11
Driving the Strategic Advance:
Growth Action − 2010
page. 33 Toward Sustainable Growth
page. 34 Corporate Governance
page. 38 Corporate Social Responsibility
page. 40 Directors, Corporate Auditors, Executive Officers
page. 41 Financial Section
page. 72 Major Subsidiaries and Affiliates
Investors Information
As of March 31, 2008
Stock Listings
Stock Code
Authorized Shares
Outstanding Shares
Transfer Agent
Tokyo, Osaka, Nagoya, Fukuoka, Sapporo
3407
4,000,000,000
1,402,616,332
Sumitomo Trust & Banking Co., Ltd.
4-5-33 Kitahama, Chuo-ku
Osaka 541-8639, Japan
Independent Auditors
PricewaterhouseCoopers Aarata
Number of Shareholders
128,865
Largest Shareholders
% of equity*
Nippon Life Insurance Co. .................................................................................. 5.22
Master Trust Bank of Japan, Ltd. TS .................................................................. 5.17
Japan Trustee Services Bank, Ltd. TS ................................................................. 4.42
Sumitomo Mitsui Banking Corp. ....................................................................... 2.53
Employees’ Stockholding ..................................................................................... 2.46
Dai-ichi Mutual Life Insurance Co. .................................................................. 2.30
Tokio Marine & Nichido Fire Insurance Co., Ltd. ........................................... 2.22
Meiji Yasuda Life Insurance Co. ........................................................................ 1.49
Mizuho Corporate Bank, Ltd. ............................................................................ 1.45
Sumitomo Life Insurance Company. ................................................................. 1.40
* Percentage of equity ownership after exclusion of treasury stock.
Distribution by Type of Shareholder
Distribution by Number of Shares Held
Japanese financial institutions 44.11%
Foreign investors
27.31%
Japanese individuals and groups 21.56%
Japanese securities companies
2.34%
Other Japanese companies
4.68%
100,000 or more
10,000〜99,999
1,000〜9,999
Less than 1,000
80.53%
6.49%
12.56%
0.42%
page. 16 At a Glance
page. 74 Corporate Profile
1,402,616,332 shares
page. 18 Operating Segments
page. 75 Investors Information
TM: Trademark or registered trademark of Asahi Kasei Corporation, affiliated companies,
or third parties granting rights to Asahi Kasei Corporation or affiliated companies.
75
Annual Report 2008
ASAHI KASEI CORPORATION
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A copy of the Company
s annual report and further information
will be made available upon request in writing to:
Corporate Communications
Asahi Kasei Corporation
1-105 Kanda Jinbocho, Chiyoda-ku,Tokyo 101-8101, Japan
Phone: +81-3-3296-3008 Fax: +81-3-3296-3162
www.asahi-kasei.co.jp
This annual report was printed with
vegetable-based ink on recycled paper.
Printed in Japan
2008.10