Asahi Kasei Report 2017
Group Mission We, the Asahi Kasei Group,
contribute to life and living for people
around the world.
Group
Vision
Providing new value to society by enabling “living in health and
comfort” and “harmony with the natural environment.”
Group
Values
Sincerity—Being sincere with everyone.
Challenge—Boldly taking challenges, continuously seeking change.
Creativity—Creating new value through unity and synergy.
Group
Slogan
Creating for Tomorrow
Editorial policy
For greater ease of understanding among our stakeholders, since fiscal
2014 we are integrating information regarding our business strategy and
financial performance, which had been published in our Annual Report,
with information regarding our CSR activities, which had been published
in our CSR Report, in a single Asahi Kasei Report. We hope that the Asahi
Kasei Report will help you gain a clear perception of the Asahi Kasei Group’s
efforts toward sustainability in society in addition to our management
strategy, business conditions, and management configuration.
Period under review
The period under review is fiscal 2016 (April 2016 to March 2017). Some
qualitative information pertaining to April to September 2017 has also
been included.
Organizational scope
The scope of the report is Asahi Kasei Corp. and its consolidated subsidiar-
ies, except with respect to Responsible Care, in which case the scope is
operations in Japan that implement the Asahi Kasei Group’s Responsible
Care program. Asahi Kasei’s three operating segments are Material, Homes,
and Health Care. Unless otherwise specified, the titles and positions of
corporate officers and other personnel as shown in this report are current
as of October 2017.
Guidelines consulted
The Global Reporting Initiative’s Sustainability Reporting Guidelines G4,
ISO 26000, and other guidelines were consulted during the preparation of
this report.
In this report, the TM symbol indicates a trademark or registered trademark
of Asahi Kasei Corporation, affiliated companies, or third parties granting
rights to Asahi Kasei Corporation or affiliated companies.
Disclaimer
The forecasts and estimates shown in this report are dependent on a variety of
assumptions and economic conditions. Plans and figures depicting the future
do not imply a guarantee of actual outcome.
Contents
2 Message from the President
Management Overview
14 Interview with the CFO
16 History of Providing Solutions for the Challenges of Society
18 Feature 1: Process of Creating Value in the Asahi Kasei Group
20 Feature 2: Value Provided by the Asahi Kasei Group
24 Directors
26 Corporate Governance
30 Specific Measures to Heighten Compliance
33 Feature 3: Global Executives Interviews
Review of Operations
38 Financial and Non-Financial Highlights
40 At a Glance
42 Material
44 Homes
46 Health Care
48 Feature 4: Research & Development
CSR
52 CSR
54 CSR Fundamentals
• Responsible Care
• Respect for Employee Individuality
• Corporate Citizenship
Financial Section
64 Management’s Discussion and Analysis
70 Risk Analysis
72 Consolidated Financial Statements
Corporate Information
104 Major Subsidiaries and Affiliates
107 Company Information
107 Investors Information
Asahi Kasei Report 2017
1
Message from the President
We, the Asahi Kasei Group, contribute to life and living
for people around the world.
“Improve human culture.” These words of Shitagau Noguchi, the founder of Asahi Kasei, manifested the
company’s mission of meeting shortages of daily necessities at the time our business began nearly a
century ago. Ever since then, we have continuously adapted to meet the changing needs of the times,
with business in fields ranging from fibers and chemicals to homes, health care, and electronic devices.
Though the content of our operations has evolved, our aspiration to help the people of the world enjoy
a better life remains unchanged. Our current Group Mission is to contribute to life and living for people
around the world, and we operate in accordance with our Group Vision of providing new value to society
by enabling “living in health and comfort” and “harmony with the natural environment.”
The world around us is dramatically different than it was a century ago. We now have many chal-
lenges to be solved as indicated by the Sustainable Development Goals (SDGs) adopted by the United
Nations in 2015. Our aim is to contribute to society’s solutions to such challenges by leveraging the
strengths we gain by having an unparalleled diversity of business operations, technologies, and human
resources. In doing so, we will provide value to the world in a way that only Asahi Kasei can.
We are now advancing our medium-term management initiative “Cs for Tomorrow 2018” that aims
to provide solutions to two important challenges faced by society for “clean environmental energy”
and “healthy/comfortable longevity with peace of mind.” Our management environment has changed
significantly in just the past year, including heightened environmental awareness as evinced by the Paris
Accord taking effect and the spread of electric vehicles, changing global market frameworks, and the
rapid advance of new technologies for IoT, AI, etc. Nevertheless, we see no need to change our basic con-
cept. While the importance of the two challenges faced by society remains unchanged, there is a greater
urgency for us to build connections among our diverse businesses and diverse human resources as we
build the base for the next phase. In fiscal 2016, the first year of Cs for Tomorrow 2018, the realignment of
our business sectors proceeded smoothly and we achieved solid business performance. We will further
accelerate the execution of Cs for Tomorrow 2018 as we work to create a portfolio of high-profitability
and high value-added businesses in fiscal 2025.
The Asahi Kasei Report 2017 showcases our proactive efforts under Cs for Tomorrow 2018 to
“contribute to life and living for people around the world,” as illustrated in special features such as “Value
Provided by the Asahi Kasei Group” and “Global Executives Interviews.” I hope this report will help you
gain a greater understanding of Asahi Kasei.
September 2017
Hideki Kobori
President
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Message from the President
Performance in fiscal 2016 exceeding our original forecast
During fiscal 2016, the outlook for the global economy remained obscure with increased political
uncertainty related to the withdrawal of the UK from the EU and increased concern regarding the
economic policy of the new US administration, as well as concern of economic slowdown in emerg-
ing economies. Meanwhile, the Japanese economy continued on a path of gradual recovery with
strong corporate performance while consumer spending became firm as the employment situation
and income environment improved.
With our transformation to an operating holding company configuration in fiscal 2016, we
reconfigured our operations into the three business sectors of Material, Homes, and Health Care.
Thanks to careful preparation, the transition went smoothly. While our performance was generally
firm, net sales, operating income, and ordinary income each declined from the previous year due
to the impact of the strong yen, decreased pharmaceutical reimbursement prices, and full-year
amortization of goodwill associated with our acquisition of Polypore International. Operating income
was nevertheless the second highest ever and net income attributable to owners of the parent (net
income) reached a new record high with gain on sale of investment securities and decreased income
taxes. Owing to exceptional efforts in each business to expand sales expansion and reduce costs,
operating income, ordinary income, and net income all exceeded our original expectations. All in
all, fiscal 2016 was a good step forward as the first year of our Cs for Tomorrow 2018 medium-term
management initiative.
Forecasting higher shipment volumes in each business, we expect fiscal 2017 results to further
improve with net sales reaching ¥1.99 trillion and operating income reaching ¥165 billion.
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The first year of our Cs for Tomorrow 2018
medium-term management initiative saw steady
progress. Net income reached a new record high.
In addition to transitioning to an operating holding company configuration and realigning our business
sectors in fiscal 2016, we also took several actions to enhance connections such as reconfiguring our R&D
organization, launching Asahi Kasei Europe, and establishing our Automotive Marketing Department.
To heighten awareness for compliance we established a Risk Management & Compliance Committee.
FY2018 Target
FY2025 Outlook
Net sales and operating income
Net sales (left scale)
Operating income (right scale)
Net sales
¥2.2 trillion
income ¥180.0 billion
Operating
Net sales
¥3.0 trillion
income ¥280.0 billion
Operating
FY2016 Result
FY2017 Forecast
Net sales
¥1.9 trillion
income ¥159.2 billion
Operating
Net sales
¥2.0 trillion
income ¥165.0 billion
Operating
(¥ billion)
3,500
3,000
2,500
2,000
1,500
1,000
500
0
'11
'12
'13
'14
'15
'16
'17
'18
'25
* Formulated assuming exchange rates of ¥110/$ and ¥120/€
(¥ billion)
350
300
250
200
150
100
50
0
(FY)
4
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Message from the President
Long-term investments
During the five-year period of the previous medium-term management initiative “For Tomorrow
2015,” we adopted decisions on ¥1 trillion of long-term investment to strengthen our existing
businesses and create new businesses for the future, including large-scale acquisitions of ZOLL and
Polypore. Cs for Tomorrow 2018 provides for some ¥700 billion in long-term investments over the
three-year period.
Decisions were adopted for about ¥150 billion of investment in fiscal 2016. In the Material sector,
these included an expansion of production capacity for HiporeTM lithium-ion battery (LIB) separator,
construction of an R&D facility for new composite materials such as cellulose nanobeads and cellulose
nanofiber, and the establishment of joint ventures for engineering resin with China National Bluestar
(Group) Co., Ltd. In the Homes sector, these included forming capital alliances with Mori-Gumi Co.,
Ltd., and Chuo Build Industry Co., Ltd., and establishment of a new production base for steel-frame
members. In the Health Care sector, decisions were adopted to augment the product pipeline.
In fiscal 2017, investments in the Material sector are mainly planned in the environment/energy,
automotive, and healthcare/hygiene fields. Investments planned in the Homes sector are focused
on alliances to extend business outside Japan. Investments in the Health Care sector are planned to
accelerate globalization and to reinforce manufacturing facilities. Overall investments are projected
to be some ¥200 billion, exceeding the level of fiscal 2016.
We will also continue to study M&A in all three sectors of Material, Homes, and Health Care, focus-
ing on proactive investments in accordance with our growth strategy. We are not only considering
large acquisitions on the scale of ZOLL or Polypore, but also medium or small-scale acquisitions if
they would further strengthen our established businesses or bring new prospects for future business
growth.
Long-term investment expenditures
FY2016
Approx. ¥150 billion
¥700 billion
over
3-year period
FY2017 (planned)
Approx. ¥200 billion
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Growth in each sector
Material
With the environment/energy, automotive, and healthcare/hygiene designated as areas of focus,
we executed several actions for each of them in fiscal 2016.
Environment/energy
● Expanded supply capacity of lithium-ion battery (LIB) separator
● Advanced verification of DRC process for DPC*
Automotive
● Reinforced business configuration (the US and Vietnam)
● Expanded capacity for S-SBR for fuel-efficient tires (Singapore)
● Expanded capacity for filament for airbags
Healthcare/hygiene
● Expanded capacity for nonwoven fabric for facial masks
● Expanded capacity for spunbond for diapers
● Started sales of UVC LEDs for disinfection
* A process for polycarbonate intermediate without using phosgene (poisonous gas) and not requiring ethylene oxide as feedstock.
In the field of the environment/energy, decisions were made to expand production capacity for
HiporeTM wet-process LIB separator at two lines in Moriyama, Shiga, Japan. While demand for
separators remains stable in consumer electronics applications, demand in automotive applica-
tions is projected to grow by some 30% per year. Having both HiporeTM wet-process separator
and CelgardTM dry-process separator enables us to meet a wide range of market requirements
in automotive applications. We are planning to raise capacity for wet-process separator to 610
million m2/year in the first half of fiscal 2019, when electric vehicle (EV) demand is projected to
ramp up. After acquiring Polypore in 2015, we also raised production capacity for dry-process
separator in the US—capacity is now 250 million m2/year. Combining both wet process and dry
process, we plan to raise our total LIB separator capacity to 1.1 billion m2/year in 2020, solidifying
our position as the world’s leader with reliable supply of high-quality products.
In the automotive field, our Automotive Marketing Department is taking the lead in sector-
wide marketing activity to build strategic relationships with vehicle manufacturers and their
suppliers. In May 2017 we unveiled our first concept car, AKXYTM (more information on page 12).
We are leveraging this drivable car to create new opportunities to communicate with people in
the industry about the future of the automobile.
In the healthcare/hygiene field, we are developing new markets for materials for pharmaceu-
ticals and medical devices. We also established Healthcare Material Business Development as a
dedicated organization for new business creation.
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Message from the President
Homes
We enhanced our homes business in the three areas of medium-rise homes, overseas business,
and homes for seniors. For construction materials, in the environment/energy field, we announced
the development and sale of Neoma ZeusTM which features world-leading insulation performance.
In the area of medium-rise homes, we enhanced our condominium business by incorporat-
ing the expertise of Mori-Gumi Co., Ltd., through a business and capital alliance, and started sale
of the Hebel BuildingTM System which employs higher quality and higher precision construction
of medium-rise homes by systematic manufacturing. In addition, we enriched the product lineup
to meet various needs in urban areas such as buildings that integrate homes with rental units or
shops. Regarding homes for seniors, we offer Hebel VillageTM apartment buildings with features
designed for active seniors who are able to live independently. For overseas operations, we
completed our first project, a condominium in Zhonghe, New Taipei, Taiwan.
We will continue to advance measures to further strengthen our businesses with comprehen-
sive products, construction, and services, and to expand the breadth of our value chain.
Health Care
We are growing the Health Care sector to be the third major pillar of the Asahi Kasei Group after
Material and Homes.
For pharmaceuticals, we reinforced our lineup in the field of orthopedics with the launch of
Reclast® osteoporosis drug which is administered once per year. To accelerate global expansion,
we are advancing a global clinical study of RecomodulinTM anticoagulant.
For medical devices, we expanded capacity in Oita, Japan, for PlanovaTM BioEX virus removal
filters used in the manufacture of biotherapeutics.
Critical care continues to be the driver of growth for the Health Care sector, with ZOLL
averaging 15% annual growth since we acquired it in 2012 and operating income turning
positive three years later even after amortization of goodwill. The LifeVestTM wearable defibrillator,
our flagship product, is gaining market penetration in Germany, France, and Japan, in addition
to its main market in the US. We are working to expand indications for the Thermogard SystemTM
intravascular temperature management system to include acute myocardial infarction, and aim-
ing for market leadership in the automated external defibrillator (AED) market with the launch of
our new AED3TM product. We will continue to expand our range of operations in the field of acute
critical care, including through proactive acquisitions to augment the product lineup.
For the Health Care sector overall, we are investing to expand business in North America
using our CVC (Corporate Venture Capital) Office in Boston, Massachusetts. Additionally, we
periodically hold meetings of our Health Care Council consisting of members from Asahi Kasei
Corp., Asahi Kasei Pharma, Asahi Kasei Medical, and ZOLL to discuss marketing activities and other
matters of strategy to expand the sector.
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Creating new businesses in the Material sector
Our transition to an operating holding company configuration enhanced connections among
technologies and human resources, enabling the acceleration of new business creation.
One area is new business creation connecting fiber, resin, and processing technology. For
example, we are developing a new kind of textile composite in a process where polyamide (PA) 66
fiber and continuous glass fiber (GF) are commingled into a yarn which is woven to form the base
material for molding, which is followed by injection of PA66 resin in a hybrid molding process. This
provides a high degree of flexibility in design together with outstanding strength. Such attributes
make this a promising material as a weight-saving substitute for metal in automotive structural
parts. Another example is cellulose nanofiber (CNF) composite being developed for automotive
applications by combining cellulose with synthetic resin. Unlike carbon fiber composite, this material
is made with thermoplastic which enables separation and recyclability for reduced environmental
burden. Combining the knowledge on cellulose gained through the BembergTM business of fibers
and textiles with the polymer composition and processing technology gained in the chemicals busi-
ness, CNF composite is an outstanding illustration of how connections between different businesses
can lead to new developments.
Another area of new business is the UVC LED, developed by connecting internal technology with
outside resources. The UVC LED combines technology for high-quality single-crystal AlN (aluminum
nitride) substrate developed by Crystal IS, Inc., which became our subsidiary in 2011 after an initial
CVC investment, with the compound semiconductor technology built up through our electronics
business. Featuring high sterilization efficiency, small size, and low power consumption, the KlaranTM
UVC LED product commercialized in May 2016 is gaining attention as a safer and more environmen-
tally friendly substitute for mercury lamps as a UV light source.
The last one is the development of an alkaline water electrolysis system. This system developed
under consignment from the New Energy and Industrial Technology Development Organization
(NEDO) produces hydrogen from renewable energy at low cost. A large-scale validation electrolyzer
installed in Yokohama, Japan, has operated for over 10,000 hours to demonstrate the stability of
the process. With a world-leading energy conversion efficiency into hydrogen of 90%, it is able to
produce 2,000 m3 of hydrogen per hour consuming just 10,000 kW of electricity under ordinary tem-
perature and ordinary pressure. This is the same amount of hydrogen that a fuel cell vehicle would
consume over a two-year period. The hydrogen can also be reacted with CO2 to produce methanol
or methane for use as green fuel. We now plan to install a demonstration plant for this system in
Germany, which is phasing out nuclear power by 2022.
Acceleration of globalization
The basic policy for globalization under the Cs for Tomorrow 2018 medium-term management initia-
tive is to focus on strategies suited to each region.
The region of Asia is positioned not only as a manufacturing base but also as a growth market.
We are proactively developing our businesses premised on production and consumption within the
region. Notable actions include:
● Establishment of joint ventures for XyronTM modified polyphenylene ether (China)
● Start of photopolymers plant (China)
● Capacity expansion of S-SBR for fuel-efficient tires (Singapore)
● Capacity expansion of spunbond nonwovens for diaper applications (Thailand)
● Sale of condominiums (Taiwan)
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Message from the President
North America is positioned as a region of continuing growth and the origin of innovation. We
are working to expand automotive and healthcare-related businesses, and to acquire leading-edge
technologies through CVC. Notable actions include:
● Reinforcing our CVC activities in the environment, energy, and healthcare fields
● Advancing clinical testing of RecomodulinTM anticoagulant
● Business expansion for LifeVestTM wearable defibrillator
● Reinforcing the separator business
● Operation of second plant for plastic compounds
Europe is positioned as the origin of environmental standards and regulations. We are working
to expand through reinforced marketing activities centered on automotive-related business. Notable
actions include:
● Launch of an Engineering Plastics Technical Center
● Advancing the alkaline water electrolysis development project
● Start of Asahi Kasei Europe GmbH
Building the base for sustainable growth
Cs for Tomorrow 2018 is directed toward the establishment of a portfolio of high-profitability and
high value-added businesses in fiscal 2025, with the three-year period from fiscal 2016 to 2018
focused on building the base for the next phase.
(1) Obtaining thorough compliance
Following the disclosure of data irregularities regarding the installation of precast concrete piles in
October 2015, our subsidiary Asahi Kasei Construction Materials Corp. is taking measures to prevent
recurrence by renewing its management system, performing training of site agents, and disseminat-
ing compliance policy.
We also established Risk Management & Compliance in January 2016 as the central hub to aggre-
gate all risk management and compliance-related information. We integrated our Risk Management
Committee and Corporate Ethics Committee into a newly established Risk Management &
Compliance Committee chaired by the President of Asahi Kasei Corp. to monitor the compliance
system and identify risks throughout the Asahi Kasei Group.
Through such actions, we are further strengthening our compliance system and implementing
thorough measures based on the “three actuals” of the actual place, the actual thing, and the actual
fact, reinforcing our foundations as a company that society can continue to trust and rely on.
Top down
(management perspective)
Enacting compliance policy; thorough identification
of risks from birds-eye view (continuous)
● Preparing and applying Asahi Kasei Group Code of Conduct
● Heightening awareness for risk management and compliance through organizational lines
● Enhancing organization (establishment of Risk Management & Compliance Committee)
Thorough compliance
The “three actuals” of actual place, actual thing, and actual fact
● Reinspection for latent risks in each business
● Assigning priority to risks
● Studying and implementing countermeasures in accordance with priority
Bottom up
(on-site perspective)
Inspection for risks;
implementation of measures (continuous)
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(2) Laying the foundation to heighten business activities
We will utilize IT to achieve dramatic improvements in the productivity of our manufacturing
and production processes. We have selected model plants and are now beginning trials of actual
application to incorporate new technologies such as IoT and Big Data. We are also utilizing IT to
deliver high added value in the businesses themselves. The LifeVestTM and plant diagnostics are key
examples of businesses that utilize ICT (information and communication technology)—the latter
based on technology refined for over 40 years and recently launched as a remote diagnostic service
to monitor vibrations for diagnosis of the condition of plants and transportation equipment. We
are also strengthening our IT infrastructure for enhanced tools and databases that support business
operations, and we continue to reinforce cybersecurity.
(3) Linkage between management strategy and HR strategy
We are working to create value by leveraging our diversified business platforms and diverse human
resources, and the key is human resources. In order to develop a group of high value-added person-
nel, we will foster and strengthen our personnel and organizations.
Diverse human resources
Vitality and growth of personnel and organizations
● Group of high value-added personnel
● Mechanisms for growth in daily work
● Satisfaction and fulfillment by each employee
Unity and linkage between management strategy
and HR strategy
Business growth
Actualizing vision
Diversified business platforms
We will maintain thorough compliance, heightened business activity, and strengthened linkage
between HR strategy and long-term growth strategy as the base of operations. Building on these, we
will advance our basic strategies of “pursuit of growth and profitability,” “creation of new businesses,”
and “acceleration of globalization,” contributing to a “society of clean environmental energy” and a
“society of healthy/comfortable longevity with peace of mind.”
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Message from the President
Drivable concept car AKXYTM
In May 2017 we unveiled our first concept car, developed jointly with electric vehicle
manufacturer GLM Co., Ltd., to showcase our capabilities in the automotive field. It is a
drivable car featuring 27 automotive solutions from Asahi Kasei. AKXYTM will help us to
actively promote our automotive-related products and technologies as we advance construc-
tive discussions with vehicle manufacturers and their suppliers about the future of the car.
Creating the future of automobiles together with customers
The automotive industry is undergoing dramatic changes, with trends for more diverse automobile
usage as well as the move toward electric drive. Asahi Kasei has a long track record of supplying vari-
ous products to the automotive industry, including fibers, chemicals, devices, and battery materials.
Now we must move beyond being just a supplier of materials. We need to be able to contribute
more fully to the automotive supply chain. By leveraging our comprehensive strengths in products,
technology, and quality, we can work together with customers in the automotive industry to create
new value for the future. We are now working to reinforce the presence of our Material sector in the
automotive industry in accordance with this objective.
The AKXYTM concept car was created to represent our aspiration to work more closely with
automotive customers, contributing to the greater safety, comfort, and environmental performance
of vehicles of the future. We partnered with GLM to leverage their electric vehicle platform in the
development of a drivable concept car equipped with a wide range of Asahi Kasei components and
systems. GLM is a young company full of energy and new ideas. They are highly oriented toward the
future, and it was very stimulating to work with them.
By having vehicle manufacturers and their suppliers experience AKXYTM, we can deepen relation-
ships with customers in the automotive industry and open the door to their adoption of many of our
leading-edge products moving forward.
To be a material concierge that
can provide automotive solutions
Tsuneyoshi Tatsuoka
Outside Director
It was very ambitious of Asahi Kasei, a material manufacturer, to create
a drivable concept car. The three broad trends in the automotive
industry today are weight reduction by substituting plastic for metal,
diversification of motive power sources with the rise of electric and
fuel-cell vehicles, and intensified application of electronic and control
systems throughout the vehicle. How can a material manufacturer adapt to these trends? The
company would need to enhance its ability to provide one-stop solutions through technical sales
as well as to be a development partner having connections with vehicle manufacturers and their
suppliers. Asahi Kasei is exceptional among Japanese material manufacturers in that it has a wide
variety of products including electronic devices such as sensors. Although it gives the company
many potential opportunities, this alone is not enough to ensure success in global competition. I see
the creation of AKXYTM as an indication of the company’s keen awareness of the need for further R&D
and applications development for automotive-related products.
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Origin of the name and logo
Deriving from Asahi Kasei X (multiplied by)
You (the customer), the name indicates our
intention to create new value for the future
together with the automotive industry. The
blue flame motif represents the transition to
complete combustion, indicating our full-
fledged effort beyond mere passion, which
would be represented by red.
1. Head lamp cover Organic/inorganic hybrid coating agent
2. Lamp extension XyronTM modified polyphenylene ether
3. Tire raw material TufdeneTM solution-polymerized
6. Body paint raw material Asahi Kasei Aluminium PasteTM
7. Body paint additive DuranateTM HDI (hexamethylene
diisocyanate)-based polyisocyanate
styrene butadiene rubber
8. Tail lamp cover DelpetTM polymethyl methacrylate
4. Tire cord LeonaTM nylon 66 filament yarn
5. Fender liner PreciseTM spunbond synthetic
continuous-filament nonwoven
Cockpit
9. WGFTM film base reflective polarizer
10. Defroster sensor
Systems
11. Vital-sign sensing technology
12. Stand-alone voice command
13. Hands-free communication
14. In-car communication
15. CO2 sensor
16. A-pillar TuftecTM hydrogenated styrenic
thermoplastic elastomer
17. Interior decoration Multicore POFTM plastic optical fiber
18. Floor mat Floor mat with polytrimethylene
terephthalate fiber
19. Connector/cable tie LeonaTM polyamide resin
20. Speaker cover EsterlloyTM ABS-based alloy resin
21. Seat surface CubitTM 3D knitting fabric
22. Headrest MEFTM moldable polyethylene foam
23. Seat skin LamousTM microfiber artificial suede
24. Seat skin lining EltasTM spunbond synthetic
continuous-filament nonwoven
25. Inside door handle TenacTM metallic-colored & low-
VOC grade polyacetal resin
26. Cup holders SunForceTM modified polyphenylene
ether foam beads
27. LIB separator HiporeTM lithium-ion battery separator
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Interview with the CFO
Executing strategies aimed
at future growth to increase
our corporate value; promoting
proactive investments for growth
and a robust capital policy
Shuichi Sakamoto
Director
Senior Executive Officer
Q
A
What is your basic financial strategy?
We are focused on consistent generation of cash flow, with an appropriate balance between
investment for growth and shareholder returns.
The Asahi Kasei Group aims to consistently expand cash flow
in two basic ways. One is by enhancing profitability through
enhanced product performance, greater cost competitiveness,
and business structure improvement, and the other is by
improving capital efficiency through intragroup financing and
appropriate control of inventory levels. To obtain stable and
low-cost financing, we employ various fund-raising methods
such as borrowing from banks, issuing bonds, and issuing
commercial paper flexibly and dynamically in accordance with
our financial circumstances.
Under our “Cs for Tomorrow 2018” (CT2018) management
initiative, we will generate cash flow not only by implementing
three basic strategies of “pursuit of growth and profitability,”
“creation of new businesses,” and “acceleration of globaliza-
tion,” and by further raising competitiveness of established
businesses, but also by creating new added value in each
sector. Cash flow generated through these efforts provides
further resources to invest for growth as well as to return to
shareholders. We are careful to maintain an appropriate bal-
ance between the two.
Primary financial metrics
Dividends per share
Payout ratio
Net income per share (EPS)
Net income per total assets (ROA)
Net income per shareholders’ equity (ROE)
Net income per net sales (ROS)
Total asset turnover ratio
Financial leverage
Net income per shareholders’ equity and
interest-bearing debt (ROIC)
D/E ratio
FY2012
FY2013
FY2014
FY2015
FY2016
¥14
36.4%
¥38.43
3.3%
7.1%
3.2%
1.04
2.1
5.7%
0.47
¥17
23.5%
¥72.48
5.5%
11.7%
5.3%
1.02
2.2
7.7%
0.33
¥19
25.1%
¥75.62
5.4%
10.6%
5.3%
1.01
2.0
7.5%
0.25
¥20
30.4%
¥65.69
4.3%
8.6%
4.7%
0.92
2.0
7.1%
0.43
¥24
29.1%
¥82.34
5.1%
10.5%
6.1%
0.84
2.0
7.6%
0.35
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Q
A
How is your progress toward the CT2018 financial targets?
In fiscal 2016 we made a favorable start toward our fiscal 2018 targets.
Our aim is to build a portfolio of high value-added businesses
with high profitability in 2025. The 3-year period of CT2018 is
focused on building the base toward that goal, and our targets
for fiscal 2018 are ¥2.2 trillion in net sales and ¥180.0 billion in
operating income.
We had expected fiscal 2016 to be a challenging year
with reduced reimbursement prices for pharmaceuticals, the
impact of the higher yen, and increased retirement expenses.
But thanks to efforts in each business to expand sales and
reduce costs, we achieved results above the forecast. We even
exceeded our fiscal 2018 targets of 8.2% for operating margin,
¥110.0 billion for net income, 9.0% for ROE, and 7.0% for ROIC.
In all, we made a good start in fiscal 2016 as the first year of the
3-year management initiative.
Fiscal 2017 will be a pivotal year as the middle year of the
3-year period. Though the operating environment changes
incessantly, we find no need to change the basic approach laid
out in CT2018. We will further advance our strategies toward
the achievement of our objectives while each individual
business adapts appropriately to change. We are targeting net
sales of ¥1,990.0 billion and operating income of ¥165.0 billion
in fiscal 2017. While working to expand operating income by
emphasizing profitability in each business, we will continue
to review our strategic shareholdings in accordance with the
corporate governance code.
Q
A
Please tell us your perspective on funding for strategic investment, and shareholder returns
including stock buybacks.
We will steadily advance our growth strategy as we aim for greater shareholder returns.
We plan to adopt and execute strategic investments totaling
¥700 billion over the 3-year period of CT2018. We adopted
decisions on ¥150 billion of this in fiscal 2016, and another
¥200 billion is slated for adoption in fiscal 2017. We are steadily
advancing measures to heighten the competitive advantages
of our existing businesses and to expand production capacity
for businesses operating on a global scale and for businesses
with potential to garner new demand in the Japanese market.
Although that leaves about half of the ¥700 billion for fiscal
2018, we are currently studying investments for non-linear
growth measures including M&A to proactively expand
businesses.
Our funding policy to support these initiatives is to rely
on borrowings in principle, while maintaining a D/E ratio of
around 0.5. We will strive to maintain stable and low-cost
financing, sustaining a sound financial position, as we advance
our strategic investments.
Our basic policy for shareholder returns is to strive for
stable dividends and increased dividends through continuous
earnings growth while maintaining an appropriate internal
reserve to perform well-balanced investment for growth and
return to shareholders. Under CT2018 we are targeting a total
return ratio of 35% in fiscal 2018, including share buybacks
performed flexibly. Our fiscal 2016 dividend was raised by ¥4
to ¥24 per share, and we will remain focused on shareholder
returns in accordance with our basic policy.
Dividends per share and payout ratio
35.1
36.4
24
20
19
17
30.4
29.1
14
14
25.1
23.5
(¥)
30
15
0
'11
'12
'13
'14
'15
'16
Dividends per share (left scale)
Payout ratio (right scale)
(%)
50
25
0
(FY)
14
Asahi Kasei Report 2017
Asahi Kasei Report 2017
15
History of Providing Solutions for the Challenges of Society
The Asahi Kasei Group has consistently grown through proactive transformation of its business portfolio
to meet the evolving needs of every age. We have constantly provided products and services
that form solutions to various environmental and social challenges. As society undergoes further changes,
we will continue to contribute to life and living for people around the world by Creating for Tomorrow.
Founder:
Shitagau Noguchi
From 1922
Shitagau Noguchi, the founder of Asahi
Kasei, succeeded in Japan’s first industrial
production of ammonia by chemical
synthesis in Nobeoka, Miyazaki, in 1923
using technology licensed from Italy. The
ammonia was used in the production of
Bemberg™ regenerated cellulose fiber,
part of a diverse range of business opera-
tions that included chemical fertilizer and
viscose rayon. As industry modernized
and the economy of Japan achieved self-
sustainable growth, our operations made
important contributions to the stability of
people’s lives.
From 1950
In 1957 we began production of polysty-
rene, and in 1959 entered the synthetic
fiber business. These were followed by
the three new businesses of nylon fiber,
synthetic rubber, and construction mate-
rials. In 1968 we began construction of a
petrochemical complex in the Mizushima
area of Kurashiki, Okayama, Japan, paving
the way for our full-scale development of
petrochemical operations. Our products
during this period supported improve-
ments in the quality of life during Japan’s
high-growth period.
Part of the ammonia plant completed in 1923
(Nobeoka, Miyazaki, Japan)
Saran Wrap™ launched in Japan in 1960
The Bemberg™ plant which started operation in
1931 (Nobeoka, Miyazaki, Japan)
Naphtha cracker (Kurashiki, Okayama, Japan)
Portfolio transformation
Chemicals
Fiscal 1940
Net sales
¥56 million
Foods
Fibers
Fiscal 1960
Net sales
¥44.9 billion
From 1970
In 1972 we entered the homes business
with the launch of the Hebel Haus™, and
in 1974 we entered the medical device
business with hollow-fiber membrane
artificial kidneys. Our entry into the elec-
tronics business began with our launch of
Hall elements (magnetic sensors) in 1980
and start of LSI manufacture in 1987.
Our products continued to help make
life more comfortable and convenient as
society’s needs diversified.
The first Hebel Haus™ (Kamata model home park)
Hollow-fiber membrane
artificial kidneys
LSIs
Others
Fibers
Foods and
Fermentation Chemistry
Construction
Materials
Homes
Fiscal 1980
Net sales
¥800.1 billion
Chemicals
Establishing the basis
for modern life
Sufficiency of daily necessities, improvement in quality of homes,
development of public infrastructure
• Development of chemical industry and
modern agriculture
• Interbellum economic downturn and
World War II
• Post-war recovery and
modernization of industry
• Period of high economic growth
• Stable economic growth
• Economic bubble
16
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Asahi Kasei Report 2017
17
From 2010
Under the “For Tomorrow 2015” manage-
ment initiative which began in 2011, we
proactively expanded our operations
through major acquisitions. In 2012 we
entered the acute critical care business
by acquiring ZOLL Medical Corporation,
and in 2015 we acquired battery separa-
tor manufacturer Polypore International,
LP. The current management initiative
“Cs for Tomorrow 2018” is focused on
expanding operations by heightening
the combined strength of the Asahi Kasei
Group.
From 1990
In 1992 we acquired Toyo Jozo Co., Ltd.
to reinforce pharmaceutical operations.
From 1999, we executed a program to
heighten selectivity and focus in opera-
tions, divesting our food business and
closing some fiber businesses, achieving
selective diversification. From 2000
onward, we also established many over-
seas operations, mainly in Asia, laying the
foundation for global management.
The LifeVest™ wearable defibrillator
Pharmaceuticals just after the Toyo Jozo merger
We are Creating for
Tomorrow, providing
new value to society
by enabling living in
health and comfort
and harmony with the
natural environment
1922–
2016
Celgard™ Li-ion battery separator of Polypore
Asahi Kasei Electronics Materials (Suzhou) Co., Ltd.,
a major manufacturing base for photosensitive
dry film
Critical Care
Others
Fibers
Health Care
Health Care
Others
Fibers
Construction
Materials
Electronics
Construction
Materials
Fiscal 2000
Net sales
¥1,269.4 billion
Fiscal 2016
Net sales
¥1,883.0 billion
Homes
Chemicals
Increased comfort and
convenience
• Two decades of meager growth
after collapse of bubble
• Effect of global economic crisis
Homes
Chemicals
Electronics
Heightened environmental consciousness
• Changing values after the Great East Japan Earthquake
• Emergence from period of slow economic growth
16
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17
Feature 1: Process of Creating Value in the Asahi Kasei Group
Creating for Tomorrow
The
The
employee
employee
Employee
fulfillment
The
The
community
community
Community
outreach
The
The
environment
environment
Environmental
protection
The
The
customer
customer
Customer
satisfaction
Society of clean
environmental energy
Sustainable Increase
in Corporate Value
The
The
supplier
supplier
Fair business
dealings
The local
The local
economy
economy
Local economic
participation
Business
operations
The
The
shareholder
shareholder
Shareholder
returns
Society of healthy/comfortable
longevity with peace of mind
Pursuit of
Pursuit of
growth and
growth and
profitability
profitability
Creation of
Creation of
new businesses
new businesses
Acceleration of
Acceleration of
globalization
globalization
“Cs for Tomorrow 2018”
strategic management initiative
CSR in Action
CSR Fundamentals
Compliance, Responsible Care, Corporate Citizenship,
Respect for Employee Individuality
Group Mission
Contributing to life and living for people around the world
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19
The Asahi Kasei Group constantly aims to increase corporate value
Creating for Tomorrow
The commitment of the Asahi Kasei Group: To do all that we can in every era to help the people of the world make
the most of life and attain fulfillment in living. Since our founding, we have always been deeply committed to
contributing to the development of society, boldly anticipating the emergence of new needs. This is what we mean
by “Creating for Tomorrow.”
Providing
value
We contribute to solutions to two important challenges faced by society, “clean environmental
energy” and “healthy/comfortable longevity,” through our diversified businesses.
▶P.20
Value Provided
by the Asahi Kasei
Group
The
environment
Shift to sustainable society;
tightening environmental
regulations
Healthcare
Expansion of
global healthcare markets
Management
Greater importance of
transparency and CSR
IT
Spread of IoT and
other IT advances
Society of clean
environmental energy
Society of healthy/comfortable
longevity with peace of mind
Energy
Increasing energy demand;
diversification of supply
Demographic
change
Increasing world population;
aging population in
developed countries
Social
economy
Increasing globalization;
growing geopolitical risks
Food
Growing food demand
Business
activity
▶P.42
Operating Segments
Focused on the three basic strategies of “pursuit of growth and profitability,” ”creation of
new businesses,” and “acceleration of globalization,” we are strengthening high value-added
businesses to create new value for people in the world.
Basic strategy
Pursuit of growth
and profitability
Creation of new
businesses
Acceleration of
globalization
Focus of CT 2018
Building the base for the next phase with connections
among diverse businesses and diverse human resources
Advancing toward
2025
Creating a portfolio of high-profitability,
high value-added businesses
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19
Feature 2: Value Provided by the Asahi Kasei Group
Our Group Vision is to provide new value to society by enabling “living in health and comfort” and “harmony with the natural
environment” in accordance with our Group Mission of contributing to life and living for people around the world. The Hall
element is a notable example of a product that illustrates how Asahi Kasei has created value from the past to the present, and
how we will continue to create value in the future.
Hall element
The Hall element is a highly sensitive magnetic sensor
made with a thin film of semiconductor material.
The Hall element works by utilizing the Hall effect, in
which magnetic fields cause change in voltage. With
high sensitivity, Hall elements from Asahi Kasei can
detect magnetic flux density and orientation. A broad
range of applications include contactless switches in
combination with magnets, angle sensors, and current sensors. Geomagnetic
sensors using Hall elements have also been commercialized, and are widely used
in smartphones. Asahi Kasei started mass production of Hall elements in 1975
and met various evolving needs of society over the following four decades by
continuously developing new applications to create new value.
Applications
Electric motors
The Hall element contributed to the commercializa-
tion of ultra-small brushless DC motors. Advantages
include longer service life by eliminating the friction
and wear of brushes, suppression of electromag-
netic noise, higher drive efficiency, and lower
power consumption. Applications have included
electronic products such as VCRs and computers,
appliances such as refrigerators and washing
machines, and automotive components.
Appliances
VCRs
Computers
CD drive
Development of Hall element
starts for collision sensor
(originally part of airbag system)
Components
using Hall element
Electric motor
1970
1975
1980
Thin-film technology
1985
Hall IC
1990
Hall element
breakthrough timeline
20
Asahi Kasei Report 2017
Launch of development
Entry to LSI business, advancing to next stage
Asahi Kasei Report 2017
21
80%
global share
of cumulative
production
volume
(FY2016)
Smartphones
Energy-efficient
appliances
Vehicle
components
Rotating axis
CPU
cooling fan
Power window
Electronic compass
The electronic compass was devel-
oped by combining Hall elements,
LSIs to amplify the sensor signals,
and signal-processing software
algorithms.
DVD player
1995
2000
2005
2010
2015
Rotational angle sensor
Electronic compass
Generating new demand
Magnetic convergence plate technology
20
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Asahi Kasei Report 2017
21
Feature 2: Value Provided by the Asahi Kasei Group
Notable Example of Value Creation—The Electronic Compass
Our invention of the electronic compass was achieved by combining technology for magnetic sensors to measure
geomagnetism with our LSI and software technology. The electronic compass significantly enhanced the functional-
ity of mobile phones and smartphones, enriching the experience of map applications such as pedestrian navigation
systems and contributing to their widespread popularity.
About the electronic compass
The outset
The electronic compass, a semiconductor device
that determines azimuth by measuring geomagne-
tism, is widely utilized for map applications installed
in smartphones such as pedestrian navigation
systems. Asahi Kasei developed the electronic com-
pass by combining our technology for magnetic
sensors, LSI technology to amplify the sensor signals,
and signal-processing software algorithms. Asahi
Kasei has earned a dominant share of the global
electronic compass market.
Magnetic North Pole
Geographic North Pole
Standard of azimuth
Horizontal
component
=
Vertical
component
Geomagnetism
Equator
Around 2000, when GPS was
becoming a standard feature in
mobile phones, we anticipated
that there would be demand for
pedestrian navigation systems
similar to vehicle navigation
systems. Unlike vehicle speed,
however, walking is too slow to
enable the direction of movement
to be determined from GPS. Realizing that an
electronic compass would be required to determine
azimuth by measuring geomagnetism, we initiated
its development.
Asahi Kasei’s advantage for development
Competitive strength
Our development of the electronic compass was
not oriented as an effort to find a new outlet for a
succession of our technologies starting from sensors
and followed by LSIs. Rather, we first identified
a market need and then took stock of our range
of existing technologies, including sensors, LSIs,
other constituent technologies, and manufacturing
technology, and considered how to apply them in
the development. We also leveraged our established
business connections to ascertain customer needs
from the early stages of development, and made
many proposals. In addition to the advantage
gained from each of these aspects, our true strength
was the ability to combine all of them together in a
new business model culminating in the electronic
compass.
While other companies
focused on the develop-
ment of sensors with high
sensitivity, which was costly
and time-consuming, Asahi
Kasei already had an estab-
lished mass-production
infrastructure for magnetic sensors as well as signal-
amplifying technology and distribution channels in
its LSI business. Instead of aiming for high sensitivity,
we sought to swiftly make an available product
that provided utility to users. Our combination
of technologies for sensors, LSIs, and algorithms
enabled us to provide a solution to customers at low
cost in a short time.
22
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23
Creating Value for the Future
Hall elements are poised for expanded use in the automobile field due to emerging trends for intensified application
of electronic and control systems throughout the vehicle. The technology for Hall elements has also enabled the
creation of infrared sensors which will meet growing demand in new fields such as human detecting sensors and gas
sensors.
For automobiles
Infrared sensor
In addition to conven-
tional applications in
motor control for power
steering, power win-
dows, and air conditioner
fans, demand for sensors
in the power train is
expected to grow in line
with engine downsizing
and an increasing number of gears in the transmis-
sion for improved fuel efficiency and compliance
with environmental regulations. The development
and spread of autonomous vehicle technology
around the world will provide further impetus to
strong demand growth for sensors in vehicles.
The infrared sensor was developed using thin-film
semiconductor technology cultivated in the
magnetic sensor business. It can be used to detect
human presence in homes and other indoor
environments. It also has great potential for use as
a gas sensor in systems to heat and cool buildings.
Especially in high-rise office buildings and in well-
sealed homes, the efficiency of heating and cooling
is highly dependent on the amount of outside air
drawn in. By measuring indoor CO2 concentration,
a gas sensor can enable the minimum necessary
ventilation while maintaining a comfortable indoor
temperature, resulting in a significantly reduced
energy requirement.
Hall elements contributing to reduced CO2 emissions
Under the “Cs for Tomorrow 2018” medium-term management initia-
tive, Asahi Kasei aims to contribute to solutions for “clean environmental
energy” through our diverse businesses. As magnetic sensors, Hall
elements play an important role in saving energy. Electric motors are
used in every kind of home appliance. By accurately detecting rotation
position and speed, magnetic sensors enable the motors to run with the
minimum amount of electricity, resulting in reduction of CO2 emission
from power generation.
We certified Hall ICs and Hall elements for air conditioner DC motors
as global warming conscious products in accordance with our original
guidelines. Our business activities with these products will make an
ongoing contribution to the environment.
22
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Asahi Kasei Report 2017
23
Directors
1. Chairman & Director
Ichiro Itoh
2. President & Representative Director
Presidential Executive Officer
Hideki Kobori
After many years of experience in the fibers business, he held several
leadership positions including executive officer for planning, accounting,
and finance, and vice-presidential executive officer. He has been Chairman
& Director since April 2010. He possesses a wealth of experience and a
broad range of knowledge on the Asahi Kasei Group’s businesses and
corporate management.
After many years of experience in the electronics business, including as
President & Representative Director of Asahi Kasei Microdevices Corp., he
oversaw strategy, accounting, finance, and internal control. He assumed
the role of President of Asahi Kasei in April 2016. He possesses a wealth of
experience and a broad range of knowledge on the Asahi Kasei Group’s
businesses and corporate management.
5. Director
Lead Executive Officer
Nobuyuki Kakizawa
6. Director
Lead Executive Officer
Soichiro Hashizume
After many years of experience in the housing businesses, he held
several leadership positions including Assistant Senior General Manager
of Accounting and Finance at Asahi Kasei Corp. and General Manager of
General Affairs at Asahi Kasei Homes Corp. He became General Manager
of General Affairs in April 2013 with responsibility for formulating and
executing measures for risk management and compliance of the Asahi
Kasei Group. He possesses a wealth of experience and a broad range of
knowledge on risk management and compliance.
After many years of experience in human resources, he held several
leadership positions including President of PTT Asahi Chemical Company
Limited. He has been responsible for human resources development and
the planning and execution of personnel and labor measures of the Asahi
Kasei Group since April 2013. He possesses a wealth of experience and a
broad range of knowledge on human resources.
9. Outside Director
Tsuneyoshi Tatsuoka
With his wealth of experience and broad range of insight into industrial and
economic policy, including as administrative vice-minister of the Ministry
of Economy, Trade and Industry, he fulfills his role as Outside Director in
deciding on important matters of the Asahi Kasei Group as well as oversee-
ing business execution.
9
8
7
1
2
3
4
5
6
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25
3. Representative Director
Vice-Presidential Executive Officer
Masafumi Nakao
4. Director
Senior Executive Officer
Shuichi Sakamoto
After many years of experience in R&D and new business development in
the electronics business, he held several leadership roles including General
Manager of the R&D Center and executive officer for quality assurance at
Asahi Kasei Microdevices Corp. Since April 2012, he has overseen R&D of
the Asahi Kasei Group. He possesses a wealth of experience and a broad
range of knowledge on R&D.
After many years of experience in the petrochemical business, he
became General Manager of Corporate Strategy in November 2014 with
responsibility for formulating and executing the management strategy
and business strategies of the Asahi Kasei Group. Since April 2016, he has
overseen accounting, finance, and IT. He possesses a wealth of experience
and a broad range of knowledge on the Asahi Kasei Group’s businesses and
corporate management.
7. Outside Director
Norio Ichino
8. Outside Director
Masumi Shiraishi
With his wealth of business management experience and broad range of
insight as a corporate executive, including as President of Tokyo Gas Co.,
Ltd., he fulfills his role as Outside Director in deciding on important matters
of the Asahi Kasei Group as well as overseeing business execution.
With her wealth of experience and broad range of insight into economics
and society, including as a professor at Kansai University, she fulfills her role
as Outside Director in deciding on important matters of the Asahi Kasei
Group as well as overseeing business execution.
24
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25
Corporate Governance
1
Basic Views on Corporate Governance
The Group Vision of Asahi Kasei is to provide new value to society
and solve social issues by enabling “living in health and comfort”
and “harmony with the natural environment” under the Group
Mission of “contributing to life and living for people around
the world.” With this as a base, we aim to contribute to society,
achieve sustainable growth, and enhance corporate value over
the longer term by promoting innovation and creating synergy
through integration of various businesses. We continue to pursue
the optimal corporate governance as a framework to make
transparent, fair, timely, and resolute decisions in accordance with
changes in the business environment.
2
Business Management Organization and Other Corporate Governance Systems regarding
Decision-making, Execution of Business, and Oversight in Management (as of June 28, 2017)
Shareholders Meeting
Audit
Election
Election
Oversight
Board of Corporate Auditors
(5 Corporate Auditors, including
3 Independent Outside Corporate Auditors)
Board of Directors
(9 Directors, including
3 Independent Outside Directors)
Cooperation
Audit
Independent Auditors
Execution of operations
Audit
Management Council
President
Nomination
Advisory Committee
Remuneration
Advisory Committee
Oversight
Risk Management & Compliance Committee
Compliance Hotline
Responsible Care Committee
Internal Audit Department
Group staff functions
Core Operating Companies, Strategic Business Units
3
Corporate Governance System
Oversight and audit
The Board of Directors, which consists of nine Directors including
three independent Outside Directors (one-third), makes decisions
on matters requiring a Board of Directors resolution in accordance
with laws or the Articles of Incorporation, makes decisions on
important matters for Asahi Kasei Corp. and other companies of
the Group, and oversees execution of operations by Directors and
Executive Officers.
The newly established Nomination Advisory Committee and
Remuneration Advisory Committee under the Board of Directors
consist primarily of Outside Directors who provide active involve-
ment in the consideration of matters such as: optimal makeup
26
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Asahi Kasei Report 2017
27
and size of the Board of Directors, policy regarding nomination
of candidates for Directors and Corporate Auditors, criteria on
the independence of Outside Directors and Outside Corporate
Auditors, remuneration policy and system for Directors, and evalu-
ation of individual Directors to determine remuneration based on
performance.
The Board of Corporate Auditors consists of five Corporate
Auditors including three independent Outside Corporate Auditors
(a majority). In accordance with the audit policy stipulated by the
Board of Corporate Auditors, each Corporate Auditor oversees
execution of duties by Directors by attending the Board of
Directors meetings and examining the state of operations. To
enhance functions of the Board of Corporate Auditors and to
facilitate smooth cooperation among Corporate Auditors from
inside the company and Outside Corporate Auditors, a Corporate
Auditors Office is staffed with full-time employees.
PricewaterhouseCoopers Aarata LLC performs financial audits
based on the Companies Act and the Financial Instruments and
Exchange Act.
Furthermore, the Internal Audit Department conducts
internal audits based on the audit plan. Results of internal audits
performed by each group staff function are aggregated by the
Internal Audit Department and reported to the Board of Directors.
Execution of operation
We have adopted an Executive Officer system to enable faster
business execution, and clearly define responsibilities; Directors
fulfill decision-making and oversight functions, and Executive
Officers fulfill execution of operations.
The Decision-making and Approval Authority Regulations
of the Asahi Kasei Group stipulate detailed criteria for decision-
making with regard to matters concerning the management
plan, investments and loans, funding and financial management,
organization and management system, research and develop-
ment, and production technology, and delegate authority from
the Board of Directors to the Management Council, strategic
business units, and core operating companies.
4
Policy and Procedure to Nominate Candidates for Directors
In selecting candidates for Directors, we appoint persons with
deep insight and excellent skills suitable for the role. For Directors
from inside the company, we select those with expertise, experi-
ence and skills required in the respective field. On the other hand,
Outside Directors are expected to supervise the management
from an objective standpoint based on their deep insights and
rich experience. Therefore we select from among people who
were corporate executives, academic experts, or public officials.
To further heighten objectivity and transparency in appointing
candidates for Directors, we established a Nomination Advisory
Committee which consists primarily of Outside Directors who
take part in discussions of the makeup and size of the Board of
Directors and policies for nomination of Directors and Corporate
Auditors, and provide advice to the Board of Directors.
5
Policy and Procedure to Determine Remuneration of Directors
Directors’ remuneration consists of fixed base remuneration,
performance-linked remuneration, and stock-based remuneration.
The monetary amount and number of stocks are determined based
on the remuneration system approved in advance by the Board of
Directors, within the limits approved at a shareholders meeting.
Fixed base remuneration provides specific amounts in
accordance with the rank of each Director. Performance-linked
remuneration is based on consolidated financial results and indi-
vidual performance evaluation. Performance is comprehensively
evaluated in consideration of the degree of achievement of
individually established objectives, achievements, contributions
to financial performance, and the degree of contributions, in
addition to management benchmarks such as net sales, operating
income, and ROA.
The stock-based remuneration system is designed to reward
current effort with compensation reflecting future share prices
by granting the shares at the time of each individual’s retirement
from any position of officer of the Asahi Kasei Group, with the
number of shares to be granted being determined in accordance
with each Director’s rank.
Remuneration for Outside Directors, however, is comprised
solely of fixed base remuneration.
We determine the level of remuneration based on research
data provided by external specialized agencies, etc.
In order to further improve objectivity and transparency of
Directors’ remuneration, we have established a Remuneration
Advisory Committee, which consists primarily of Outside Directors,
who participate in discussions about the Directors’ remuneration
system and operation thereof, and provide advice to the Board of
Directors.
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27
Corporate Governance
6
Independence Standards and Qualification for Outside Directors and Outside Corporate Auditors
In determining that Outside Directors and Outside Corporate
Auditors are independent, we ensure that they do not correspond
to any of the following and whether they are capable of perform-
ing duties from a fair and neutral standpoint.
5. Company which receives donation or aid (¥10 million or more
in a year) from the Asahi Kasei Group or person who executes
businesses thereof
6. Main shareholder of the Asahi Kasei Group (person or com-
1. Person who currently executes or has executed businesses of
the Asahi Kasei Group (executive directors, executive officers,
employees, etc.) over the last 10 years
pany who directly or indirectly owns 10% or more of all voting
rights in Asahi Kasei) or person who executes businesses
thereof
2. Company or person who executes businesses thereof whose
7. Person who executes businesses of a company which elects
major business partner is the Asahi Kasei Group (company with
more than 2% of its annual consolidated net sales from the
Asahi Kasei Group)
Directors, Corporate Auditors, or employees of the Asahi Kasei
Group as its own Directors or Corporate Auditors
8. Independent Auditors of the Asahi Kasei Group or any staff
3. Major business partner of the Asahi Kasei Group (when
thereof
payments by this partner to the Asahi Kasei Group account for
more than 2% of our annual consolidated net sales or when
we borrow money from such partner amounting to more than
2% of our consolidated total assets) or person who executes
businesses thereof
4. Person who receives money or other financial gain (¥10 million
or more in a year) from the Asahi Kasei Group as an individual
other than remuneration as a Director or Corporate Auditor of
Asahi Kasei
9. Person who fell into any of the categories 2 through 8 above
over the last three years
10. Person who has a close relative (spouse, relative within the sec-
ond degree of kinship, and those who share living expenses)
who falls under any of the categories 1 through 8 above,
provided that “person who executes businesses thereof” in
1, 2, 3, 5, 6, and 7 above shall be replaced with “important
person who executes businesses thereof (executive directors,
executive officers, etc.)”
7
Audits
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 LLC is contracted as the
Independent Auditors to perform financial audits in accordance with
the Companies Act and Financial Instruments and Exchange Act.
The Independent Auditors form a team of assistants for
performance of the audit in accordance with its audit plan,
comprising 17 certified public accountants and 34 other specialist
accountants.
The Internal Audit Dept., 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 of the consolidated financial audit of Asahi
Kasei each quarter and each fiscal year.
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29
Corporate
Governance
Feature
Feature
The effectiveness of our Board of Directors is regularly evaluated after each fiscal year, and results of
evaluation are disclosed.
1. Measures implemented in fiscal 2016
The Board of Directors implemented the following measures in
fiscal 2016 based on evaluation of the previous fiscal year.
1) Change of agendas for Board of Directors meetings
In order to enhance the supervisory functions of the Board of
Directors, the agendas for Board of Directors meetings were
reviewed in order to place greater focus on discussions of corpo-
rate governance, risk management, and compliance. After several
discussions at the meetings, the new Asahi Kasei Group Code of
Conduct was established and became available on the Asahi Kasei
website in April 2017.
2) Proposal for adoption of a stock-based remuneration
system
By more clearly linking remuneration of Directors and Asahi Kasei’s
shareholder value, a new system was proposed to reinforce the
common interest between Directors and shareholders, including
both the benefits and risks associated with variations in the
share price. The system is designed to enhance the motivation
of Directors to contribute to greater business performance and
corporate value of Asahi Kasei over the longer term. For the
purposes above, we proposed the introduction of a stock-based
remuneration system at the 126th Ordinary General Meeting of
Shareholders, and approval was received. To ensure objectivity
and transparency, the proposal for adopting the system was
deliberated at the Remuneration Advisory Committee consisting
primarily of Outside Directors.
3) Enhanced provision of information to Outside
Directors and Outside Corporate Auditors
As part of our effort to expand the provision of information to
Outside Directors and Outside Corporate Auditors, we held tours
of our sites for Outside Directors and Outside Corporate Auditors
to help them gain a deeper understanding of our operations. In
addition to holding such site visits on an annual basis, we provide
regular explanations by people responsible for each business unit
in order for Outside Directors and Outside Corporate Auditors to
keep abreast of the current business situation and issues.
2. Moving forward
Through the measures described above, we believe that we have
enhanced the supervisory functions of the Board of Directors.
Based on deliberations of the effectiveness of the Board of
Directors during fiscal 2016, we will continue and expand these
efforts in the future. We also plan to develop discussions during
fiscal 2017 on the longer-term direction of management strate-
gies, the progress of the medium-term management initiative,
and IR activities, as well as the opinions of investors and trends of
capital markets.
There is an increasing need for the Asahi Kasei Group to
conduct management from a global perspective through large-
scale M&A and overseas business development, and the business
environment is rapidly changing. In line with such changes in
the environment, we recognize the need to flexibly adapt the
membership and the structure of the Board of Directors in the
future.
Greater diversity of Directors is needed for growth over the longer term
I feel that the current operation of the Board of Directors is generally appropriate. Outside
Directors have diverse backgrounds, including in corporate management, industrial
policy, and academia, and independence is maintained. Directors are given ample time
to consider proposals in accordance with their content, and the frequency of Board
meetings is appropriate. Discussions among Directors are uninhibited and lively, and
frank opinions are exchanged.
Nevertheless, viewed from a longer-term perspective, there are outstanding issues
concerning the composition of Directors. If we are to have a broader range of business
strategies, including for future M&A and global development, I think we need to bring in
more people having backgrounds in technology, women from within the company, and
younger people as Directors. I believe this is important for the longer-term development
of Asahi Kasei, and I will continue to clearly express my thoughts on the matter.
Masumi Shiraishi
Outside Director
Asahi Kasei Report 2017
29
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Specific Measures to Heighten Compliance
“Compliance,” “Communication,” and “Challenge” are identified as areas of emphasis under our Cs for Tomorrow 2018
management initiative. To heighten awareness for compliance among personnel, we are focusing on the “three actuals”
of the actual place, actual thing, and actual fact. We believe that the trust of society is earned by having employees go
to the actual place in person, see the actual thing with their own eyes, and know the actual facts.
Basic principles
The Asahi Kasei Group takes compliance seriously, and fully adheres to laws and regulations that are applicable to each business and
function, as well as internal company rules. Each employee is also expected to uphold high ethical standards and respect social norms
throughout the course of business activities.
Actions during the past year
Enhanced framework for risk management and compliance
Enactment of Asahi Kasei Group Basic Regulation for Risk
Management & Compliance
We newly enacted the Asahi Kasei Group Basic Regulation for Risk
Management & Compliance to clearly specify basic systems and
organizations for the central aggregation and administration of all
matters related to risk management and compliance.
Establishment and composition of Risk Management &
Compliance Committee
Our previous Corporate Ethics Committee and Risk Management
Committee were combined into a new Risk Management &
Compliance Committee chaired by the President of Asahi Kasei
Corp. The new committee monitors the management of risks and
the state of compliance throughout the Asahi Kasei Group.
Outline of Asahi Kasei Group Basic Regulation
for Risk Management & Compliance
1. Purpose of the regulation
2. Definition of terms for risk management & compliance
3. Scope of application of the regulation
4. Framework for risk management & compliance
1) Designation of Executive Officer for Risk Management &
Compliance
2) Establishment and composition of Risk Management &
Compliance Committee
3) Establishment of Risk Management & Compliance
Oversight Department/Risk Management & Compliance
Promotion Departments
4) Role of Presidents of SBUs and core operating companies
Framework for risk management & compliance
Board of Directors,
Management Council
Deliberation/decision
Reporting
Risk Management &
Compliance Committee
(Secretariat)
Instructions/reports
Risk Management & Compliance,
General Affairs
(Risk Management &
Compliance Oversight Department)
Coordination
Administrative departments
(Risk Management &
Compliance Promotion Departments)
5) Designation and role of Risk Management & Compliance
Business units
Supervisors/Risk Management & Compliance Managers
5. The Asahi Kasei Group Code of Conduct
6. Crisis response
7. Internal reporting system
Strategic Business Units
Core Operating Companies
Subsidiaries (worldwide)
Subsidiaries (worldwide)
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31
Formulation of compliance policy, heightening awareness
Establishment of new Asahi Kasei Group Code of Conduct
For greater ease of understanding among our personnel around
the world, we fundamentally reviewed the content of our former
“Corporate Ethics—Basic Policy and Code of Conduct” and adopted
a new “Asahi Kasei Group Code of Conduct” which is applied
throughout all companies of the Asahi Kasei Group. In fiscal 2017 we
distributed a booklet on the new code of conduct to all employees
in Japan, and disclosed the code of conduct on our public website.
(Measures to gain understanding and familiarity with the Asahi Kasei
Group Code of Conduct among subsidiaries and affiliates located
outside Japan are scheduled to be performed henceforth.)
Efforts for heightened awareness at each workplace
Each workplace in Japan is holding training sessions to review the
content of the Asahi Kasei Group Code of Conduct. To support
the consistent and effective implementation of these training
sessions, we prepared several case studies for employees to easily
understand how elements of the code of conduct relate to real-
world situations, as well as a supplementary reader that explains
the content of the code of conduct, with cartoon illustrations.
Outline of the Asahi Kasei Group Code of Conduct
Case studies
1. Ensuring Safety, Environmental Protection, and High
1. Reporting, informing, and/or discussing as fundamental to
Quality to Contribute to Life and Living
(1) Maintaining Thorough Safety in All Aspects
ensuring thorough safety
2. What is the first thing you think of when putting priority on
(2) Provision of Safe and High-Quality Products and Services that
Customers Can Rely On
the safety and health of customers?
3. Health management at the workplace
(3) Thorough Management of Workplace Safety, Ensuring Safe
4. Environmental standards that were acceptable in the past, but...
and Comfortable Workplace Environments
(4) Environmental Protection and Harmony with Local
Communities
5. Dealing with sudden media inquiries
6. 1) Even if good data is obtained...
2) Although sales are important...
7. Even when the company doesn’t give you instructions...
8. At social gatherings of industry associations...
9. 1) What is optimal procurement?
2) Offers of gifts from suppliers
10. When enthusiastic instruction may seem dehumanizing...
11. Beware of overdependence on certain individuals!
12. 1) Discretion when speaking in the elevator!
2) Caution when writing in blogs or SNS
13. 1) Be wary of e-mail from unknown parties!
2) Carelessness with customer information
14. Carelessness with technological information
15. Conduct with integrity (part 1)
Conduct with integrity (part 2)
2. Maintaining Sincere Relationships with Various Related
Parties around Us
(5) Timely and Appropriate Disclosure of Information to Society
(6) Appropriate Descriptions to Customers, Provision of Safe and
Reliable Products and Services
(7) Healthy Relationships with Customers and Government
Officials
(8) Fair Relationships with Competitors
(9) Optimized Procurement and Healthy and Appropriate
Relationships with Suppliers
(10) Respect for Human Rights and Diversity
3. Utilizing Management Assets
Appropriately and Effectively
(11) Performing Work with Integrity and Responsibility
(12) Compliance with Accounting and Tax Rules,
Protecting Company Property
(13) Protecting and Managing Information
(14) Protecting and Respecting Intellectual Property Rights
(15) Compliance with Laws and Regulations,
Practicing Corporate Ethics
The Asahi Kasei Group Code of Conduct is available at the following address:
www.asahi-kasei.co.jp/asahi/en/csr/compliance/about_compliance/pdf/about_compliance_01.pdf
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31
Specific Measures to Heighten Compliance
Cartoon illustrations of
case study examples
Measures for risk management
Reviews to identify latent risks in each business unit
Managers responsible for risk management and compliance are
designated in each SBU, core operating company, and subsidiary,
and work to assess and analyze their related risks and to plan and
implement measures to mitigate serious risks. Through the Risk
Management & Compliance Committee, we confirm and follow-
up on the state of risk management in each business unit.
Measures applied throughout the Asahi Kasei Group
Prevention of bribery: To prevent the occurrence of any act
which would constitute bribery, we newly enacted Asahi Kasei
Group Policies for Prevention of Bribery, including basic policies to
prohibit bribery and clear procedures to follow to reduce bribery-
related risks.
Protection of personal information: In conformity with the May
2017 amendment of Japan’s Act on the Protection of Personal
Information, we revised the Asahi Kasei Group Regulation for
Management of Personal Information as necessary. Related depart-
ments were informed of the changes and new measures required.
Prevention of insider trading: In March 2017, an employee of
a subsidiary was fined by Japan’s Financial Services Agency for
insider trading. Taking this matter very seriously, we revised the
Asahi Kasei Group Regulation for Prevention of Insider Trading to
prevent any recurrence. Since July 2017, the revised regulation
requires advance notification of share trading by employees,
and prohibits share trading by employees prior to earnings
announcements.
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33
Feature 3: Global Executives Interviews
Asahi Kasei acquired acute critical care device manufacturer ZOLL in 2012 and battery separator man-
ufacturer Polypore in 2015 for a combined total of some $4.4 billion. While ZOLL retained its manage-
ment team after the acquisition, new leadership was installed at Polypore. In these interviews, leaders
of the two companies share their thoughts on the PMI process and other management challenges.
ZOLL
How do you evaluate the post-merger integration (PMI) pro-
cess between Asahi Kasei and ZOLL?
The process of PMI went smoothly, I think mostly because of the flexibility that Asahi Kasei
showed. ZOLL and Asahi Kasei have very different kinds of business, so we had to learn a lot
about one another’s ways of working. Asahi Kasei’s PMI team really allowed the ZOLL people
to help define what would work for ZOLL in the long term for continuous growth. It’s a good
example of what I found to be the Japanese way of making a plan after first scrutinizing condi-
tions; different from the American way of taking action first and thinking about it later.
Compensation was another area where Asahi Kasei showed flexibility. Knowing there
are big differences between the American and Japanese systems, Asahi Kasei contracted an
American compensation consulting firm to analyze what kind of incentives would be best
for ZOLL. The firm concluded that in order to achieve retention, ZOLL people should be
compensated in a different manner. But I told Asahi Kasei it wasn’t necessary. ZOLL already had
an effective compensation system that kept people satisfied, with a low turnover rate. Asahi
Kasei flexibly adopted our opinion and trusted us more than the consulting firm, and the result
was excellent.
When it comes to flexibility, I believe we owe a lot to the leadership of Fujiwara-san, the
President of Asahi Kasei at the time. He and I had many discussions about how to integrate our
companies. He always said that the key to success would be to retain the ZOLL people, since
Asahi Kasei couldn’t grow the business without them. I really appreciate his vision, giving us
flexibility to manage the business after the merger as well.
Richard Packer
Chairman, Board Director,
ZOLL Medical Corporation
Primary Executive Officer,
Asahi Kasei Corp.
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Feature 3: Global Executives Interviews
Did you find any shortcomings of Asahi Kasei?
In my view, some top management people may not really want to take bold actions for
growth. They tend to seek stability. I believe that seeking growth provides greater potential to
increase business opportunities, and ZOLL is always doing so. Like most American companies,
we don’t want to just be stable. The younger people in Asahi Kasei understand the need for
growth and are eager for it, but some of the senior people don’t give me that impression. I’m
not saying we should always take high risks aiming for high rewards. The point is striking a
balance between risk and reward. It’s good to gain a degree of stability by having diversified
operations, but we can’t expect any growth at all without taking any risk.
Why do you think some senior people place too much
emphasis on stability?
It may because of the Japanese system of lifetime employment and seniority. This functioned
very well during the period of high growth until the 1990s. But past success can be an
impediment to change. In effect, younger people are prevented from getting into positions
of responsibility early in their career. If people don’t join the management ranks until they are
near retirement, it’s natural that they would tend to value stability. They don’t want to hurt
the business during their tenure, and they can’t expect to stay long enough to follow through
on something new. If people joined the management ranks at a younger age, knowing they
had 10 or 20 years ahead of them, they would be more ambitious in taking risks to expand
their business. When I took responsibility for ZOLL, I was the youngest of the top executives;
others were more than 10 years older than I. I looked for ways to grow the business, knowing
the risks entailed, but I knew I had years ahead of me to make it work if I made a mistake. In
the United States, we have a way to fast-track young personnel, moving younger people into
management earlier and giving them responsibility for growing their business. I know this may
cause friction because some people are skipped over, and some younger people receive more
compensation than their seniors. But I believe that it is important to utilize talented young
people this way. A diversity in age is also beneficial because the more experienced people can
serve as mentors to the younger leaders, and they can reinforce one another effectively.
Packer together with Taketsugu Fujiwara,
President of Asahi Kasei at the time of the
acquisition in 2012
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35
You said growth creates opportunities. What is needed for
Asahi Kasei to grow more?
I think growth provides opportunities and solves various problems. Having worked at Asahi
Kasei for five years, I really appreciate our corporate culture, I know we have outstanding
people, and I understand how much they care about the company. Also, I have seen that we
can be very flexible. So I think we already have the foundation for further success, but that
alone is not enough. We need to build on that foundation by utilizing not only people of
various ages but also local people in various locations. By flexibly utilizing a more diverse range
of people, Asahi Kasei can build on its strengths toward further growth. I believe this can also
establish Asahi Kasei’s competitive advantage ahead of other Japanese companies in the midst
of globalization. In that sense, utilizing diversity of personnel becomes all the more important.
Looking back on the 25 years I’ve been involved in the management of ZOLL, we have
always utilized people of various nationalities. We leverage local people in the management
of our operations around the world. For example, a German person runs our business in
Germany, and a British person runs our British business. We deliberately involve local people in
the management at each location rather than sending an American person, and it has worked
well for us. Unfortunately, we have not been as successful with diversity of gender, as we do
not have enough women in high executive positions. We need to do better in this area.
Finally, could you tell us about the mission of the acute critical
care business?
I remember when I first met people from Asahi Kasei. They were fascinated by the mission
of ZOLL. Here was this medical equipment that could save a life in danger, and a company
that saw its mission as saving lives by providing the right products. On the other hand, I was
fascinated by the fact that Asahi Kasei, a 100-year-old company with $20 billion in sales mainly
in chemicals, had a mission of contributing to healthy living and longevity. You would rarely
see that attitude in an American company. Asahi Kasei sincerely held protecting life to be one
of its core values, which aligned perfectly with ZOLL’s aims. Our relationship was cemented by
sharing the same mission. Since the merger, ZOLL’s growth has accelerated and our products
save many more lives than before. Together with Asahi Kasei, ZOLL will continue to expand as
we fulfill our unchanging mission of saving lives.
The LifeVest™ wearable defibrillator
The ZOLL AED Plus™ automated external
defibrillator
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35
Feature 3: Global Executives Interviews
Polypore
What is the key to expanding your business?
The operating environment for Polypore is changing very rapidly. As electric drive vehicles
become more widespread, battery performance is improving tremendously. Performance
requirements for battery separators are constantly on the rise. We need to meet these changes
while maintaining high quality and stable supply. The key is adapting to rapid change. The
management team must clearly discern the changes, and swiftly act accordingly.
What measures have you taken to adapt to changes?
During the post-merger integration (PMI) process, we overhauled the management team.
After the acquisition, a new kind of leadership was required for Polypore. Previously, skillful
explanation was required in order to raise funds from the capital markets. As part of Asahi
Kasei, however, this became unnecessary. Rather, swift actions toward growth while integrat-
ing our businesses together and adapting to rapid changes became essential. The previous
management team was ill suited to the new tasks. The eight members of the current team
are a diverse group, including three women and several nationalities—Japanese, American,
German, and Chinese. This team is nimble enough to adapt our strategy on a monthly basis,
yet adhere firmly to a long-term growth perspective. It is also able to gain the understanding
of personnel as we busily work toward further growth.
How do you evaluate the support you’ve received from
Asahi Kasei?
The battery separator business is probably the most dynamically changing business in Asahi
Kasei. The company understands that. Investment decisions are made swiftly and flexibly with
sufficient consideration for economics and safety. A delay in judgment would be devastating
for this business. I am extremely grateful that Asahi Kasei acts promptly and appropriately to
respond to changes in the operating environment and meet customer needs.
How do you keep personnel motivated in such a rapidly
changing operating environment?
Maintaining employee motivation is absolutely vital. Among brain scientists, there is a theory
that people naturally fear change, and to maintain a balance people also need an equivalent
degree of stability. I feel that the company’s vision can serve as the needed source of stability.
While people work hard every day on new developments and quality improvements to meet
customer needs, the company’s vision remains an unchanging beacon to continuously strive
toward. For example, consider Elon Musk, the CEO of Tesla. He is also CEO of SpaceX, which
develops rockets. His vision is for the rockets to be used to move 50,000 people to Mars in
the near future. I understand that a sense of urgency regarding the world’s energy issues and
a grand vision are what motivate his employees. Polypore is also involved in solutions to the
world’s energy challenges. I would like to craft a clear vision that enables all our employees to
share the same aim.
I also think it’s important to enjoy change. Sometimes it’s necessary to go beyond
your own boundaries. In the United States, there tends to be clear recognition of personal
Shigeki Takayama
CEO, Polypore International, LP
Senior Executive Officer,
Asahi Kasei Corp.
Celgard™ lithium-ion battery separator
Takayama gives his first briefing to Polypore and
Celgard employees after the acquisition
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37
At the opening ceremony of a new plant for
Daramic™ in Gujarat, India
Daramic™ lead-acid battery separator
performance, and so boundaries of responsibility are clearly delineated. At Asahi Kasei, though,
people often work beyond their boundaries. This is one aspect of taking on challenges, which
is one of our Group Values. Motivation for work comes not only from monetary remuneration.
Even in the United States, “fun” is recently seen as an important factor. If the company encour-
ages people to proactively reach beyond their own area, we can foster a culture that values
fun. I hope we can get Polypore personnel to begin doing this, and our management team is
now advancing discussions on how to do so.
Globalization requires appropriate response to various
changes. What do you consider to be important points?
The first is to have high-level administrative functions such as legal, HR, and IT. Polypore
operates globally, with manufacturing sites around the world. They have rich knowledge and
experience in various regions. I think the Asahi Kasei Group would benefit from leveraging
such functions. For instance, if one of our businesses is going into a region where Polypore is
already operating, Polypore’s knowledge of legal procedures, HR systems, and IT infrastructure
can be very helpful. Also, we have 10 group companies in the United States including ZOLL
and Polypore. Polypore has a highly advanced IT infrastructure which could be used to support
other operations as well.
The second important point is hiring outstanding local personnel in each location. For
example, when we built a new Daramic™ plant in India, an excellent local employee led the
project for us. Everything went very smoothly. The local managers and engineers we’ve hired
in each location are fluent in English and help us think hard about the business. Retaining
highly capable local personnel is extremely important. Polypore has a global HR network, and
is able to contact appropriate outside people as required. It would be valuable for the Asahi
Kasei Group to make use of this function.
Thirdly is outstanding communication. I have a telephone conference with around 100
global leaders every three months. In these quarterly conferences, I discuss the state of busi-
ness, progress on achieving our budget, and what our challenges are. The participants have
various nationalities and different native languages, so we try to make sure the documents
are written in plain English. We are also careful about the sequence of the documents to be
discussed. Arranging each conference requires careful coordination so as to avoid a time
that falls on a holiday for any of the participants. We have a very capable communications
team that arranges the conferences and prepares the documents. Effective communication
is essential for smooth decision-making among our global leaders, and to advance the overall
management of a global organization.
What is the significance of your business?
Our business makes an important contribution to solutions to the world’s fossil-fuel challenges.
We have the potential to reshape the history of energy. It is a wonderful business that employ-
ees can tell their families about with pride. I’d like to channel this into motivation to work
diligently for the growth of the business. Put simply, our product is a polyolefin film. But as
part of a battery, it is an essential component that ensures safety and performance. More and
more electric drive vehicles are on the road. Soon there will be a million, then two million. Our
product plays a vital role in ensuring the safety of those vehicles. We can never compromise
on the safety and quality of our products. We will continue to contribute to a society of clean
environmental energy, providing safety that no competitor can match as we create new value
for society.
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37
Financial and Non-Financial Highlights
For the years ended March 31
Net sales
Domestic sales
Overseas sales
Operating income
Ordinary income
Income before income taxes
Net income attributable to owners of the parent
Comprehensive income
Net income 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 wortha
Net worth per share, yen
Net worth/total assets, %
Number of employees
2017
¥1,882,991
1,226,633
656,358
159,229
160,633
157,388
115,000
138,979
82.34
90,573
91,387
79,566
24.00
2017
¥2,254,500
346,682
556,881
340,302
1,151,344
824.36
51.1
33,720
2016
¥1,940,914
1,261,203
679,711
165,203
161,370
146,389
91,754
(11,925)
65.69
99,000
93,811
81,118
20.00
2016
¥2,211,729
336,743
555,989
305,140
1,041,901
745.94
47.1
32,821
2015
¥1,986,405
1,313,128
673,277
157,933
166,543
158,440
105,652
214,484
75.62
89,108
86,058
75,540
19.00
2015
¥2,014,531
339,677
502,507
334,368
1,082,654
775.05
53.7
30,313
2014
¥1,897,766
1,289,054
608,712
143,347
142,865
163,860
101,296
146,102
72.48
92,397
86,052
71,101
17.00
2014
¥1,915,089
328,540
480,535
285,735
912,699
653.15
47.7
29,127
a Net assets less non-controlling interests.
b In the year ended March 31, 2012, the accounting policy for naphtha resale was changed to exclude naphtha resale amount from net sales. This change is applied retroactively
from the year ended March 31, 2008, through the year ended March 31, 2011.
Net sales1
Operating income2
1,897.8
1,986.4
1,940.9
1,883.0
1,666.6
(¥ billion)
2,000
1,500
1,000
500
0
143.3
157.9
165.2
159.2
(¥ billion)
250
200
150
100
50
0
-50
92.0
2013
¥1,666,640
1,181,429
485,211
91,960
95,125
82,302
53,712
117,515
38.43
113,785
80,050
71,120
14.00
309,677
461,581
263,704
812,080
581.05
45.1
28,363
2012
¥1,573,230
1,151,705
421,525
104,258
107,567
94,866
55,766
62,561
39.89
85,124
78,440
66,269
14.00
279,206
416,119
227,489
706,846
505.72
50.1
25,409
2011b
¥1,555,945
1,106,656
449,289
122,927
118,219
98,342
60,288
45,088
43.11
66,014
84,092
62,320
11.00
256,248
418,354
220,773
663,566
474.59
46.5
25,016
2010b
¥1,392,212
1,021,803
370,409
2009b
¥1,521,178
1,127,213
393,965
Millions of yen, except where noted
2008b
¥1,663,778
1,176,441
2007
¥1,623,791
1,195,751
57,622
56,367
46,056
25,286
—
18.08
83,990
86,166
62,924
10.00
251,084
447,497
226,331
633,343
452.91
46.3
25,085
34,959
32,500
19,031
4,745
—
3.39
126,725
79,436
60,849
10.00
273,539
441,271
218,477
603,846
431.77
43.8
24,244
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
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
2013
2012
2011
2010
2009
2008
2007
¥1,800,170
¥1,410,568
¥1,425,879
¥1,368,892
¥1,379,337
¥1,425,367
¥1,459,922
'12
'13
'14
Fibers
Health Care
Chemicals
Critical Care
Electronics
Others
Homes
'15
Construction Materials
'16
(FY)
'12
'13
'14
Fibers
Health Care
Chemicals
Critical Care
Electronics
Others
'15
Construction Materials
'16
Homes
Corporate expenses and eliminations, etc.
(FY)
Net income attributable to owners of the parent, ROE
Interest-bearing debt, D/E ratio
(¥ billion)
120
100
80
60
40
20
0
101.3
105.7
91.8
115.0
53.7
7.1
11.7
10.6
10.5
8.6
(%)
24
20
16
12
8
4
0
(¥ billion)
500
400
300
200
100
0
381.4
0.47
449.7
402.8
303.9
269.0
0.33
0.25
0.43
0.35
'13
Net income attributable to owners of the parent (left scale)
'12
'14
'15
'16
ROE (right scale)
(FY)
'13
Interest-bearing debt (left scale)
'12
'14
'15
D/E ratio (right scale)
'16
1.0
0.8
0.6
0.4
0.2
0
(FY)
1 In FY2016, the four segments of Chemicals & Fibers, Homes & Construction
Materials, Electronics, and Health Care were changed to the three segments of
Material, Homes, and Health Care. Some businesses were reclassified among
segments at the same time. For comparison, FY2015 results have been recalculated
according to the new classifications.
38
Asahi Kasei Report 2017
2 Amortization of goodwill, etc., related to acquisition of ZOLL and Polypore are
excluded from Critical Care and Electronics, respectively, and included in
“Corporate expenses and eliminations, etc.”
Asahi Kasei Report 2017
39
Income before income taxes
Net income attributable to owners of the parent
For the years ended March 31
Net sales
Domestic sales
Overseas sales
Operating income
Ordinary income
Comprehensive income
Net income 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 wortha
Net worth per share, yen
Net worth/total assets, %
Number of employees
a Net assets less non-controlling interests.
2017
¥1,882,991
1,226,633
2016
¥1,940,914
1,261,203
2015
¥1,986,405
1,313,128
2014
¥1,897,766
1,289,054
656,358
159,229
160,633
157,388
115,000
138,979
82.34
90,573
91,387
79,566
24.00
346,682
556,881
340,302
824.36
51.1
33,720
679,711
165,203
161,370
146,389
91,754
(11,925)
65.69
99,000
93,811
81,118
20.00
336,743
555,989
305,140
745.94
47.1
32,821
673,277
157,933
166,543
158,440
105,652
214,484
75.62
89,108
86,058
75,540
19.00
339,677
502,507
334,368
1,082,654
775.05
53.7
30,313
1,151,344
1,041,901
608,712
143,347
142,865
163,860
101,296
146,102
72.48
92,397
86,052
71,101
17.00
328,540
480,535
285,735
912,699
653.15
47.7
29,127
2017
2016
2015
2014
¥2,254,500
¥2,211,729
¥2,014,531
¥1,915,089
b In the year ended March 31, 2012, the accounting policy for naphtha resale was changed to exclude naphtha resale amount from net sales. This change is applied retroactively
from the year ended March 31, 2008, through the year ended March 31, 2011.
38
Asahi Kasei Report 2017
2013
¥1,666,640
1,181,429
485,211
91,960
95,125
82,302
53,712
117,515
38.43
113,785
80,050
71,120
14.00
2013
¥1,800,170
309,677
461,581
263,704
812,080
581.05
45.1
28,363
2012
¥1,573,230
1,151,705
421,525
104,258
107,567
94,866
55,766
62,561
39.89
85,124
78,440
66,269
14.00
2012
¥1,410,568
279,206
416,119
227,489
706,846
505.72
50.1
25,409
Millions of yen, except where noted
2011b
¥1,555,945
1,106,656
449,289
122,927
118,219
98,342
60,288
45,088
43.11
66,014
84,092
62,320
11.00
2011
¥1,425,879
256,248
418,354
220,773
663,566
474.59
46.5
25,016
2010b
¥1,392,212
1,021,803
370,409
57,622
56,367
46,056
25,286
—
18.08
83,990
86,166
62,924
10.00
2010
¥1,368,892
251,084
447,497
226,331
633,343
452.91
46.3
25,085
2009b
¥1,521,178
1,127,213
393,965
34,959
32,500
19,031
4,745
—
3.39
126,725
79,436
60,849
10.00
2009
¥1,379,337
273,539
441,271
218,477
603,846
431.77
43.8
24,244
2008b
¥1,663,778
1,176,441
487,337
127,656
120,456
105,599
69,945
—
50.01
82,911
73,983
56,170
13.00
2008
¥1,425,367
272,372
424,193
234,873
666,244
476.39
46.7
23,854
2007
¥1,623,791
1,195,751
428,040
127,801
126,507
114,883
68,575
—
49.00
84,413
71,646
52,426
12.00
2007
¥1,459,922
240,006
426,959
281,502
645,655
461.50
44.2
23,715
Environmental and safety investment
Greenhouse gas emissions from production processes
(¥ billion)
(million tons CO2 equivalent)
7.88
5.20
5.38
3.80
3.90
8
6
4
2
0
5
4
3
2
1
0
4.11
4.17
4.06
3.84
3.03
'12
Environmental investment
'13
'14
'15
'16
(FY)
Safety investment
'12
Carbon dioxide
Sulfur hexafluoride
'13
Nitrous oxide
'14
Methane
'15
'16
(FY)
HFCs
PFCs
Number of women working as managers3
Employees using parental leave4
370
410
500
534
454
600
500
400
300
200
100
0
600
500
400
300
200
100
0
454
468
457
556
582
'13/6
'14/6
'15/6
'16/6
'17/6
3 Results as of June 30 each year for personnel employed by Asahi Kasei Corp.,
Asahi Kasei Microdevices Corp., Asahi Kasei Homes Corp., Asahi Kasei Construction
Materials Corp., Asahi Kasei Pharma Corp., and Asahi Kasei Medical Co., Ltd. (Asahi
Kasei Chemicals Corp., Asahi Kasei Fibers Corp., and Asahi Kasei E-materials Corp.
included in FY2015 and earlier).
Women
'12
Men
'13
'14
'15
'16
(FY)
4 Results for personnel employed by Asahi Kasei Corp., Asahi Kasei Microdevices
Corp., Asahi Kasei Homes Corp., Asahi Kasei Construction Materials Corp., Asahi Kasei
Pharma Corp., and Asahi Kasei Medical Co., Ltd. (Asahi Kasei Chemicals Corp., Asahi
Kasei Fibers Corp., and Asahi Kasei E-materials Corp. included in FY2015 and earlier).
Asahi Kasei Report 2017
39
At a Glance
The Asahi Kasei Group operates business in the
three sectors of Material, Homes, and Health Care.
The “Cs for Tomorrow 2018” medium-term man-
agement initiative is focused on raising corporate
value through optimal allocation of management
resources across the three sectors.
Business sector
Material
FY2017 net sales and operating income*
Net sales and operating income are forecasted to increase in all
three sectors.
Health Care
14.8 %
Homes
32.8 %
FY2017
Net sales
(planned)
¥1,990 billion
Material
52.4 %
Homes
Health Care
18.7 %
FY2017
Operating income
(planned)
¥165 billion
Homes
33.9 %
Material
47.4 %
Health Care
* Original forecast announced on May 11, 2017.
Note: Percentages shown exclude “Others” category and “corporate expenses and
eliminations.”
40
Asahi Kasei Report 2017
Asahi Kasei Report 2017
41
FY2017 forecast
Business units
Major products
Net sales
¥ 1,033.0 billion
Operating income
¥ 90.0 billion
Net sales
¥ 647.0 billion
Operating income
¥ 64.5 billion
● Asahi Kasei Corp.
● Asahi Kasei Microdevices Corp.
Fibers & Textiles SBU
Petrochemicals SBU
Performance Polymers SBU
Performance Materials SBU
Consumables SBU
Separators SBU
Asahi Kasei Microdevices
Corp. (electronic devices)
● Asahi Kasei Homes Corp.
● Asahi Kasei Construction
Materials Corp.
Hipore™ lithium-ion battery
(LIB) separator
Membrane-process
ion-exchange plant
Acrylonitrile plant
Lamous™ microfiber suede
Homes
Construction Materials
Hebel Haus™
Atlas™ condominiums
Hebel Building™ System
Neoma Foam™ phenolic foam
insulation panels
● Asahi Kasei Pharma Corp.
● Asahi Kasei Medical Co., Ltd.
● ZOLL Medical Corporation
Pharmaceuticals
Medical Care
Acute Critical Care
Net sales
¥ 291.0 billion
Operating income
¥ 35.5 billion
Pharmaceutical products
Planova™ virus removal
filter
ZOLL AED Plus™
automated external
defibrillator
LifeVest™ wearable defibrillator
Asahi Kasei Report 2017
41
40
Asahi Kasei Report 2017
Operating Segments
Material
From unique fiber materials to petrochemicals and synthetic resins, and from
consumables such as Saran Wrap™ cling film to battery separators and electronic
devices such as LSIs and sensors, our high value-added product portfolio is
expanding on a global scale, contributing to a better future through unrivaled
technologies.
■ Sales composition
52.3 %
Operating income
composition
46.8 %
Hideki Kobori
Executive Officer
for Material business sector
President & Representative Director,
Presidential Executive Officer,
Asahi Kasei Corp.
Fiscal
2016
Not including “Others” category and
corporate expenses and eliminations.
Main products
Highl ight s
Net sales & operating income
977.9
88.5
1,033.0
90.0
(¥ billion)
1,200
900
600
300
0
'16
'17*
(forecast)
Net sales (left scale)
Operating income (right scale)
(¥ billion)
120
90
60
30
0
(FY)
* Beginning with FY2017, the Energy Division, which was
formerly included in Others, is reclassified into the Material
segment. FY2016 figures are recalculated in accordance
with the new classification.
■ Bemberg™ cupro fiber
■ Roica™ premium stretch fiber
■ Spunbond nonwovens
■ Leona™ nylon 66 filament
■ Acrylonitrile (AN)
■ Styrene
■ Polyethylene (PE)
■ Engineering plastics
■ Synthetic rubber
■ Microza™ hollow-fiber filtration
membranes
■ Ion-exchange membranes
■ Ceolus™ microcrystalline cellulose
■ Saran Wrap™ cling film
■ Sunfort™ photosensitive dry film
■ Hipore™ and Celgard™ Li-ion battery
separators
■ Daramic™ lead-acid battery separator
■ Mixed-signal LSIs
■ Hall elements
• Launch of Klaran™ UVC LEDs for
disinfection
With light emission in the vicinity of 265 nm—the
wavelength most effective for disinfection—and
featuring high output with a small footprint,
Klaran™ affords unprecedented flexibility in the
design of disinfection products and systems. A
wide range of applications is expected to include
healthcare, home electronics, and various other
fields where UVC disinfection of water, air, and
surfaces had previously been impractical.
• Capacity expansion for Hipore™
LIB separator
With increasing demand for hybrid-electric and all-
electric vehicles worldwide, the lithium-ion battery
(LIB) market is forecasted to grow substantially in
automotive applications, in addition to applica-
tions for consumer electronics. Capacity expansion
at the plant in Moriyama, Shiga, will further
reinforce our capability to provide stable supply to
meet rising global demand for LIB separators.
42
Asahi Kasei Report 2017
Asahi Kasei Report 2017
43
Fibers and Textiles
Q
A
Please tell us about your proactive investments for growth and the earnings contribution of each business,
as well as the outlook for fiscal 2017.
Sales and operating income decreased in fiscal 2016 with the impact of the stronger yen. We aim to
increase sales and operating income in fiscal 2017 by leveraging the investments we made for growth.
Although shipments were firm in fiscal 2016, sales and operating
income decreased with the impact of the stronger yen. Demand
for Bemberg™ cupro fiber continues to grow as material for
ethnic garments in India and Pakistan as well as functional
innerwear. Sales of Lamous™ microfiber suede are expanding in
automotive interior applications. Recent expansions of production
capacity—for Bemliese™ continuous-filament cellulose nonwoven
to meet growing demand in facial masks, and for Leona™ nylon 66
filament to meet growing demand in air bags—are contributing
to increased earnings.
We forecast firm demand for each product in fiscal 2017, with
recent capacity expansions expected to enable further growth.
Chemicals
Q
A
You reported lower sales but increased operating income for the Chemicals business in fiscal 2016. What is
the current situation and future outlook for petrochemicals, synthetic rubber, and engineering plastics?
Sales decreased and operating income increased in fiscal 2016 as the stronger yen impacted
each product category and terms of trade for acrylonitrile (AN) improved. We forecast increased
shipments of each product in 2017 while a scheduled maintenance turnaround of the naphtha
cracker will have a negative impact, resulting in higher sales and lower operating income.
Petrochemicals sales decreased in fiscal 2016 with lower ship-
ments of styrene following the strengthening of petrochemical
operations in Japan, but operating income increased with
improved terms of trade for AN. In performance polymers,
sales increased with growing shipments of synthetic rubber for
fuel-efficient tires and engineering plastics, but operating income
decreased due to the impact of the stronger yen.
We forecast higher sales in fiscal 2017 with further growth in
synthetic rubber for fuel-efficient tires and engineering plastics,
but lower operating income as an effect of a maintenance turn-
around scheduled at the naphtha cracker of Asahi Kasei Mitsubishi
Chemical Ethylene Corp. in Mizushima, Okayama, Japan.
In July 2017 we decided to increase production capacity
of our plant in Singapore for synthetic rubber for fuel-efficient
tires to meet rapidly growing demand against a background of
greater motorization in emerging markets and more stringent
environmental regulations around the world.
Electronics
Q
A
How did separators and electronic devices perform in fiscal 2016, and what is your outlook moving
forward?
Sales grew with strong shipments of each product in fiscal 2016, but operating income decreased as an
effect of the stronger yen and amortization of goodwill related to the acquisition of Polypore. We forecast
higher sales and operating income in fiscal 2017 with further shipment growth for each product.
Fiscal 2016 separators sales increased with greater shipments
across the board and a full-year contribution from Polypore which
we acquired in the second quarter of fiscal 2015, but operating
income decreased with the impact of the stronger yen and amor-
tization of goodwill related to the Polypore acquisition. We have
decided to increase production capacity for Hipore™ lithium-ion
battery (LIB) separator to meet brisk demand growth in automo-
tive applications, including hybrid-electric and all-electric vehicles.
We plan to make further proactive expansions of our LIB separator
supply infrastructure, raising our capacity to 1.1 billion m2/year
by 2020. Both sales and operating income for electronic devices
increased in fiscal 2016, despite the impact of the stronger yen,
with growing shipments of audio devices for smartphones.
We forecast higher sales and operating income in fiscal 2017
with increased shipments of both separators and electronic
devices.
42
Asahi Kasei Report 2017
Asahi Kasei Report 2017
43
Operating Segments
Homes
Fumitoshi Kawabata
Executive Officer
for Homes business sector
Senior Executive Officer, Asahi Kasei Corp.
President & Representative Director,
Asahi Kasei Homes Corp.
With our homes business that provides high-quality products and services for
Long Life Homes that maintain high customer satisfaction that lasts more than
half a century, and our construction materials business that provides innovative
and original high value-added products, we set the stage for a rich and fulfilling
lifestyle.
■ Sales composition
33.2 %
Operating income
composition
35.5 %
Fiscal
2016
Net sales & operating income
(¥ billion)
800
600
400
200
0
619.0
64.1
647.0
64.5
(¥ billion)
100
75
50
25
0
Not including “Others” category and
corporate expenses and eliminations.
'16
'17
(forecast)
Net sales (left scale)
Operating income (right scale)
Main products
Highl ight s
■ Hebel Haus™ unit homes
■ Hebel Maison™ apartment buildings
■ Atlas™ condominiums
■ Hebel Rooms™ apartment rental
network
■ Remodeling
■ Mortgage financing
■ Hebel™ AAC panels
■ Neoma Foam™ phenolic foam
insulation panels
■ Foundation systems
■ Structural systems and components
• Launch of Hebel Building™ System
Asahi Kasei Homes launched the sale of its Hebel
Building™ System enabling higher quality, higher
precision construction of medium-rise buildings by
using systematic manufacturing techniques, devel-
oped mainly targeting 4–6 story buildings with space
for commercial use on upper floors. By leveraging
the company’s core technology for heavy-frame steel
structures as well as the manufacturing and construc-
tion systems of the Hebel Haus Frex™, the new system
enables the construction of buildings up to 8 stories
while maintaining high quality and precision. It also
affords exceptional flexibility in design, with ceiling
height ranging from 2.8 to 3.5 m, suitable for com-
mercial purposes.
• Launch of Comfortable Space Laboratory™
Asahi Kasei Construction Materials launched its Comfortable Space Laboratory™ in Sakai,
Ibaraki, Japan, as a facility to exhibit and allow visitors to experience the outstanding
thermal insulation performance of Neoma Foam™ panels. The laboratory will serve as
a venue to raise public awareness on the importance of the thermal environment and
insulation performance, as well as the quality of Neoma Foam™ products.
44
Asahi Kasei Report 2017
Asahi Kasei Report 2017
45
Homes
Q
A
How did your homes business perform in fiscal 2016, and how is the trend for home orders?
Both sales and operating income decreased in fiscal 2016 with lower deliveries of order-built homes. After
the full resumption of advertising, however, orders recovered to the same level as in the previous year.
Deliveries of Hebel Haus™ unit homes and Hebel Maison™
apartment buildings decreased reflecting a decline in orders
received in fiscal 2015, and advertising expenses increased. Labor
costs increased for remodeling operations, while real estate
operations grew in line with an increased number of rental units
under management. For homes overall, both sales and operating
income decreased.
After the full resumption of advertising in May 2016, home
orders recovered to the previous year’s level and increased by
+0.1% for the full year. To gain further growth in orders, we held
an “Outdoor Living Fair” to showcase how the rooftop of Hebel
Haus™ homes can be filled with enjoyable greenery and nature
even while generating electricity. We also expanded the market-
ing area for Hebel Maison™ apartment buildings with features that
enrich the living environment for tenants with dogs and cats.
Medium-rise built with the Hebel
Building™ System
Hebel Maison Boriki™
Construction Materials
Q
A
Please tell us about the situation in fiscal 2016, and prospects for the future.
Both sales and operating income decreased in fiscal 2016 with lower shipments of autoclaved
aerated concrete (AAC) panels and foundation systems. Although feedstock costs are expected to
increase, fiscal 2017 operating income is forecasted to be even with the previous year thanks to
increased shipments of Neoma Foam™ high-performance foam insulation panels.
Fiscal 2016 shipments of Neoma Foam™ grew mainly for use in
wood-frame houses, but shipments of foundation systems and
Hebel™ AAC panels declined. Both sales and operating income
decreased for construction materials overall.
Although demand related to construction projects in
preparation for the Tokyo Olympics and Paralympics is anticipated
to begin materializing around the middle of fiscal 2017, the
business environment for construction materials is expected to be
challenging with stagnating demand related to construction of
rental homes and rising transportation costs. We forecast sales to
increase and net income to be on the same level as the previous
year with shipment growth mainly in Neoma Foam™ insulation
panels.
Neoma Foam™ phenolic foam
insulation panels
Comfortable Space
Laboratory™
Asahi Kasei Report 2017
45
44
Asahi Kasei Report 2017
Operating Segments
Health Care
We contribute to advanced medical care around the world with world-class
drugs in the fields of orthopedics, critical/intensive care, and the immune
system; blood purification devices for chronic and acute renal failure, and various
intractable diseases; and products for the manufacturing process of biophar-
maceuticals and other new drugs. Our life-saving products in the field of acute
critical care include AEDs, defibrillators for professional use, and intravascular
temperature management systems.
■ Sales composition
14.5 %
Operating income
composition
17.7 %
Net sales & operating income
(¥ billion)
300
270.1
291.0
(¥ billion)
60
200
100
0
31.9
35.5
40
20
0
'16
'17
(forecast)
Net sales (left scale)
Operating income (right scale)
Fiscal
2016
Not including “Others” category and
corporate expenses and eliminations.
Highl ight s
• Japanese approval of Reclast® for
intravenous infusion 5 mg*
Asahi Kasei Pharma obtained approval for the sale of
Reclast® for intravenous (i.v.) infusion 5 mg in Japan
for the treatment of osteoporosis. Reclast® is an
osteoporosis drug capable of a year-long treatment
with intravenous administration one time each year.
* Reclast® is a bisphosphonate developed by Novartis Pharma
AG and was first approved in 2007 in the US and EU followed
by approval in over 115 countries worldwide. Reclast® is a
trademark of Novartis Pharma AG.
• New spinning plant for
Planova™ BioEX filters
Asahi Kasei Medical constructed a new plant
for the spinning of hollow-fiber membranes for
Planova™ BioEX virus removal filters at its Planova
Oita Plant in Oita, Japan. Incorporating hydro-
philic polyvinylidene fluoride (PVDF) hollow-fiber
membranes, Planova™ BioEX virus removal filters are used in the production process for
biotherapeutic products such as biopharmaceuticals and plasma derivatives. The hollow-
fiber membranes produced at the new spinning plant will be used in the assembly of
Planova™ BioEX filters at plants in Oita and Nobeoka.
Yutaka Shibata
Executive Officer
for Health Care business sector (joint)
Primary Executive Officer, Asahi Kasei Corp.
President & Representative Director,
Asahi Kasei Pharma Corp.
Richard Packer
Executive Officer
for Health Care business sector (joint)
Primary Executive Officer, Asahi Kasei Corp.
Chairman & Board Director,
ZOLL Medical Corporation
Main products
■ Teribone™ osteoporosis drug
■ Recomodulin™ anticoagulant
■ APS™ polysulfone-membrane
dialyzers
■ Therapeutic apheresis devices
■ Planova™ virus removal filters
■ Defibrillators for professional use
■ LifeVest™ wearable defibrillator
■ AED Plus™ automated external
defibrillator
■ Thermogard System™ temperature
management system
46
Asahi Kasei Report 2017
Asahi Kasei Report 2017
47
Pharmaceuticals and Medical Care
Q
A
Please tell us about fiscal 2016 results and the fiscal 2017 forecast for the pharmaceuticals and medical care
businesses.
Net sales and operating income decreased in fiscal 2016 with reduced reimbursement prices and
competition from generics. We are forecasting both sales and operating income to increase in fiscal
2017 with increased shipments of Teribone™ osteoporosis drug and Planova™ virus removal filters.
Medical care products
Although shipments of Teribone™ osteoporosis drug and
Recomodulin™ thrombomodulin increased, fiscal 2016 sales and
operating income from pharmaceuticals decreased with the impact
of reduced reimbursement prices, including repricing of Teribone™
for market expansion, and the impact of competition from generics
on Flivas™ agent for treatment of benign prostatic hyperplasia.
Although shipments of Planova™ virus removal filters increased,
sales and operating income from medical care decreased with the
impact of the stronger yen and the impact of reduced reimburse-
ment prices for dialysis-related products in Japan.
In fiscal 2017, in pharmaceuticals operations we expect
increased R&D expenses related to the development of an auto-
injection formulation of Teribone™ and a further impact on Flivas™
due to competition from generics, but increased shipments of
Teribone™ following approval to extend the maximum duration
of treatment. In medical care operations we expect firm sales
centering on Planova™. Increased sales and operating income are
forecasted for pharmaceuticals and medical care as a whole.
Acute Critical Care
Pharmaceuticals
Q
A
The acute critical care operation continues to grow. Please tell us about fiscal 2016 results and the fiscal
2017 forecast.
Fiscal 2016 saw continued growth in operating income. We forecast further growth in fiscal 2017.
The acute critical care business continued to expand well in fiscal
2016. Although sales showed a decline when translated into
consolidated accounts due to the impact of the stronger yen,
both sales and operating income increased on a US-dollar basis.
The LifeVest™ wearable defibrillator business continued to expand
well, especially in the US, and sales of other products such as defi-
brillators and related accessories also increased. Operating income
grew in both Japanese-yen and US-dollar terms despite increased
SG&A expenses associated with an ongoing increase in personnel
to reinforce sales activities. Sales on a US-dollar basis have grown
at an average of 15% per year for the past 10 years.
The trend in fiscal 2017 will be largely unchanged, with con-
tinuous growth expected. Although we anticipate higher SG&A
expenses with reinforced sales activities, we forecast higher net
sales and operating income centering on the LifeVest™ business.
ZOLL AED Plus™
automated external
defibrillator
LifeVest™ wearable defibrillator
46
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Asahi Kasei Report 2017
47
Feature 4: Research & Development
New business creation with
R&D leveraging diversification
Masafumi Nakao
Representative Director, Vice-Presidential Executive Officer; Executive Officer for R&D
Strategy of New Business Creation
One of our basic strategies under the “Cs for
Tomorrow 2018” medium-term management
initiative is “creation of new businesses.” Having
various technologies and diverse business
operations, the Asahi Kasei Group is striving to
create new value through combinations among
core technologies, multifaceted business
models, and diverse human resources. The areas
of “clean environmental energy” and “healthy/
comfortable longevity with peace of mind” are
targeted in R&D to create new businesses that
provide solutions to challenges faced by society.
Our main areas of
focus to address
social issues
Foster and acquire
core technology
Acquire technology seeds
Apply technology laterally
Society of clean
environmental
energy
Society of
healthy/
comfortable
longevity with
peace of mind
CVC
Coordination/
combination
Strengths of
Asahi Kasei
Utilize market
channels
Enhance and fully
utilize business platforms
Heighten
added value
Business models
Solutions
M&A
■ Aims and approach for new business creation
The Asahi Kasei Group will create new businesses by leverag-
ing our strengths in technology and operations from a 3-axis
perspective. The first axis is to enhance and fully utilize our
market channels. By utilizing the various market channels and
platforms of each business area throughout the Asahi Kasei
Group, we will develop a broad range of new businesses. The
second axis is to foster and acquire core technology. While
performing in-house R&D, we will actively apply new external
technologies to enhance our core technologies. The third
axis is to heighten added value. In addition to just supplying
substances, which had been our main approach particularly in
material businesses, we will place greater emphasis on build-
ing new business models around services and solutions.
Approach for new business creation viewed by market axis and technology axis
Established mature markets
Established growth markets
New markets
Potential future markets
until FY2018
until FY2025
1. Coordinate with strategic business units and core operating
companies
Maximizing value of established businesses
• Brand strength/market channels • Cost competitiveness • Services
2. Utilize information technology, study new business models
Creating added value from new perspectives
• Higher added value from solutions
3. Coordinate with strategic
business units and core
operating companies
• Marketing
• Full utilization of Asahi Kasei
Group technologies and business
platforms
• Acquiring missing parts (CVC)
/
s
t
n
e
m
e
v
o
r
p
m
i
s
n
o
i
t
a
n
b
m
o
c
i
i
l
/
s
e
g
o
o
n
h
c
e
t
g
n
i
t
s
i
x
E
l
d
e
p
o
e
v
e
d
y
l
w
e
N
i
l
s
e
g
o
o
n
h
c
e
t
4. Review programs, examine originality and differentiation
B-to-C in Health Care and Homes sectors
• Better therapy
• Comfortable residential living
B-to-B in Material sector
• Disregarding mature markets
• Pursuing originality and differentiation in growth markets
5. Focus on strong points and
accelerate
• Accelerating R&D
• Acquiring technology seeds/
sprouts by CVC
• New business models
6. Basic/exploratory research in
collaboration with universities
and government research organs
Long-term perspective
• Develop/acquire leading-edge
technology
• Collaboration with outside research
institutions
48
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Asahi Kasei Report 2017
49
We perform longer-term group-wide corporate R&D projects where we identify business areas
with a high degree of novelty and markets having high growth potential. R&D for further
enhancement of existing businesses is focused on ways to build on our strengths. We aim to
create new businesses by leveraging our diversification through seamless connections between
projects as well as through proactive collaboration utilizing outside resources including CVC.
R&D at the Asahi Kasei Group
The strength of the Asahi Kasei Group is the ability to create
new businesses based on our wide range of technologies
and to manage diverse fields of operation. Throughout our
history of diversification, we have leveraged a wide variety of
technologies cultivated in chemicals operations to establish
a number of core technologies. Since our founding, we have
constantly performed R&D to meet the world’s needs and cre-
ated new businesses based on technology. While our business
environment and the structure of society are rapidly changing,
we will continue to strive for the creation of new value.
■ R&D organization
We reviewed our R&D organization at the time of our transi-
tion to an operating holding company configuration in April
2016. Material-related R&D is now combined together under
Corporate Research & Development, with efforts advancing
in coordination with the R&D sections of each SBU. Under
the new configuration, R&D with a longer perspective is
seamlessly connected with product development peripheral
to established businesses.
Asahi Kasei Corporation
Corporate Research &
Development
• Technology Policy Center
• CVC Office
• Corporate IP
• Analysis & Simulation Center
• R&D Center
• Healthcare R&D Center
• Synergistic Solution Initiative
• Yamashita Laboratory
• Chemistry & Chemical Process Laboratory
• Fibers & Textiles Technology Center
• Performance Polymers Technology Center
• Performance Materials Technology Center
Corporate Production
Technology
• Maintenance Technology Center
• Engineering Center
• Production Technology Center
Clean Energy Project
UVC Project
Residential Living Project
Material
Homes
Health Care
Asahi Kasei
(operating function)
• Fibers & Textiles
• Petrochemicals
• Performance Polymers
• Performance Materials
• Consumables
• Separators
Asahi Kasei
Microdevices
• Research &
Development Center
Asahi Kasei Homes
• Technology Div.
• New Business
Development Dept.
• Housing R&D Center
• Lifestyle R&D Laboratory
Asahi Kasei
Construction Materials
• Products & Marketing
Development Dept.
• Materials Technology Dept.
Asahi Kasei Pharma
• Clinical Development Center
• Pharmaceutical Research Center
Asahi Kasei Medical
• Medical Products
Development Div.
ZOLL Medical
• R&D departments
48
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49
Feature 4: Research & Development
■ Main R&D bases around the world
With R&D bases located around the world, we are able to meet
a wide variety of needs in each market.
R&D sites overseas
Asia, ASEAN:
Technical Center located in close
proximity to market demand
Dormagen, Germany
Engineering Plastics
Technical Center
Shanghai, China
Engineering Plastics Technical Center
Guangzhou, China
Engineering Plastics Technical Center
Vietnam
Computer Aided Engineering
(CAE)
Charlotte, North Carolina
Polypore
R&D sites in Japan
Core R&D sites
Kawasaki, Ohito, Fuji,
Moriyama, Mizushima,
Nobeoka, etc.
■ R&D expenses
Each SBU performs R&D both to reinvigorate and enhance
existing businesses and to create new businesses for the future.
North America:
Acquiring new technology (CVC);
Healthcare-related R&D; new business creation
Waltham, Massachusetts
Asahi Kasei Pharma America
Chelmsford,
Massachusetts
ZOLL, CVC
Menlo Park,
California
CVC
Owensboro, Kentucky
Polypore
Albany,
New York
Crystal IS: UVC LED
Critical Care
14.3%
Corporate expenses
17.1%
Annual R&D expenses
(¥ billion)
90
Breakdown of
R&D expenses
¥79.6 billion
(FY 2016)
Fibers
3.7%
Chemicals
21.4%
Health Care
24.8%
Construction
Materials
1.0%
Homes 3.3%
Electronics 14.5%
50
Asahi Kasei Report 2017
81.1
79.6
75.5
71.1 71.1
80
70
60
0
66.3
62.3
’10
’11
’12
’13
’14
’15
’16
(FY)
Asahi Kasei Report 2017
51
■ Core technologies that support Asahi Kasei products
Compound semiconductor/LSI
● Application-specific IC ● Electronic compass
● IR sensor/gas sensor ● Magnetic sensor
Catalyst/process
● Cyclohexanol ● AN/MMA
● CreolexTM metallocene polyethylene
● SunfineTM ultrahigh molecular
weight polyethylene
Catalysis/
inorganic
synthesis
Compound
semicon-
ductors
Software
algorithms
Homes/construction materials
● Hebel HausTM unit homes
● Hebel MaisonTM apartment buildings
● HebelTM autoclaved aerated concrete
● Neoma FoamTM phenolic foam insulation
Foam
insulation
Polymers/processing
● Performance polymers:
LeonaTM, XyronTM, TenacTM, etc.
● Synthetic rubber:
TuftecTM/TufpreneTM, etc.
● SB latex/Dura-PhotoTM
● AsacleanTM
● Saran WrapTM cling film
● Photosensitive resins:
SunfortTM, PimelTM, APRTM/AFPTM
● NovacureTM latent hardener
Chemical
process
Polymer design/
polymerization/
processing
Core
Technologies
Anti-quake/
construction methods/
anti-fire/durability
Bio
pharmaceuticals
Functional
polymer
Polymeri-
zation/
spinning/
cellulose
Fibers
● Spunbond
nonwovens
● BemlieseTM
● LamousTM
● RoicaTM
● LeonaTM filament
● BembergTM
Biological
information
processing
Virus
removal/
blood puri-
fication
Health Care
● Prescription drugs: TeriboneTM, RecomodulinTM, etc.
● Acute critical care devices: AEDs, LifeVestTM, etc.
● Blood purification:
Artificial kidneys (APSTM),
therapeutic apheresis devices
● PlanovaTM virus removal filters
Phase
separation/
electro-
chemistry
Membranes/separation
● MicrozaTM
● Ion-exchange membranes
● HiporeTM
IP Strategy
To facilitate the creation of new businesses as an important
management task in the Asahi Kasei Group, the management
strategy, IP strategy, and R&D strategy of each operation are
integrated as one. IP activities directly contribute to the man-
agement of operations by acquiring IP rights from R&D results
to gain business advantage, enabling the creation of new
businesses, and securing the profitability of existing businesses.
The business units take the lead in formulating an IP
strategy that matches the characteristics of each operation.
Emphasis is placed on the quality of individual patents as well
as the quantity of patents. Strategic licensing is performed
when it is deemed an effective means to heighten the contri-
bution of IP rights to our own business operations.
Japanese Patent
Applications
5.4%
4.4%
1.6%
b
a
34.19%
1.4%
Overseas Patent
Applications
8.9%
12.2%
2.0%
a
b
11.8%
c
5.5%
b
Total
834
a
37.2%
10.9%
c
4.1%
b
Total
147*
Japanese Trademark
Applications
7.2%
5.7%
Overseas Trademark
Applications
10.0%
1.2%
20.7%
b
4.9%
4.9%
3.7%
c
b
15.7%
a
b
2.9%
c
0.7%
Total
140
Total
81
a
75.3%
a
60.5%
a
47.1%
50
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Asahi Kasei Report 2017
51
■ Holding company ■ Material (a: Chemicals b: Fibers c: Electronics) ■ Homes (a: Homes b: Construction Materials) ■ Health Care (Pharmaceuticals, Medical Care) ■ Others
(From January 1 to December 31, 2016)
* Overseas applications for a single patent family are counted as one.
CSR
Medium-Term Management Initiative and CSR Fundamentals
The Asahi Kasei Group is focused on providing solutions to various challenges faced by society in accordance
with our Group Mission of contributing to life and living for people around the world.
Under our Cs for Tomorrow 2018 management initiative which began in fiscal 2016, we are emphasizing
business operations that contribute to a “society of clean environmental energy” and
a “society of healthy/comfortable longevity with peace of mind” based on four CSR Fundamentals:
Compliance, Responsible Care, Corporate Citizenship, and Respect for Employee Individuality.
Position of CSR Fundamentals
Creating for Tomorrow
The
The
employee
employee
Employee
fulfillment
The
The
community
community
Community
outreach
The
The
environment
environment
Environmental
protection
The
The
customer
customer
Customer
satisfaction
Sustainable Increase
in Corporate Value
The
The
supplier
supplier
Fair business
dealings
The local
The local
economy
economy
Local economic
participation
The
The
shareholder
shareholder
Shareholder
returns
Society of clean
environmental energy
Pursuit of
Pursuit of
growth and
growth and
profitability
profitability
Business
operations
Creation of
Creation of
new businesses
new businesses
Society of healthy/comfortable
longevity with peace of mind
Acceleration of
Acceleration of
globalization
globalization
P. 54
Area of focus
Key subjects under CT2018
Goals
Compliance
P. 30
Responsible Care
Identification of
compliance-related issues
Enriching the risk compliance
system
Environmental protection
Operational safety
Workplace safety and hygiene
Health maintenance
Product safety
Managing chemical substances
Dissemination of
Human Resources Principles
Developing human resources
(global human resources)
Valuing human rights and diversity
Balancing work and family life
Stakeholder dialog
• Customers
• Investors
• Suppliers
• Public outreach
Community fellowship
• Gain trust through not only thorough
compliance with laws and regulations, but
also consideration of generally accepted
social norms
• Understand risks in management, and
establish a system to mitigate them and
enable sustainable development
• Contribute to establishment of a recycling-
oriented society
• Enrich system for risk assessment
• Zero workplace injuries
• Maintain and promote employees’ health
• Enrich RC compliance
• Minimize risks from chemicals
• Employee engagement in challenging and
fulfilling work in global business operations
• Workplace environment that respects
diversity and work-life balance, enabling
employees to perform to their full potential
• Maintain good relationships with
stakeholders
• Utilize our resources to provide solutions to
challenges faced by society
“Cs for Tomorrow 2018”
strategic management initiative
CSR in Action
Respect for
Employee Individuality
CSR Fundamentals
Compliance, Responsible Care, Corporate Citizenship,
Respect for Employee Individuality
P. 58
Corporate Citizenship
Group Mission
Contributing to life and living for people around the world
P. 60
52
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53
Our four CSR Fundamentals of Compliance,
Responsible Care, Corporate Citizenship, and
Respect for Employee Individuality are applied
throughout the Asahi Kasei Group.
CSR Fundamentals
Area of focus
Key subjects under CT2018
Goals
Compliance
Responsible Care
Respect for
Employee Individuality
Corporate Citizenship
P. 30
P. 54
P. 58
P. 60
Identification of
compliance-related issues
Enriching the risk compliance
system
Environmental protection
Operational safety
Workplace safety and hygiene
Health maintenance
Product safety
Managing chemical substances
Dissemination of
Human Resources Principles
Developing human resources
(global human resources)
Valuing human rights and diversity
Balancing work and family life
Stakeholder dialog
• Customers
• Investors
• Suppliers
• Public outreach
Community fellowship
• Gain trust through not only thorough
compliance with laws and regulations, but
also consideration of generally accepted
social norms
• Understand risks in management, and
establish a system to mitigate them and
enable sustainable development
• Contribute to establishment of a recycling-
oriented society
• Enrich system for risk assessment
• Zero workplace injuries
• Maintain and promote employees’ health
• Enrich RC compliance
• Minimize risks from chemicals
• Employee engagement in challenging and
fulfilling work in global business operations
• Workplace environment that respects
diversity and work-life balance, enabling
employees to perform to their full potential
• Maintain good relationships with
stakeholders
• Utilize our resources to provide solutions to
challenges faced by society
Platinum Kurumin certification for
outstanding support for the devel-
opment of the next generation.
52
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Asahi Kasei Report 2017
53
Responsible Care
CSR Fundamentals
Safety is a fundamental prerequisite for the continuation of operations as a corporate member of
society. To ensure that every aspect of safety is maintained, the Asahi Kasei Group implements a
Responsible Care (RC) program comprising the six pillars of operational safety, workplace safety and
hygiene, environmental protection, health maintenance, product safety, and community outreach.
Message from the
Executive for RC
Masafumi Nakao
Representative Director, Vice-
Presidential Executive Officer
Asahi Kasei Corp.
Asahi Kasei adopted an operating holding company configuration in fiscal 2016 and started
the three-year medium-term management initiative “Cs for Tomorrow 2018” (CT2018). We are
not only implementing various measures to achieve our business targets and build the base
for the next phase towards fiscal 2025, but also contributing to society through our business
operations. The operating climate is changing greatly with growing awareness for global
environmental issues and corporate responsibility as a social entity. At the Asahi Kasei Group,
in accordance with our Group Mission of contributing to life and living for people around the
world, we will give due consideration to the environment, safety, and health throughout the
full life cycle from R&D to manufacturing, product supply, and disposal, while focusing on the
three fundamental “actuals” of the actual place, actual thing, and actual fact, as we ensure the
stable provision of product quality that our customers can depend upon. While working to
achieve our annual RC objectives, we will also advance RC activities from a broader perspective,
reinforcing R&D to provide solutions to global warming and other environmental issues, in
order to raise our corporate value for our various stakeholders.
Responsible Care at Asahi Kasei
RC 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, together with measures to gain greater public trust through disclosure and communication. RC was conceived
in Canada in 1985, and was strengthened on a global scale with the establishment of the International Council of Chemical
Associations (ICCA) in 1990. In 1995, the chemical industry in Japan began implementing RC with the establishment of the
Japan Responsible Care Council (JRCC*). Asahi Kasei was among the founding members of the JRCC, and played a leading role
in the expansion and development of RC in Japan.
RC at the Asahi Kasei Group is not limited to chemicals-related operations but encompass operations in all fields, including
homes, health care, fibers, electronics, construction materials.
* JRCC: Operated as the Japan Chemical Industry Association’s RC Committee since April 2011.
Asahi Kasei Group RC Principles
RC at the Asahi Kasei Group is
guided by the following principles:
In April 2016, a statement
regarding quality assurance was
added, and the six elements were
condensed into four.
We give the utmost consideration to environmental protection, quality assurance, operational safety, workplace
safety and hygiene, and health maintenance, throughout the product life cycle from R&D to disposal, as
preeminent management tasks in all operations.
• We give full consideration to the global environment, and make efforts to reduce the environmental
burden of all operations.
• We continuously provide safe products and services with the quality that gives customers a sense of
security and satisfaction.
• We strive for stable and safe operation while preventing workplace accidents and securing the safety of
personnel and members of the community.
• We strive for a comfortable workplace environment, and support the maintenance and promotion of
employee health.
In addition to maintaining legal compliance, we set self-imposed targets for continuous improvement, while
performing proactive information disclosure and communication to gain public understanding and trust.
Revised on April 1, 2016
RC Management System
The management system of Asahi Kasei Group RC is
maintained in accordance with our Group RC Management
Guidelines and other internal standards. The RC Committee, a
corporate organ under the direct authority of the President of
Asahi Kasei, deliberates RC plans and results and ensures that
continuous reevaluation and improvement are systematically
pursued with “plan-do-check-act” (PDCA) cycles—for the Asahi
Kasei Group as a whole, within each core operating company
and Region*, and within individual plants and facilities.
Certified compliance with internationally standardized
management systems is obtained for the RC Management
System of the Asahi Kasei Group. We have obtained ISO 14001
environmental management system certification for environ-
mental protection and ISO 9001 quality management system
certification for product safety. An Occupational Health &
Safety Management System (OHSMS) is adopted for workplace
safety, hygiene, and health.
* A site or group of sites consisting of several plants and facilities of various core
operating companies. Each Region General Manager is responsible for the unified
implementation of RC in the respective Region.
54
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55
Prevent abnormal reactions, confirm interlock functions on-site
Confirmed progress in preventing abnormal reactions and
securing interlock functions
★★★
Ongoing confirmation of implementation at RC Audits, etc.
★★★ Control changes to equipment and operating conditions
For more information, please refer to the Asahi Kasei Group CSR website.
http://www.asahi-kasei.co.jp/asahi/en/csr/
★★★Complete ★★Satisfactory ★Unsatisfactory
FY2016 Results
Preparation for follow-up on RC compliance at overseas companies
(start in FY2017 using external organizations such as ERM)
RC training course partially revised
Group discussions enhanced
Follow-up until all members pass test
Communication and coordination with superiors
RC at affiliates enhanced through instructions and support
by core operating companies
RC reports of 2 core operating companies and
8 plant complex sites were used in community outreach
No polluting accidents or serious incidents,
27 incidents (2 other than freon leaks)
Attainment
FY2017 RC Objectives
★★
★★
Review RC framework (including quality assurance)
Enhance RC compliance
Further advance RC education and training
(gaining fuller understanding)
★★★ Enhance RC at affiliates
★★★ Continue to enhance dialog with the public
★
Avoid all polluting accidents and minor incidents
RC objectives and results
FY2016 RC Objectives
Enhance RC compliance
Advance RC education and training for section managers and
assistant chiefs
Enhance RC at affiliates
Enhance dialog with the public
Avoid all polluting accidents and minor incidents
Promote recycling-oriented society:
· Final disposal of 0.3% or less of generated industrial waste
· Recycling rate of at least 90%
Prevention of global warming:
· Reduce CO2 emissions in Japan by 28.2% from FY2005 level
· Reduce global CO2 emissions by 5% from FY2010 level
· Reduce GHG emissions in Japan by 34.8% from FY2005 level
· LCA/CO2 contribution ratio1 of 8.3
Protect water resources:
· Water resource contribution ratio2 of 8.3
Control emissions of chemical substances:
· Control emissions of PRTR-specified substances
· Control emissions of air and water pollutants
Preserve biodiversity when procuring biological resources
Advance CSR procurement
Avoid all industrial accidents
Continuously monitor for hazards of fire, explosion, and leaks;
perform training of managers
Goal reached with final disposal rate of 0.3%
Goal reached with recycling rate of 98%
45% reduction from FY2005 level
29.6% reduction from FY2010 level
48.6% reduction from FY2005 level
LCA/CO2 contribution ratio of 10.3
Water resource contribution ratio of 8.5
Release of PRTR-specified substances and emission of VOCs
reduced by 92% and 87%, respectively, from FY2000 level
Continuously advanced actions in Nobeoka, Moriyama, and Fuji;
started new program at Asahi Kasei Jyuko Co., Ltd. in FY2016
Implemented CSR procurement
No serious industrial accidents,
3 incidents including minor industrial accidents and slight injuries
Review performed at time of on-site confirmation
for preventing abnormal reactions
Control changes to equipment and operating conditions
Review earthquake response and enhance emergency response systems:
· Confirm seismic resistance of high-pressure gas facilities and
formulate plans
· Implement seismic retrofitting for specific and non-specific buildings
Monitor for items in need of replacement and uninspected items,
implement remediation
Avoid all workplace injuries:
· Achieve frequency rate3 of 0.1 or less
· Achieve severity rate4 of 0.005 or less
Deepen utilization of OHSMS:
· Enhance risk assessment for workplace tasks
Avoid all accidents in “caught in/between machinery” category
(no lost-workday injury):
· Perform sound risk assessment for mechanical equipment
Avoid chemical burn, poisoning, fire, explosion, etc.
related to chemical substances (no lost-workday injury):
· Perform sound risk assessment for chemical substances
· Perform sound management of workplace environment
Prevent injuries during working hours unrelated to operating procedures
and during commuting:
· Prevent lost-workday injury related to stairways
· Prevent traffic accidents resulting in harm to self or others
while commuting or traveling for sales
Enhance safety management guidance of on-site contractors:
Completed according to the plan
Delay in some retrofitting for FY2016
Information shared with Corporate Production Technology;
ongoing review with new perspectives
0.38
Over 0.005 (tentative)
Risk assessment level confirmed at audit and
improvements applied as necessary
Advanced risk assessment for mechanical equipment, but one
lost-workday injury in “caught in machinery” category occurred
in irregular work in February 2017
Advanced risk assessment for chemical substances and manage-
ment of workplace environment, but 1 lost-workday injury occurred
· 4 lost-workday injuries due to falls related to stairways and walking
· Injuries due to traffic accidents resulting in harm to self or others
while commuting or traveling for sales decreased from 4 to 2
· No serious accident of on-site contractors
No serious injuries, but injury from forklift tip-over
Reinforce management of safety on equipment work:
· Zero severe injuries related to equipment work
Promote health maintenance and improvement among personnel:
· Promote the prevention of and countermeasures to lifestyle-related
diseases
· Prevent falls
Promote countermeasures to mental health issues and
enhance support system:
· Implement company-wide stress survey, utilize its results,
and perform follow-up
Develop the health management system:
· Resolve critical tasks at each site with lateral extension
· Establish the health management system at affiliates and
independent plants
Ongoing zero lost-workday injuries related to serious product safety
incidents (review the definition)
Enhance management of chemical substances:
· Promote compliance with laws and regulations on management of
chemical substances in Japan and overseas
· Encourage JIPS5 activities
· Promote JAMP6 tools
No serious injuries, but injury in “caught in machinery” category
Proportion of employees with health warning signs and obesity
increased slightly; ratio of employees who smoke decreased
Physical fitness tests performed as part of fall prevention program,
follow-up implemented
Stress survey and follow-up implemented
Held internal interviews and provided instructions
on health management activities
Expanded scope of affiliates and independent plants supported
by specialist industrial physicians
Compliance maintained and system enhanced
Secretariat activities to promote JIPS; continued risk assessment
and public disclosure of safety documents
Provided and received information via MSDSplus and AIS,
used new JAMP scheme chemSHERPA
★
★★
★
★★
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· 3.3% increase from FY2015 level
14% decrease from FY2015 level
2.9% increase from FY2015 level
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★★★
★★★
Promote recycling-oriented society:
· Maintain rate of final disposal at 0.3% or less of generated industrial waste
· Maintain recycling rate of at least 90%
Prevention of global warming:
· Reduce CO2 emissions in Japan by 28.7% from FY2005 level
· Reduce global CO2 emissions by 5% from FY2010 level
· Reduce GHG emissions in Japan by 34.8% from FY2005 level
· Achieve LCA/CO2 contribution ratio of 8.5
★★★ Protect water resources:
★★★
· Water resource contribution ratio of 8.8
Control emissions of chemical substances:
· Control emissions of PRTR specified substances
· Control emissions of air and water pollutants
★★★ Promote preservation of biodiversity at each site
★★★ Advance CSR procurement
★★★ Continue to avoid all industrial accidents
★★★ Enhance risk assessment:
· Continuously monitor for hazards of fire, explosion, and leaks
· Continue ongoing review to prevent abnormal reactions and
confirm interlock functions
· Enhance pre-investment safety assessment system
★★★
Enhance earthquake response system:
· Review earthquake preparedness
(emergency facilities, disaster response supplies)
★★
· Advance seismic retrofitting of specific and non-specific buildings
★★★ Monitor for items in need of replacement and uninspected items,
implement remediation
No serious workplace injuries:
· Achieve frequency rate of 0.1 or less (1.0 or less overseas)
· Achieve severity rate of 0.005 or less
Prevent all accidents in “caught in/between machinery” category:
· Perform sound risk assessment for mechanical equipment
· Through standards of behavior for safety
Avoid workplace injuries related to chemical substances:
· Perform sound risk assessment for chemical substances
· Perform sound management of workplace environment
Prevent injuries during working hours unrelated to operating procedures
and during commuting:
· Thorough standards of behavior for safety related to stairways and walking
· Program to prevent traffic accidents resulting in harm to self or others
while commuting or traveling for sales
Prevent serious injuries related to on-site contractors and equipment work:
· Improve the level of safety management guidance related to on-site
contractors and equipment work
Promote health maintenance and improvement among personnel:
· Promote the prevention of and countermeasures to lifestyle-related
diseases
· Prevent falls
Promote countermeasures to mental health issues and
enhance support system:
· Implement company-wide stress survey, utilize its results,
and perform follow-up
Improve the health management system:
· Resolve critical tasks at each site with lateral extension
· Establish the health management system at affiliates and
independent plants
★★
★★
★
★★
Enhance management of chemical substances:
· Promote compliance with laws and regulations on management of
chemical substances in Japan and overseas
· Encourage JIPS activities
· Expand use of JAMP (chemSHERPA)
Number of people our health care business contributed to:
· FY2018 objective: maintain FY2015 level
Number of residents in Hebel HausTM homes:
· FY2018 objective: 10% increase from FY2015 level
No product safety incidents
★★★ Maintain zero serious product safety incidents
54
Asahi Kasei Report 2017
1 LCA is used to determine the amount of reduction in CO2 emissions enabled by Asahi Kasei products and technologies in comparison with conventional products and technologies. The ratio is calculated by
dividing this amount by the global CO2 emissions of the entire Asahi Kasei Group.
2 The water resource contribution ratio is calculated by adding up the total quantity of water clarified and recycled using Asahi Kasei filtration technology and dividing this by the quantity of the Asahi Kasei
Group’s water intake.
3 Number of accidental deaths and injuries resulting in the loss of one or more workdays, per million man-hours worked.
4 Lost workdays, severity-weighted, per thousand man-hours worked.
5 Japan Initiative of Product Stewardship: A chemical industry initiative promoted by the Japan Chemical Industry Association to minimize chemical risks through voluntary risk assessment and management.
6 Joint Article Management Promotion-consortium.
Asahi Kasei Report 2017
55
Responsible Care
Environmental protection
As in our Group Vision of “harmony with the natural environment,” the Asahi Kasei Group considers environmental
preservation as one of the most important tasks. Our major focuses are on 1) prevention of global warming, 2) promotion of
a recycling-oriented society, 3) management of chemical substances, and 4) preservation of biodiversity. For prevention of
global warming, we have established new indicators and targets to curtail greenhouse gas emissions to be achieved by fiscal
2020. Regarding promotion of a recycling-oriented society, we continue to reduce our rate of final disposal and increase our
rate of recycling. Furthermore, as a chemical company, we are working to promote safe handling of chemical substances and
actively provide safety information. We are also making efforts to reduce the impact of our business activities on biodiversity.
Highlights
■ Climate-change effort ranked “A–” by CDP* for two
consecutive years
Our effort with respect to climate change was given an evalua-
tion of “A–” by the CDP* in fiscal 2015 and 2016.
■ Moriyama Works receives Environmental Action Promotion
Award
Actions in Moriyama for the conservation of endangered
smallhead stickleback were recognized with an Environmental
Action Promotion Award at the 9th Biotope Award ceremony
held by the Japan Biotope Association.
* Formerly the Carbon Disclosure Project, CDP is an NPO based in the UK which
researches and evaluates how companies and cities are working to address
environmental issues related to climate change, water, forests, etc., and provides
the information and results to investors. It began as a project to disclose companies’
environmental strategy and performance in response to demand from institutional
investors. The CDP is now one of the most trusted evaluation organizations among
investors. It issues evaluations on a 9-rank scale of A, A–, B, B–, C, C–, D, D–, and F.
Operational safety
To achieve safe operations, it is essential to build highly safe plants based on process hazard assessment prior to construction,
to perform sound plant maintenance, and to operate facilities in a stable and safe manner. The Asahi Kasei Group avoids
operational accidents through risk assessments prior to the construction of new plants, periodic inspections of existing plants
performed by auditors specialized in fire and explosion prevention, process reviews from the perspective of preventing
abnormal reactions and ensuring interlock functions, and process reviews corresponding to the age of facilities.
In fiscal 2013, we completed a program of on-site confirmation
to identify hazards from the perspective of preventing abnor-
mal reactions and ensuring interlock functions. From fiscal
2013 onwards, we have been preparing technical documents
on items with a high degree of hazard and on accidents and
problems which occurred in the past. From fiscal 2015, we
are implementing education and training for managers and
operators to enable them to properly identify the cause and
take appropriate action if problems occur, including problems
that have not been previously encountered. There were no
serious operational accidents inside or outside Japan during
fiscal 2016.
Workplace safety and hygiene
The effort to prevent workplace accidents is integrated in a
comprehensive OHSMS* program that combines conven-
tional safety initiatives—such as tidiness/orderliness/
cleanliness, reporting of near-accidents and potential
hazards, hazard prediction analysis, safety patrols, and case
studies—with risk assessments and a prevention-oriented
plan-do-check-act (PDCA) system.
Integration of workplace safety initiatives
Conventional safety initiatives
Risk assessments
PDCA management system
OHSMS
* Occupational Health and Safety Management System. A standardized system used
to confirm that continuous improvement is being applied to measures to minimize
the risks of workplace injuries and to prevent the emergence of future risks.
Occurrence of workplace injuries
Incidence of lost-workday
injury by event category,
FY2016 in Japan
Total
18 cases
Incidence of lost-workday
injury by event category,
FY2006–2015 in Japan
Total
122 cases
22%
17%
11%
Fall on same level
Kickback/overexertion
Traffic accident
Contact with high-temperature
11%
substance/object
11%
Caught in something else
6%
Caught in/between machinery
6%
Hit by flying/falling object
Collision
6%
Contact with harmful substances 6%
4%
Others
Traffic accident
Fall on same level
Fall from height
Caught in/between machinery
Kickback/overexertion
Contact with high temperature
substance/object
Caught in something else
Hit by flying/falling object
Collision
Others
24%
20%
13%
12%
12%
5%
3%
2%
2%
7%
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Asahi Kasei Report 2017
Asahi Kasei Report 2017
57
For more information, please refer to the Asahi Kasei Group CSR website.
http://www.asahi-kasei.co.jp/asahi/en/csr/
Health maintenance
The Asahi Kasei Group implements various activities to help employees maintain and advance their mental and physical well-being
in accordance with its health management guidelines, including screening for lifestyle-related diseases and mental health checkups.
Enhanced health management framework
During fiscal 2016, interviews to monitor the effectiveness of
the health management centers were performed at 7 sites.
The series of interviews were launched in fiscal 2014 to confirm
whether the activities at each site, including the duties of our
industrial physicians and health nurses, are being performed in
accordance with the Industrial Safety and Health Law and our
health management guidelines. Further guidance and support
is being provided as necessary.
Quality assurance
Upon our transition to an operating holding company configuration in April 2016, we established a new Asahi Kasei Group
Quality Policy and Group Quality Assurance Bylaws. At the same time, Corporate ESH & QA was reorganized, including the
establishment of a new Quality Assurance Group to coordinate the reinforcement of quality assurance activities throughout
the Asahi Kasei Group, ensuring the provision of safe and reliable products to our customers. In fiscal 2016, we once again
met our target of no serious product safety incidents.
Asahi Kasei Group Quality Policy
The Asahi Kasei Group creates and provides products
and services with the quality to meet the needs of
customers and society and ensure safety and security.
Reinforcing the quality assurance system:
maintaining zero serious product safety incidents
■ Consumer satisfaction and safety
Products and services provided by the Asahi Kasei Group
include materials, products, installations, various services, and
after-sale support. We believe that providing products and
services that satisfy our customers is our ultimate mission. We
constantly strive to enhance our systems for quality assurance,
including product safety.
Managing chemical substances
■ Effort to maintain zero serious product safety incidents
As part of the effort to prevent serious product safety
incidents, we established new quality assurance bylaws that
stipulate quality assurance activities for RC administrators to
perform. The bylaws newly define the central role of quality
assurance managers in activities to enhance quality assurance,
and are applied in concert with our product safety guidelines
to secure product safety and prevent the occurrence of serious
product safety incidents.
All business units of the Asahi Kasei Group apply these uni-
form bylaws and guidelines to assure the quality of products
and services.
To ensure the safety of products and production processes in the Asahi Kasei Group, we maintain awareness of the properties
of the chemical substances we use, and manage them strictly and appropriately throughout each phase from materials
procurement to production (including intermediates), use, and disposal.
The Asahi Kasei Group’s effort
Strict management and control of chemical substances is a
key element in the effort to ensure environmental protection,
operational safety, workplace safety and hygiene, health main-
tenance, and product safety. Chemical substances are man-
aged at each stage from development to use and disposal.
The management of chemical substances begins with R&D,
which is guided throughout every stage by a commitment
to developing products and processes characterized by safe,
environmentally sound production, handling, and use.
Industry-wide initiatives
Joint Article Management Program (JAMP)
As an active member of JAMP, we participate in the
development of systems to manage chemical substance infor-
mation as well as revision of the list of applicable substances.
We also convey relevant information throughout the supply
chain to help establish JAMP as a widely used tool.
In fiscal 2016, we started to use a tool of information
transmission compatible with chemSHERPA, a new scheme by
the Ministry of Economy, Trade and Industry. We are working
to smoothly transition from JAMP to chemSHERPA during the
two-year period starting in fiscal 2016.
As a major upstream company, we will continue to work
with the JAMP Office toward the greater adoption of the
JAMP-IT platform as a means of information sharing.
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57
CSR Fundamentals
Respect for Employee Individuality
The Asahi Kasei Group considers fulfilling and satisfying working conditions and
workplace culture, in which personnel feel motivated to achieve and take pride in their
career, to be key to business performance.
Our human resources policies are focused on the maintenance and reinforcement of a corporate culture
emphasizing Asahi Kasei characteristics, the personal growth of each employee, and the creation and
expansion of business through superior people and organizations, based on the understanding that the
exceptional power of our people and organizations is the source of our competitive strength.
Human Resources Principles
The Human Resources Principles of the Asahi Kasei Group are a distillation of the values and beliefs held in common by all
employees, a key aspect of a corporate culture where personal growth and corporate development are mutually reinforcing.
Corporate Commitment
Basic Expectations
Expectations of Leaders
The basic commitment to human resources
is to provide the venue for a dynamic and
fulfilling career as a part of a lively and
growing corporate group.
• Enterprise and growth through challenge
and change
• Integrity and responsibility in action
• Respect for diversity
• Building the team, heightening
performance and achievement
• Going beyond conventional boundaries,
in thought and action
• Contributing to mutual development
and growth
Human resource development
A wide range of training programs
Employees are given a wide range of training to develop the skills
needed to successfully advance their careers. A regular program
of training is applied at key career stages beginning with hiring
and extending through promotion to managerial positions. Other
individual training programs such as for global management are
implemented according to business need. Each core operating
company also implements training programs to support the devel-
opment of employee skills required for its specific field of business.
Group Masters
The Asahi Kasei Group employs a “Group Masters” program
to recognize employees who have developed and exercised
extraordinary expertise and skills that hold universal value, and to
facilitate their application throughout the Group. As of May 2017,
88 Group Masters are designated: 30 as Senior Group Experts and
58 as Group Experts, with rank and remuneration commensurate
with general manager and section manager, respectively.
To accelerate the creation of new businesses as a basic strategy of the
“Cs for Tomorrow 2018” management initiative, we revised the system in
fiscal 2017 for greater emphasis on the development and growth of engi-
neers and technical personnel. The program is focused on reinforcing the
specialized technical abilities of such personnel who will drive the creation
of new businesses and the enhancement of established businesses.
Development of global human resources
To accelerate the expansion of world-leading businesses in
accordance with the medium-term management initiative “Cs for
Tomorrow 2018” from the perspective of human resources, we are
implementing measures such as internship programs for young
personnel, and holding training sessions for personnel at overseas
subsidiaries on subjects such as dissemination of corporate phi-
losophy, intercultural communication, and management training.
Valuing human rights and diversity
Basic policy
Human Resources leads the effort to ensure that there will be no
discrimination to maintain a lively workplace culture which enables
personnel to perform at their best, to advance employment of persons
with disability, and to rehire personnel after mandatory retirement.
To prevent any harassment or discrimination, we implement
training on corporate ethics to employees at each level—new
hires, assistant managers, and managers. Ethics training is also
implemented by business unit and by geographical area.
Hiring
The Asahi Kasei Group is working to create new value for
society by enabling living in health and comfort and harmony
with the natural environment. We strive to hire motivated and
capable personnel who will successfully execute our strategy
on a global scale.
We continue to hire university graduates of foreign nationality
every year, and the overall makeup of our personnel is becoming
more global. We are also strengthening our ties to universities
both in Japan and overseas, through career briefing sessions and
student internships, as part of an ongoing effort to attract talent.
In April 2017, 379 new graduates were hired: 296 men and
83 women. In addition, 108 persons were hired in mid-career
between April 2016 and March 2017.
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59
For more information, please refer to the Asahi Kasei Group website.
http://www.asahi-kasei.co.jp/asahi/en/csr
Expansion of opportunities for women
In 1993, we established a dedicated corporate organ (now
Diversity Promotion Group) to promote equal opportunity,
and have proactively increased the proportion of women hired
and expanded the distribution of job assignments for women.
While only five employees at the rank of manager or above were
women in 1993, this has risen to 534 in June 2017. To support
female personnel in their careers, we provide a mentoring pro-
gram, hold seminars on returning to work after maternity leave,
and publish diversity-related articles in our internal magazine.
Number of women as managers*
600
410
454
370
500
534
500
400
300
200
100
0
Employment of persons with disabilities
Asahi Kasei Ability Corp. was established in 1985 for the employ-
ment of persons with disabilities, performing a wide range of ser-
vices for the Asahi Kasei Group. The employment rate at applicable
companies of the Asahi Kasei Group was 2.19% (550.0 persons) as of
June 1, 2017, exceeding the legal requirement. We continue recruit-
ment activities to further increase the employment of persons with
disabilities at group companies other than Asahi Kasei Ability.
Rate of employment of persons with disabilities
at applicable Group companies*
Asahi Kasei Group
Legal minimum
2.12
2.08
2.05
2.12
2.19
2.00
(%)
2.2
2.1
2.0
1.9
1.8
1.7
’13/6
’14/6
’15/6
’16/6
’17/6
’13/6
’14/6
’15/6
’16/6
’17/6
* Results as of June 30 each year for personnel employed by Asahi Kasei Corp.,
Asahi Kasei Microdevices Corp., Asahi Kasei Homes Corp., Asahi Kasei Construction
Materials Corp., Asahi Kasei Pharma Corp., and Asahi Kasei Medical Co., Ltd. (Asahi
Kasei Chemicals Corp., Asahi Kasei Fibers Corp., Asahi Kasei E-materials Corp. are
included through June 2015).
* Results as of June 1 each year at applicable Group companies. Calculation based on
total employment of 25,073 persons in the 21 applicable companies. As of June 1,
2017, the number of persons with disabilities employed by Asahi Kasei Ability Corp.
stood at 333 of the total 550 employees with disabilities. Calculated in accordance
with the Act on Employment Promotion etc. of Persons with Disabilities.
Balancing work and family life
Basic policy
We provide various forms of support for personnel to work
with security and vitality in accordance with their individual
circumstances and values from the perspective of balancing
work and family life.
Parental leave
Our parental leave is available through the fiscal year in which
the child turns three years old. In fiscal 2016, parental leave
was utilized by 582 personnel. This included 316 men, 43% of
those who were qualified, and 266 women.
Employees using parental leave*
Women
Men
242
212
235 233
226 231
240
316
316
266
330
220
110
0
’12
’13
’14
’15
’16
(FY)
* Results as of June 30 each year for personnel employed by Asahi Kasei Corp.,
Asahi Kasei Microdevices Corp., Asahi Kasei Homes Corp., Asahi Kasei Construction
Materials Corp., Asahi Kasei Pharma Corp., and Asahi Kasei Medical Co., Ltd. (Asahi
Kasei Chemicals Corp., Asahi Kasei Fibers Corp., and Asahi Kasei E-materials Corp.
included through June 2015).
Shortened working hours for child care
Personnel are able to utilize shortened working hours to care
for preschoolers, with the working day shortened by up to 2
hours until the child enters elementary school. In September
2007, a provision called “Kids Support” was added to enable
personnel with children in the first and second grades to work
shortened hours as well. These provisions may be used con-
currently with a “flex-time” system for flexible working hours.
Leave to accompany spouse overseas
As globalization continues to advance, an increasing number
of personnel have a spouse who is transferred to an overseas
assignment. In fiscal 2013 we adopted a provision for such
personnel to take a leave of absence to accompany their
spouses living overseas. In fiscal 2016, 16 personnel utilized
this provision.
Platinum Kurumin certification mark
In 2016, we received the Platinum Kurumin
certification mark from the Ministry of Health,
Labor and Welfare.* Platinum Kurumin
certification is awarded in recognition of
proactive support for the development of
the next generation which is superior to the
previously received Kurumin certification.
* Certification received for Asahi Kasei Corp., Asahi Kasei Homes Corp., Asahi Kasei
Microdevices Corp., Asahi Kasei Pharma Corp., Asahi Kasei Medical Co., Ltd., and
Asahi Kasei Ability Corp. Asahi Kasei Ability Corp. is the first company in Miyazaki
Prefecture to receive Platinum Kurumin certification.
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Corporate Citizenship
CSR Fundamentals
We are committed to advancing in harmony with society from a global perspective
through fair information disclosure and the proactive employment of management
resources for corporate responsibility and citizenship.
Stakeholder dialog
Different corporate organs hold responsibility for fair and open dialog with each of our different groups of stakeholders.
Stakeholders
Customers
Shareholders, investors
Suppliers
Local communities
Corporate
Communications at Asahi
Kasei Corp.
Communications sections
at core operating
companies
Marketing and sales
departments,
consumer contact offices
Investor Relations
at Asahi Kasei Corp.
• Issuing news releases
• Holding news
conferences
• Issuing documents for
information disclosure
• Website disclosure of
information
• Responding to CSR-
related questionnaires
• Promoting social
contribution activities
• Issuing news releases
• Holding news
conferences
• Website disclosure of
information
• Face-to-face discussion
by marketing and sales
personnel
• Taking inquiries via
telephone, website, etc.
• Meeting with
securities analysts and
institutional investors
• Seminars for Individual
investors
• Website disclosure of
information
• Taking inquiries via
telephone, website, etc.
Purchasing and logistics
sections, environment
and safety sections at
production sites
General affairs and
administration sections
at production sites
• Safety discussion
forums
• Information exchange
forums
• Periodic community
dialog meetings
• Community outreach
initiatives
Customer relations
Investor Relations
Principled supplier
relationships
Public outreach
Asahi Kasei Group
Customer relations
We believe that it is by maintaining customer satisfaction that our products and services contribute to society. For
materials, intermediates, and devices, communication with our customers is handled by the sales and technical support
departments of each business unit. For end products and housing, communication with our customers is handled by the
customer support center of each product.
Investor Relations
We strive to disclose information in a timely and fair manner to enable our domestic and
international investors to gain an accurate understanding of the Asahi Kasei Group.
Shareholder distribution
Information on shareholder distribution is available in the
Corporate Citizenship section of our CSR website.
IR meetings with institutional investors and
securities analysts
In fiscal 2016, Investor Relations (IR) held 210 meetings with
institutional investors and securities analysts in Japan, includ-
ing quarterly results briefings and an annual management
briefing with the President. To deepen understanding of Asahi
Kasei among investors, we held a briefing on the Material
sector as well as individual meetings. In addition, 79 meetings
were held overseas. We also provide a wide variety of informa-
tion for investors on our website.
Seminars for individual investors
To provide individual investors with a better understanding
of the operations of the Asahi Kasei Group, 5 seminars were
held in fiscal 2016. We will continue to provide accurate and
timely information to individual investors through direct com-
munications, the corporate website, and articles published in
magazines for individual investors.
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For more information, please refer to the Asahi Kasei Group website.
http://www.asahi-kasei.co.jp/asahi/en/csr
Principled supplier relationships
A relationship of mutual trust with our suppliers is fostered through fair and principled purchasing
practices based on regulatory compliance and respect for the environment and human rights.
Purchasing departments throughout the Asahi Kasei Group
regard suppliers as important partners and work to build
relationships with them based on sincerity in accordance with
our Group Philosophy. To this end, we are placing greater
emphasis on CSR in accordance with our Procurement Policy.
Each year we conduct a survey of suppliers to help foster
greater awareness of the importance of CSR issues.
Public outreach
We work to honor and respect the local culture of each community where our operations are
based, and to maintain effective dialog and communication with community members.
Many of our major plants offer plant tours to provide the local
community with a better understanding of our operations
and the measures we implement for the environment and
safety. Measures for community dialog and interaction include
regularly held forums and meetings with representatives of
local governments and members of local residents associa-
tions. We also open our gymnasiums, sports fields, parking lots,
and other facilities for public use and enjoyment, and host a
variety of events.
Community fellowship
The Community Fellowship Committee is organized under direct supervision of the President
of Asahi Kasei. Its roles include formulation of overall policy, plans, and courses of action in
regard to community fellowship activities. The Committee also monitors and reviews com-
munity fellowship activities at each site and at each affiliated company of the Asahi Kasei Group. Under our Community
Fellowship Policy, we are involved in a wide range of community-focused activities in accordance with the three themes
of Nurturing the Next Generation, Coexistence with the Environment, and Promotion of Culture, Art, and Sports.
We participate in the One-Percent Club of the Keidanren
(Japan Business Federation), and convert our social contribu-
tion activities into monetary value by a method set forth in
its annual Survey of Expenditure for Corporate Philanthropic
Activities. In fiscal 2015, this was ¥1.133 billion.
Nurturing the Next Generation
To promote understanding and heighten interest in science
and technology among elementary, junior high, and high
school students, we visit schools and host visits by students to
factories to give explanations and demonstrations of science and
technology and on environmental issues. We also support career
development with occupational lectures and host visits by junior
high and high school students to our corporate head office. Such
activities were held 81 times in fiscal 2016, with a total of some
3,408 students of 83 schools participating. In August 2016, we
held a laboratory tour for female high school students, together
with informal discussion with our researchers, as part of our effort
to foster interest in careers in science and technology among
young women. We also sponsor educational events including
science competitions and environmental education programs
organized by newspaper companies, exhibit at science and
chemistry events, and have a partnership with the National
Museum of Emerging Science and Innovation (Miraikan).
Coexistence with the Environment
In addition to our afforestation activities in Miyazaki and
Shizuoka, we participate in an afforestation project in the
Horqin Desert of Inner Mongolia, China. We also exhibit at
environmental-related events, and work to raise understand-
ing of environmental issues.
Disaster relief
We participate in a Disaster Relief Market featuring produce
of the areas affected by the Great East Japan Earthquake. We
also supported the relief effort in areas affected by the July
2017 flooding in northern Kyushu by making donations of ¥5
million each to the government of Oita Prefecture and to the
Community Chest of Fukuoka.
Promotion of Culture, Art, and Sports
Members of our corporate distance running and judo teams
have competed in the Olympics a total of some 50 times. In
Nobeoka, Miyazaki, where the teams are based, we host a
major track event, and hold running and judo lessons for the
local youth. The Asahi Kasei Himuka Cultural Foundation was
established in 1985 to enrich the environment of day-to-day
life and culture in Miyazaki Prefecture, with a wide range of
cultural activities being held.
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PB
Financial Section
Contents
64 Management’s Discussion and Analysis
70 Risk Analysis
72 Consolidated Financial Statements
72 Consolidated Balance Sheets
74 Consolidated Statements of Income
75 Consolidated Statements of Comprehensive Income
76 Consolidated Statements of Changes in Net Assets
77 Consolidated Statements of Cash Flows
78 Notes to Consolidated Financial Statements
78 1. Major policies for preparing the consolidated financial statements
78 2. Significant accounting policies
79 3. Changes in significant accounting policies
80 4. Notes to Consolidated Balance Sheets
81 5. Notes to Consolidated Statements of Income
83 6. Notes to Consolidated Statements of Comprehensive Income
83 7. Notes to Consolidated Statements of Changes in Net Assets
85 8. Notes to Consolidated Statements of Cash Flows
85 9. Leases
86 10. Financial instruments
89 11. Marketable securities and investment securities
90 12. Derivative financial instruments
93 13. Provision for retirement benefits
95 14. Taxes
96 15. Business combinations
97 16. Asset retirement obligations
97 17. Business segment information
100 18. Information on related parties
101 19. Per share information
102 20. Borrowings
102 21. Others
103 Independent Auditor’s Report
PB
Asahi Kasei Report 2017
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63
Management’s Discussion and Analysis
Fiscal year 2016 (April 1, 2016 – March 31, 2017)
Operating Environment
During fiscal 2016, the outlook for the global economy
remained obscure with increased political uncertainty related
to the withdrawal of the UK from the EU and increased con-
cern regarding the economic policy of the new US administra-
tion, as well as concern of economic slowdown in emerging
economies. Meanwhile, the Japanese economy continued on
a path of gradual recovery with strong corporate performance
while consumer spending became firm as the employment
situation and income environment improved.
Overview of Consolidated Results
Net sales, operating income
Consolidated net sales for the fiscal year decreased by ¥57.9
billion (3.0%) to ¥1,883.0 billion. Overseas sales decreased by
¥23.4 billion (3.4%) to ¥656.4 billion, largely in the Material
segment, and decreased by 0.2 percentage points as a portion
of consolidated net sales from 35.0% to 34.9%. Domestic sales
decreased by ¥34.6 billion (2.7%) to ¥1,226.6 billion with lower
deliveries of order-built homes in the Homes segment and
lower reimbursement prices for pharmaceuticals in the Health
Care segment.
Operating income decreased by ¥6.0 billion (3.6%) to
¥159.2 billion. As a percentage of net sales, cost of sales
decreased by 1.0 percentage points to 68.8%. Selling, general
and administrative (SG&A) expenses increased by ¥6.5 billion
despite the decrease in net sales, increasing as a portion of
net sales by 1.0 percentage points to 22.7%. Operating margin
decreased by 0.1 percentage points to 8.5%.
Non-operating income and expenses, ordinary income
Net non-operating income was ¥1.4 billion, a ¥5.2 billion
improvement from the ¥3.8 billion net non-operating
expenses of a year earlier. Foreign exchange loss transitioned
to foreign exchange gain, and equity in losses of affiliates
decreased. As a result, ordinary income decreased by ¥0.7
billion (0.5%) to ¥160.6 billion.
Extraordinary income and loss
Extraordinary income of ¥10.1 billion included ¥9.9 billion
in gain on sales of investment securities. Extraordinary loss
of ¥13.3 billion included ¥6.2 billion in business structure
improvement expenses, ¥4.9 billion in loss on disposal of
noncurrent assets, ¥1.5 in impairment loss, and ¥0.7 billion in
business integration expense. The net extraordinary loss of
¥3.2 billion was ¥11.7 billion lower than a year ago.
Net income attributable to owners of the parent
With ordinary income of ¥160.6 billion and net extraordinary
loss of ¥3.2 billion, income before income taxes was ¥157.4
billion. Income tax expense was ¥40.7 billion (current income
taxes of ¥49.0 billion less deferred income taxes of ¥8.3 billion).
Net income attributable to non-controlling interests was ¥1.7
billion. As a result, net income attributable to owners of the
parent increased by ¥23.2 billion (25.3%) to ¥115.0 billion, and
net income per share increased by ¥16.65 to ¥82.34 from the
¥65.69 of the previous year.
Net Sales,
Overseas Sales Ratio
Operating Income,
Operating Margin
SG&A, SG&A Ratio
Net Income Attributable to
Owners of the Parent,
Net Income per Share
(¥ billion)
2,000
(%)
40
(¥ billion)
200
(%)
20
(¥ billion)
500
(%)
50
(¥ billion)
120
1,500
1,000
500
0
’12
’13
’14
’15
’16
Net sales (left scale)
Overseas sales ratio (right scale)
64
Asahi Kasei Report 2017
30
150
20
100
10
50
0
(FY)
0
’12
’13
’14
’15
’16
Operating income (left scale)
Operating margin (right scale)
400
300
200
100
0
15
10
5
0
(FY)
’12
’13
’14
’15
’16
SG&A (left scale)
SG&A ratio (right scale)
40
30
20
10
0
(FY)
90
60
30
0
’12
’13
’14
’15
’16
(¥)
100
75
50
25
0
(FY)
Net income attributable to owners of
the parent (left scale)
Net income per share (right scale)
Asahi Kasei Report 2017
65
Among electronics operations, shipments of each battery
separator product increased. While results of Polypore, consoli-
dated from the second quarter of fiscal 2015, were included,
amortization of goodwill, etc., was recorded for the full year,
and the stronger yen had an impact. In electronic devices,
shipments of audio devices for smartphones increased but the
stronger yen had an impact.
Homes
Sales decreased by ¥13.5 billion (2.1%) from a year ago to
¥619.0 billion, and operating income decreased by ¥6.9 billion
(9.7%) from a year ago to ¥64.1 billion.
Among homes operations, in order-built homes, deliveries
of Hebel Haus™ unit homes and Hebel Maison™ apartment
buildings decreased as an effect of orders received during
the previous period, while SG&A expenses such as advertising
expenses increased. In remodeling, SG&A expenses such as
labor costs increased, but in real estate, management of rental
units was firm.
In construction materials operations, sales of Neoma™
phenolic foam insulation panels were firm, while shipments
of autoclaved aerated concrete (AAC) and foundation systems
decreased.
Results by Operating Segment
In April 2016, the Asahi Kasei Group reorganized its business
portfolio together with the beginning of a new strategic
management initiative. The previous four reportable segments
of Chemicals & Fibers, Homes & Construction Materials,
Electronics, and Health Care, together with an “Others” cat-
egory, have been changed to the three reportable segments
of Material, Homes, and Health Care, together with an “Others”
category. The figures for the year-ago period have been recal-
culated in accordance with the new segment configuration for
comparison purposes.
Material
Sales decreased by ¥31.3 billion (3.1%) from a year ago to
¥973.2 billion, and operating income increased by ¥5.3 billion
(6.6%) from a year ago to ¥84.5 billion.
In fibers & textiles, shipments of Bemberg™ cupro fiber,
Lamous™ artificial suede, and Leona™ nylon 66 filament
increased, but selling prices declined due to competition, and
each product in fibers & textiles operations was impacted by
the stronger yen.
Among chemical operations, in petrochemicals, shipments
of styrene decreased following the strengthening of petro-
chemical operations in Japan, while terms of trade improved
for acrylonitrile. Shipments of synthetic rubber for fuel-efficient
tires and engineering plastics increased, but each product in
performance polymers was impacted by the stronger yen.
In performance materials and consumables, ion-exchange
membranes were impacted by the stronger yen, but sales of
electronic materials and Saran Wrap™ cling film were firm.
Fibers Business
Operating Income Increases/Decreases
Chemicals Business
Operating Income Increases/Decreases
Electronics Business
Operating Income Increases/Decreases
Sales
volume
+2.2
Sales
prices1
–3.0
13.9
Foreign
exchange2
–2.8
(¥ billion)
80
Sales volume
+5.0
60
60.9
(¥ billion)
15
Operating
costs and
others
+39.1
70.4
11.7
Operating
costs and
others
+1.4
40
20
0
Sales
prices1
–12.6
Foreign
exchange2
–22.2
Sales
volume
+7.7
Sales
prices1
–6.2
4.4
Foreign
exchange2
–4.6
Operating
costs and
others
+1.1
2.5
12
9
6
3
0
(¥ billion)
20
15
10
5
0
64
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65
’15
’16
(FY)
’15
’16
(FY)
’15
’16
(FY)
1 Excluding impact of foreign exchange
2 Impact of foreign exchange on sales prices
1 Excluding impact of foreign exchange
2 Impact of foreign exchange on sales prices
1 Excluding impact of foreign exchange
2 Impact of foreign exchange on sales prices
Management’s Discussion and Analysis
Health Care
Sales decreased by ¥15.3 billion (5.4%) from a year ago to
¥270.1 billion, and operating income decreased by ¥4.3 billion
(11.9%) from a year ago to ¥31.9 billion.
Others
Sales increased by ¥2.1 billion (11.2%) from a year ago to ¥20.7
billion, and operating income increased by ¥2.3 billion (59.8%)
from a year ago to ¥6.0 billion.
Shipments of Teribone™ osteoporosis drug and
Recomodulin™ recombinant thrombomodulin increased,
but pharmaceuticals operations were impacted by reduced
reimbursement prices, and Flivas™ agent for treatment of
benign prostatic hyperplasia was impacted by competition
from generics.
Shipments of Planova™ virus removal filters increased, but
medical devices operations were impacted by the stronger
yen and, in Japan, by reduced reimbursement prices for
dialysis-related products.
In critical care operations, on a local-currency basis, the
LifeVest™ wearable defibrillator business continued to expand
well, and sales of other products such as defibrillators and
related accessories increased, but SG&A expenses grew with
reinforced sales activity. The higher exchange value of the yen
had an impact on the translation of results into consolidated
accounts.
Homes Business
Operating Income Increases/Decreases
Construction Materials Business
Operating Income Increases/Decreases
Health Care Business
Operating Income Increases/Decreases
(¥ billion)
80
(¥ billion)
6.0
5.8
Sales volume
–0.9
Sales
volume
–1.5
Sales
prices
+1.9
65.4
Operating
costs and
others
–6.4
59.5
60
40
20
0
4.5
3.0
1.5
0
Sales
prices
–0.5
Operating
costs and
others
0
4.5
(¥ billion)
30
24
24.3
Sales
volume
+1.2
Sales
prices1
–7.5
Foreign
exchange2
–3.6
17.1
Operating
costs and
others
+2.6
18
12
6
0
’15
’16
(FY)
’15
’16
(FY)
’15
’16
(FY)
1 Excluding impact of foreign exchange
2 Impact of foreign exchange on sales prices
66
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67
Net assets increased by ¥110.7 billion (10.5%) from
¥1,057.4 billion to ¥1,168.1 billion. While dividend payments
were ¥27.9 billion, net income attributable to owners of the
parent was ¥115.0 billion.
As a result, net worth per share increased by ¥78.42 to
¥824.36, net worth to total assets increased from 47.1% to
51.1%, and debt-to-equity ratio decreased by 0.08 points to
0.35.
Liquidity and Capital Resources
Financial position
Total assets at fiscal year end were ¥2,254.5 billion, ¥42.8 billion
(1.9%) higher than a year earlier.
Current assets increased by ¥38.5 billion (4.5%) to ¥894.5
billion, mainly as notes and accounts receivable–trade
increased by ¥22.7 billion and inventories increased by ¥9.9
billion.
Noncurrent assets increased by ¥4.2 billion (0.3%) to
¥1,360.0 billion, notably with a ¥39.5 billion increase in invest-
ment securities while there was a ¥31.8 billion decrease in
intangible assets.
Current liabilities decreased by ¥130.8 billion (18.0%) to
¥594.9 billion, mainly as a result of a ¥200.1 billion decrease
in short-term loans payable and a ¥16.5 billion decrease in
income taxes payable, while there was a ¥56.0 billion increase
in commercial paper.
Although bonds payable decreased by ¥20.0 billion, non-
current liabilities increased by ¥62.8 billion (14.7%) to ¥491.5
billion with a ¥98.0 billion increase in long-term loans payable.
Interest-bearing debt decreased by ¥46.8 billion (10.4%) to
¥402.8 billion.
Critical Care Business
Operating Income Increases/Decreases
Others
Operating Income Increases/Decreases
Total Assets, Net Worth
Sales
volume
+5.8
Foreign
exchange2
–0
Sales
prices1
+1.9
Operating
costs and
others
–4.8
14.8
11.9
(¥ billion)
20
15
10
5
0
(¥ billion)
6.0
Sales
volume
+1.9
6.0
(¥ billion)
2,500
Operating
costs and
others
+0.4
3.8
4.5
3.0
1.5
0
2,000
1,500
1,000
500
0
’15
’16
(FY)
’15
’16
(FY)
’12
’13
’14
’15
’16
(FY)
1 Excluding impact of foreign exchange
2 Impact of foreign exchange on sales prices
Total assets
Net worth
66
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67
Management’s Discussion and Analysis
Capital Expenditure
Notable capex by operating segment was as follows.
Capital expenditure (capex) was primarily for new and
expanded production plant and equipment in long-term
growth fields. Investments were also made for rationalization,
labor-saving, maintenance, and IT systems to bring greater
product reliability and cost reductions.
The following table of capex by operating segment shows
totals of property, plant and equipment and intangible assets
(other than goodwill), excluding consumption tax.
A total of ¥90.6 billion was invested during the fiscal year
for the expansion of businesses with competitive superiority,
particularly in the Material segment, as well as for modification
and rationalization.
Material
Homes
Health Care
Totals for the year
(¥ million)
Compared to
previous year (%)
Others
Material
Homes
Health Care
Others
Combined
Corporate assets and
eliminations
Consolidated
47,205
12,139
15,604
6,836
81,783
8,790
90,573
82.5
101.6
80.5
145.3
87.7
152.1
91.5
Corporate assets
Construction of a new production line
for Hipore™ lithium-ion battery separator,
construction of a new production facility
for Bemliese™ continuous-filament
cellulose nonwoven, rationalization, labor-
saving, and maintenance.
Rationalization, labor-saving, and
maintenance.
Construction of a new manufacturing
facility for the active ingredient of
Recomodulin™ thrombomodulin agent,
construction of a new plant for the
spinning of hollow-fiber membranes for
Planova™ BioEX virus removal filters, ratio-
nalization, labor-saving, and maintenance.
Rationalization, labor-saving, and
maintenance.
R&D equipment, IT systems, and
maintenance.
Net Worth to Total Assets
Interest-Bearing Debt,
D/E Ratio
Capex, Depreciation and
Amortization
(%)
60
50
40
30
20
10
0
(¥ billion)
500
400
300
200
100
0
’12
’13
’14
’15
’16
(FY)
’12
’13
’14
’15
’16
1.0
0.8
0.6
0.4
0.2
0
(FY)
(¥ billion)
120
90
60
30
0
’12
’13
’14
’15
’16
(FY)
Interest-bearing debt (left scale)
D/E ratio (right scale)
Capex
Depreciation and amortization
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69
Cash Flows
Free cash flows* were a positive ¥79.0 billion, as cash provided,
principally from income before income taxes and from depre-
ciation and amortization, exceeded cash used, principally for
purchase of property, plant and equipment, and for payment
of income taxes. Cash flows from financing activities were a
net ¥74.0 billion used, principally due to a decrease in short-
term loans payable. As a result, cash and cash equivalents at
fiscal year end were ¥144.1 billion, ¥1.2 billion less than a year
earlier.
Cash flows from operating activities
Cash used included ¥61.4 billion for income taxes paid and a
¥20.8 increase in notes and accounts receivable–trade. Income
before income taxes provided ¥157.4 billion, and depreciation
and amortization provided ¥91.4 billion. Net cash provided by
operating activities was ¥169.0 billion, ¥47.3 billion less than a
year earlier.
Cash flows from investing activities
Cash provided included ¥12.0 billion in proceeds from sales
of investment securities. Cash used included ¥83.0 billion for
purchase of property, plant and equipment, ¥9.8 billion for
purchase of investment securities, and ¥8.8 billion for purchase
of intangible assets. Net cash used in investing activities was
¥89.9 billion, ¥195.4 billion less than a year earlier.
Cash flows from financing activities
Cash provided included ¥138.8 billion in proceeds from long-
term loans payable, and a ¥56.0 increase in commercial paper.
Cash used included a ¥193.8 billion decrease in short-term
loans payable, ¥45.5 billion for repayment of long-term loans
payable, and ¥27.9 billion in cash dividends paid. Net cash
used in financing activities was ¥74.0 billion, ¥175.3 billion
more than a year earlier.
* Total of net cash provided by (used in) operating activities and net cash provided
by (used in) investment activities.
Financial Policy
We aim to increase free cash flows with increased earnings
through enhanced cost efficiency, greater product competi-
tiveness, and business structure improvements, and with
greater capital efficiency through utilization of group finance
and maintenance of optimum inventory levels.
A wide range of fund-raising methods including bank
borrowings, bonds, and commercial paper will be utilized
dynamically in accordance with the financial circumstances
of the Asahi Kasei Group in order to obtain stable financing at
low cost.
These resources will be used to fund strategic investments
under the “Cs for Tomorrow 2018” strategic management
initiative focused on the pursuit of growth and profitability,
creation of new businesses, and acceleration of globalization,
as well as dividends for shareholders.
Advancing these measures will enable us to further
enhance corporate value and provide an appropriate return to
shareholders while maintaining discipline for a sound financial
constitution.
Free Cash Flows
(¥ billion)
160
Cash Flows
(¥ billion)
300
120
80
40
0
(40)
(80)
(120)
(160)
200
100
0
(100)
(200)
(300)
’12
’13
’14
’15
’16
(FY)
’12
’13
’14
’15
’16
(FY)
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
68
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69
Risk Analysis
Operating risks and non-operating risks which may materially influence investor decisions are described below. The manage-
ment maintains awareness of the possibility that these scenarios may emerge and, to the fullest possible extent, implements
measures to avoid their emergence and to minimize their impact on corporate performance in the event that they do emerge.
The description of risks given here includes elements which may emerge in the future, but as it is based on current evalua-
tions as of June 28, 2017, it does not include risks which could not be foreseen.
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.
Pharmaceutical, medical device, and critical care device
businesses
Pharmaceutical, medical device, and critical care device busi-
nesses may be significantly affected by government measures
regarding health care or other changes in government policy
in various countries. Unforeseeable side effects or complica-
tions may emerge, significantly affecting these businesses.
Product approval may be withdrawn as a result of reexamina-
tion, and competition may intensify as a result of the market
entry of generics. For products under development, regulatory
approval may be prolonged or fail to be obtained, market
demand may be lower than expected, and reimbursement
prices may be lower than expected. Such scenarios may affect
our consolidated performance and financial condition.
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 diminish,
thereby affecting our consolidated performance and financial
condition.
Exchange rate fluctuation
The value of items denominated in currencies other than the
yen is affected by the rate of exchange at the time of conver-
sion to yen. Although measures such as currency 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 affect-
ing 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 economi-
cally unfavorable circumstances due to legal and regulatory
changes, vulnerability of infrastructure, difficulty in hiring/retain-
ing 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 affect-
ing 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
fluctuations in Japanese interest rates. Changes in Japanese
tax policy, including consumption taxes, or fluctuations in
Japanese interest rates may result in diminished housing
demand, thereby affecting our consolidated performance and
financial condition.
70
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71
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 opportunity loss due
to plant shutdown caused by damage to plant facilities, supply
chain disruptions which impede raw materials procurement,
etc., thereby affecting our consolidated performance and
financial condition.
Business and capital alliances
Acquisitions, business alliances, and capital alliances may
bear lower results or less synergy than anticipated due to
deterioration of the operating environment, thereby affecting
our consolidated performance and financial condition. Poor
performance at companies in which we have invested may
require the recording of an impairment loss for goodwill, etc.,
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.
Business counterparties
The occurrence of misconduct or unforeseeable credit impair-
ment, etc. may necessitate additional losses or allowances
to be recorded in financial accounts, thereby affecting our
consolidated performance and financial condition.
70
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71
Consolidated Financial Statements
Consolidated Balance Sheets
Asahi Kasei Corporation and Consolidated Subsidiaries
March 31, 2017 and 2016
ASSETS
Current assets:
Cash and deposits (Notes 8 and 10)
Notes and accounts receivable—trade
Short-term investment securities (Notes 8, 10 and 11)
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets (Note 14)
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets:
Property, plant and equipment:
Buildings and structures (Notes 4 (b), (d))
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles (Notes 4 (b), (d))
Accumulated depreciation
Machinery, equipment and vehicles, net
Land (Note 4 (d))
Lease assets (Note 9)
Accumulated depreciation
Lease assets, net
Construction in progress
Other (Note 4 (d))
Accumulated depreciation
Other, net
Subtotal
Intangible assets:
Goodwill
Other
Subtotal
Investments and other assets:
Investment securities (Notes 4 (a), (b), 10 and 11)
Long-term loans receivable (Note 10)
Deferred tax assets (Note 14)
Other
Allowance for doubtful accounts
Subtotal
Total noncurrent assets
Total assets
The accompanying notes are an integral part of these statements.
72
Asahi Kasei Report 2017
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
2016
2017
¥ 145,289
¥ 146,054
302,751
—
159,395
116,481
70,806
20,279
81,816
(2,272)
894,545
508,713
(278,122)
230,590
1,376,029
(1,176,686)
199,343
62,391
12,367
(11,381)
986
45,958
150,073
(132,460)
17,613
556,881
285,622
177,149
462,772
284,137
18,918
9,309
28,154
(215)
340,302
1,359,955
280,095
1,534
159,441
108,684
68,618
18,133
75,324
(1,865)
856,018
495,817
(268,635)
227,183
1,348,103
(1,149,544)
198,559
61,046
12,928
(11,183)
1,745
49,240
147,286
(129,072)
18,215
555,989
305,112
189,470
494,582
244,598
16,353
20,098
24,280
(189)
305,140
1,355,711
$ 1,295,026
2,698,556
—
1,420,759
1,038,248
631,126
180,756
729,263
(20,251)
7,973,482
4,534,388
(2,479,027)
2,055,353
12,265,166
(10,488,332)
1,776,834
556,119
110,233
(101,444)
8,789
409,644
1,337,668
(1,180,676)
156,993
4,963,731
2,545,878
1,579,009
4,124,895
2,532,641
168,625
82,975
250,949
(1,916)
3,033,265
12,121,891
¥ 2,254,500
¥ 2,211,729
$ 20,095,374
Asahi Kasei Report 2017
73
LIABILITIES AND NET ASSETS
Liabilities:
Current liabilities:
Notes and accounts payable—trade (Note 10)
Short-term loans payable (Notes 4 (b), 10 and 20)
Commercial paper (Notes 10 and 20)
Current portion of bonds payable (Notes 10 and 20)
Lease obligations (Notes 9, 10 and 20)
Accrued expenses
Income taxes payable (Note 10)
Advances received
Provision for periodic repairs
Provision for product warranties
Provision for removal cost of property, plant and equipment
Asset retirement obligations (Note 16)
Other
Total current liabilities
Noncurrent liabilities:
Bonds payable (Notes 10 and 20)
Long-term loans payable (Notes 4 (b), 10 and 20)
Lease obligations (Notes 9, 10 and 20)
Deferred tax liabilities (Note 14)
Provision for periodic repairs
Provision for removal cost of property, plant and equipment
Provision for loss on litigation
Net defined benefit liability (Note 13)
Asset retirement obligations (Note 16)
Long-term guarantee deposits (Note 10)
Other
Total noncurrent liabilities
Total liabilities
Net assets:
Shareholders’ equity:
Capital stock
Authorized—4,000,000,000 shares
Issued and outstanding—1,402,616,332 shares
Capital surplus
Retained earnings (Note 7 (b) (ii))
Treasury stock
(2017—5,958,904 shares, 2016—5,861,678 shares)
Total shareholders’ equity
Accumulated other comprehensive income:
Net unrealized gain on other securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Commitments and contingent liabilities (Notes 4 (c) and 9)
Total liabilities and net assets
The accompanying notes are an integral part of these statements.
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
2016
2017
¥ 147,543
113,475
56,000
20,000
305
100,419
16,202
72,882
5,003
2,461
1,800
572
58,217
594,880
20,000
192,584
467
59,759
165
4,390
2,162
178,368
3,436
20,479
9,695
491,506
1,086,385
¥ 126,653
313,587
—
—
919
98,717
32,735
74,667
3,908
2,355
2,130
568
69,423
725,662
40,000
94,632
537
64,930
558
7,228
2,171
186,300
3,480
20,131
8,702
428,669
1,154,330
$ 1,315,117
1,011,454
499,153
178,269
2,719
895,080
144,416
649,630
44,594
21,936
16,044
5,098
518,914
5,302,433
178,269
1,716,588
4,163
532,659
1,471
39,130
19,271
1,589,874
30,627
182,539
86,416
4,381,014
9,683,439
103,389
79,443
850,532
(3,242)
103,389
79,410
763,076
(3,150)
921,553
708,111
7,581,175
(28,897)
1,030,122
942,724
9,181,941
113,475
55
40,831
(33,140)
121,222
16,771
1,168,115
92,280
(179)
48,429
(41,353)
99,177
15,498
1,057,399
1,011,454
490
363,945
(295,392)
1,080,506
149,487
10,411,935
¥2,254,500
¥2,211,729
$20,095,374
72
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73
Consolidated Statements of Income
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2016
Net sales (Note 17)
Cost of sales (Note 5 (b))
Gross profit
Selling, general and administrative expenses (Note 5 (a))
Operating income (Note 17)
Non-operating income:
Interest income
Dividends income
Equity in earnings of affiliates
Other
Total non-operating income
Non-operating expenses:
Interest expense
Equity in losses of affiliates
Foreign exchange loss
Donations
Other
Total non-operating expenses
Ordinary income
Extraordinary income:
Gain on sales of investment securities
Gain on sales of noncurrent assets (Note 5 (c))
Total extraordinary income
Extraordinary loss:
Loss on valuation of investment securities
Loss on disposal of noncurrent assets (Note 5 (d))
Impairment loss (Note 5 (e))
Business structure improvement expenses (Notes 5 (e), (f ))
Litigation settlement
Loss on piling business (Note 5 (g))
Business integration expense
Special retirement expenses and other
Loss on discontinuation of joint sales agreement (Notes 5 (e), (h))
Total extraordinary loss
Income before income taxes
Income taxes (Note 14) — current
— deferred
Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent
The accompanying notes are an integral part of these statements.
Millions of yen
2017
¥1,882,991
1,296,255
586,736
427,506
159,229
2016
¥1,940,914
1,354,698
586,216
421,013
165,203
Thousands of
U.S. dollars (Note 1)
2017
$16,783,947
11,554,105
5,229,842
3,810,554
1,419,280
1,425
5,170
4,899
3,854
15,347
4,435
—
1,228
3,930
4,351
13,944
160,633
9,918
165
10,083
101
4,863
1,484
6,189
—
—
690
—
—
13,328
157,388
49,017
(8,293)
40,724
116,663
1,663
1,417
4,757
—
5,148
11,322
3,611
854
3,679
851
6,159
15,154
161,370
8,275
917
9,192
363
5,214
3,493
3,606
1,201
1,456
1,547
2,027
5,266
24,173
146,389
55,419
(2,441)
52,978
93,412
1,658
12,702
46,083
43,667
34,352
136,795
39,531
—
10,946
35,030
38,782
124,289
1,431,794
88,404
1,471
89,874
900
43,346
13,228
55,165
—
—
6,150
—
—
118,798
1,402,870
436,911
(73,919)
362,991
1,039,870
14,823
¥ 115,000
¥ 91,754
$ 1,025,047
74
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75
Consolidated Statements of Comprehensive Income
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2016
Net income
Other comprehensive income:
Net increase (decrease) in unrealized gain on other securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of affiliates accounted
for using equity method
Total other comprehensive income (Note 6)
Comprehensive income
Comprehensive income attributable to:
Owners of the parent
Non-controlling interests
The accompanying notes are an integral part of these statements.
Millions of yen
2017
¥116,663
2016
¥ 93,412
21,177
234
(8,020)
8,114
810
22,315
¥138,979
¥137,045
1,934
(21,098)
1,519
(48,860)
(33,331)
(3,567)
(105,337)
¥ (11,925)
¥ (12,708)
783
Thousands of
U.S. dollars (Note 1)
2017
$1,039,870
188,760
2,086
(71,486)
72,324
7,220
198,904
$1,238,782
$1,221,544
17,239
74
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75
Consolidated Statements of Changes in Net Assets
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2016
Shareholders’ equity
Accumulated other comprehensive income
Millions of yen
Capital
stock
¥103,389
Capital
surplus
¥79,410
Retained
earnings
(Note 7 (b))
¥763,076
Total
shareholders’
equity
Treasury
stock
¥(3,150) ¥ 942,724
Net
unrealized
gain on
other securities
¥ 92,280
Deferred
gains or
losses on
hedges
Foreign
currency
translation
adjustment
¥(179)
¥48,429
Remeasure-
ments of
defined
benefit plans
¥(41,353)
Total
accumulated
other
comprehensive
income
¥ 99,177
Non-
controlling
interests
¥15,498 ¥1,057,399
Total
net assets
103,389
79,410
0
33
10
763,086
(27,935)
115,000
418
(37)
(3,150)
(93)
1
10
942,734
(27,935)
115,000
(93)
1
418
(37)
33
92,280
(179)
48,429
(41,353)
99,177
15,498
10
1,057,409
(27,935)
115,000
(93)
1
418
(37)
33
21,195
234
(7,597)
8,213
22,045
1,273
23,318
—
¥103,389
33
¥79,443
87,446
¥850,532
(92)
87,388
¥(3,242) ¥1,030,122
21,195
¥113,475
234
¥ 55
(7,597)
¥40,831
8,213
¥(33,140)
22,045
¥121,222
1,273
110,705
¥16,771 ¥1,168,115
Shareholders’ equity
Accumulated other comprehensive income
Millions of yen
Capital
stock
¥103,389
Capital
surplus
¥79,408
Retained
earnings
(Note 7 (b))
¥699,259
Treasury
stock
¥(3,041)
Total
shareholders’
equity
¥879,014
Net
unrealized
gain on
other securities
¥113,562
Deferred
gains or
losses on
hedges
Foreign
currency
translation
adjustment
¥(1,697)
¥ 99,531
Remeasure-
ments of
defined
benefit plans
¥ (7,757)
Total
accumulated
other
comprehensive
income
¥ 203,639
Non-
controlling
interests
¥15,068
Total
net assets
¥1,097,722
103,389
79,408
699,259
(3,041)
(27,937)
91,754
2
(113)
4
—
879,014
(27,937)
91,754
(113)
6
—
—
—
113,562
(1,697)
99,531
(7,757)
203,639
15,068
—
1,097,722
(27,937)
91,754
(113)
6
—
—
—
(21,282)
1,519
(51,102)
(33,596)
(104,462)
430
(104,032)
—
¥103,389
2
¥79,410
63,817
¥763,076
(109)
¥(3,150)
63,710
¥942,724
(21,282)
¥ 92,280
1,519
¥ (179)
(51,102)
¥ 48,429
(33,596)
¥(41,353)
(104,462)
¥ 99,177
430
¥15,498
(40,323)
¥1,057,399
Shareholders’ equity
Accumulated other comprehensive income
Thousands of U.S. dollars (Note 1)
Capital
stock
$921,553
Capital
surplus
$707,817
Retained
earnings
(Note 7 (b))
$6,801,640
Treasury
stock
$(28,077)
Total
shareholders’
equity
$8,402,924
Net
unrealized
gain on
other securities
$ 822,533
Deferred
gains or
losses on
hedges
$(1,596)
Foreign
currency
translation
adjustment
$431,669
Remeasure-
ments of
defined
benefit plans
$(368,598)
Total
accumulated
other
comprehensive
income
$ 884,009
Non-
controlling
interests
$138,141 $ 9,425,074
Total
net assets
921,553
707,817
0
294
89
6,801,729
(248,997)
1,025,047
3,726
(330)
(28,077)
(829)
9
89
8,403,013
(248,997)
1,025,047
(829)
9
3,726
(330)
294
822,533
(1,596)
431,669
(368,598)
884,009
138,141
89
9,425,163
(248,997)
1,025,047
(829)
9
3,726
(330)
294
—
$921,553
294
$708,111
779,446
$7,581,175
(820)
$(28,897)
778,929
$9,181,941
188,921
$1,011,454
2,086
$ 490
(67,715)
$363,945
73,206
$(295,392)
196,497
$1,080,506
11,347
$149,487
986,764
$10,411,935
188,921
2,086
(67,715)
73,206
196,497
11,347
207,844
Balance at March 31, 2016
Cumulative effect of changes
in accounting policies
Restated balance
Changes during the fiscal year:
Dividends from surplus
Net income attributable
to owners of the parent
Purchase of treasury stock
Disposal of treasury stock
Change of scope of consolidation
Change of scope of equity method
Capital increase of
consolidated subsidiaries
Net changes of items other than
shareholders’ equity
Total changes of items
during the period
Balance at March 31, 2017
Balance at March 31, 2015
Cumulative effect of changes
in accounting policies
Restated balance
Changes during the fiscal year:
Dividends from surplus
Net income attributable
to owners of the parent
Purchase of treasury stock
Disposal of treasury stock
Change of scope of consolidation
Capital increase of
consolidated subsidiaries
Change of scope of equity method
Net changes of items other than
shareholders' equity
Total changes of items
during the period
Balance at March 31, 2016
Balance at March 31, 2016
Cumulative effect of changes
in accounting policies
Restated balance
Changes during the fiscal year:
Dividends from surplus
Net income attributable
to owners of the parent
Purchase of treasury stock
Disposal of treasury stock
Change of scope of consolidation
Change of scope of equity method
Capital increase of
consolidated subsidiaries
Net changes of items other than
shareholders' equity
Total changes of items
during the period
Balance at March 31, 2017
The accompanying notes are an integral part of these statements.
76
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77
Consolidated Statements of Cash Flows
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2016
Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Impairment loss
Amortization of goodwill
Amortization of negative goodwill
Increase in provision for periodic repairs
Increase (decrease) in provision for product warranties
Decrease in provision for removal cost of property, plant and equipment
Decrease in net defined benefit liability
Interest and dividend income
Interest expense
Equity in (earnings) losses of affiliates
Gain on sales of investment securities
Loss on valuation of investment securities
Gain on sale of property, plant and equipment
Loss on disposal of noncurrent assets
(Increase) decrease in notes and accounts receivable—trade
(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable—trade
Increase (decrease) in accrued expenses
(Decrease) increase in advances received
Other, net
Subtotal
Interest and dividend income received
Interest expense paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of shares in subsidiaries resulting in change in scope of consolidation
Payments for transfer of business
Payments of loans receivable
Collection of loans receivable
Other, net
Net cash used in investing activities
Cash flows from financing activities:
(Decrease) increase in short-term loans payable
Increase in commercial paper
Proceeds from long-term loans payable
Repayment of long-term loans payable
Repayments of lease obligations
Purchase of treasury stock
Proceeds from disposal of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling interests
Other, net
Net cash (used in) provided by financing activities
Effect of exchange rate change on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents resulting from changes
in scope of consolidation
Cash and cash equivalents at end of year (Note 8)
The accompanying notes are an integral part of these statements.
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
2016
2017
¥ 157,388
91,387
1,484
17,806
(159)
703
108
(3,168)
(8,150)
(6,595)
4,435
(4,899)
(9,918)
101
(165)
4,863
(20,756)
(9,840)
18,619
2,467
(1,886)
(6,721)
227,105
7,733
(4,428)
(61,444)
168,965
(4,105)
5,232
(82,983)
3,178
(8,810)
(9,846)
12,018
—
—
(5,218)
2,169
(1,553)
(89,920)
(193,760)
56,000
138,812
(45,513)
(965)
(93)
1
(27,935)
(712)
207
(73,959)
(6,759)
(1,673)
145,307
¥ 146,389
93,811
3,493
15,821
(159)
824
(193)
(1,339)
(9,227)
(6,173)
3,611
854
(8,275)
363
(917)
5,214
48,513
12,901
(24,104)
(3,980)
120
(4,863)
272,687
7,558
(3,596)
(60,431)
216,218
(6,360)
17,364
(85,184)
774
(10,330)
(7,017)
10,197
(193,680)
(200)
(11,131)
2,520
(2,241)
(285,287)
213,417
—
9,445
(91,760)
(1,411)
(113)
6
(27,937)
(653)
371
101,365
(5,560)
26,736
112,297
$ 1,402,870
814,573
13,228
158,713
(1,417)
6,266
963
(28,238)
(72,645)
(58,784)
39,531
(43,667)
(88,404)
900
(1,471)
43,346
(185,008)
(87,708)
165,960
21,989
(16,811)
(59,907)
2,024,289
68,928
(39,469)
(547,678)
1,506,061
(36,590)
46,635
(739,665)
28,327
(78,527)
(87,762)
107,122
—
—
(46,510)
19,333
(13,843)
(801,497)
(1,727,070)
499,153
1,237,294
(405,678)
(8,601)
(829)
9
(248,997)
(6,346)
1,845
(659,230)
(60,246)
(14,912)
1,295,187
443
¥ 144,077
6,273
¥ 145,307
3,949
$ 1,284,223
76
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77
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 prime
minister of Japan as required by the Financial Instruments and Exchange
Act in Japan, are prepared in accordance with accounting principles
generally accepted in Japan, which are different in certain respects from
the application and disclosure requirements of International Financial
Reporting Standards. The accompanying consolidated financial state-
ments are a translation of those filed with the prime minister of Japan and
incorporate certain modifications to enhance foreign readers’ understand-
ing of the consolidated financial statements. In addition, the notes to the
consolidated financial statements include certain financial information
which is not required under the disclosure regulations in Japan, but is
presented herein as additional information.
The U.S. dollar amounts presented in the consolidated financial
statements are included solely for the convenience of readers. These
translations should not be construed as representations that the Japanese
yen amounts actually represent, have been, or could be converted into
U.S. dollars. As the amounts shown in U.S. dollars are for convenience
only, and are not intended to be computed in accordance with generally
accepted translation procedures, the approximate current exchange rate
of ¥112.19=US$1 prevailing on March 31, 2017, has been used.
Consolidation and investments in affiliated companies
The consolidated financial statements consist of the accounts of the
parent company and 171 subsidiaries (174 subsidiaries at March 31,
2016, hereinafter collectively referred to as the “Company”) which, with
minor exceptions due to immateriality, are all majority or wholly owned
2. Significant accounting policies
(a) Cash and cash equivalents
For cash flow statement purposes, cash and cash equivalents include
all highly liquid investments, generally with original maturities of three
months or less, which are readily convertible to known amounts of cash,
and therefore present an insignificant risk of changes in value due to
changes in interest rates.
(b) Inventories
Inventories held for sale in the ordinary course of business are stated at the
lower of cost or net realizable value. Residential lots and dwellings for sale
are stated at specifically identified costs.
(c) Noncurrent assets and depreciation/amortization
Property, plant and equipment (except for lease assets) are stated at cost.
Significant renewals and improvements are capitalized at cost, while
maintenance and repairs are charged to income as incurred. Depreciation
is provided for under the declining-balance method for property, plant
and equipment, except for buildings and building accessories acquired on
or after April 1, 2016 which are depreciated using the straight-line method,
at rates based on estimated useful lives of the assets, principally ranging
from 5 to 60 years for buildings and from 4 to 22 years for machinery and
equipment and vehicles.
Intangible fixed assets (except for lease assets), including software for
internal use, are mainly amortized using the straight-line method over the
estimated useful lives of the assets. The estimated useful life of software for
internal use is mainly 5 years.
Lease assets (financing lease transactions without title transfer) are
depreciated/amortized on a straight-line basis over the period of the lease
with no residual value. For financing lease transactions without title trans-
fer whose transaction date is before March 31, 2008, the previous method
of accounting for lease transactions continues to be applied, with periodic
lease charges for financing leases being charged to income as incurred.
(d) Significant allowances
i) Allowance for doubtful accounts
Estimates of the unrecoverable portion of receivables, generally based
on historical rates and for specific receivables of particular concern based
on individual estimates of recoverability, are recognized as allowance for
doubtful accounts.
companies, including 6 core operating companies (Asahi Kasei Homes
Corp., Asahi Kasei Construction Materials Corp., Asahi Kasei Microdevices
Corp., Asahi Kasei Pharma Corp., Asahi Kasei Medical Co., Ltd., and
ZOLL Medical Corporation), Polypore International, LP, and Tongsuh
Petrochemical Corp. Ltd. (Korea). Material inter-company transactions and
accounts have been eliminated.
Investments in unconsolidated subsidiaries and 20% to 50% owned
companies in which the Company exercises significant influence are
accounted for, with minor exceptions due to immateriality, using the
equity method of accounting. There were 32 such unconsolidated subsid-
iaries and 20% to 50% owned companies to which the equity method is
applied at March 31, 2017 (31 at March 31, 2016), including Asahi Kasei EIC
Solutions Corp. and Asahi Yukizai Corporation.
Certain subsidiaries’ results are reported in the consolidated financial
statements using a fiscal year ending December 31. Material differences in
inter-company transactions and accounts arising from the use of different
fiscal year-ends are appropriately adjusted for through consolidation
procedures.
All assets and liabilities of acquired companies are measured at their
fair value and any difference between the net assets and the cost of
investment is recognized as goodwill or negative goodwill. Goodwill, and
negative goodwill incurred through business combinations which took
place before April 1, 2010, are amortized using the straight-line method
over a reasonable period during which their effects would last, with the
exception of minor amounts which are charged to income as incurred.
ii) Provision for periodic repairs
The portion of foreseeable periodic repair expenses deemed to cor-
respond to normal wear and tear of plant and equipment as of the closing
date of the fiscal year is recognized as provision for periodic repairs.
iii) Provision for product warranties
Estimates of product warranty expenses based on historical rates are
recognized as provision for product warranties.
iv) Provision for removal cost of property, plant and equipment
Provision for removal cost of property, plant and equipment is recorded
based on estimated future removal cost of property, plant and equipment
at the end of each fiscal year.
v) Provision for loss on litigation
Provision for loss on litigation is recorded for estimated losses related to
pending litigation.
(e) Accounting for retirement benefits
i) Method of attributing expected retirement benefits to each
period
In calculating retirement benefit obligations, the Company applies a
method of attributing expected retirement benefits to each period based
on a benefit formula basis.
ii) Accounting for actuarial gains/losses and prior service costs
Actuarial gains/losses are amortized using the straight-line method from
the fiscal year following their accrual over a certain period (mainly 10
years) within the average remaining service period of employees at the
time of accrual. Prior service costs are amortized using the straight-line
method over a certain period (mainly 10 years) within the average remain-
ing service period of employees at the time of accrual.
iii) Adoption of the simplified method
In calculating expected defined benefit liability and periodic retirement
benefit expenses, certain consolidated subsidiaries have adopted the sim-
plified method. Under this method, the expected defined benefit liability
is recorded at the severance payment amount to be required should all
employees retire voluntarily at fiscal year end.
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derivatives that are designated as hedging instruments. Gains or losses
arising from changes in fair value of these qualifying hedges are deferred
as “Deferred gains or losses on hedges” until being offset against gains or
losses of the underlying hedged assets and liabilities.
(h) Taxes
Accrued income taxes are stated at the estimated amount of payables
for corporation, enterprise, and inhabitant taxes. The asset and liability
approach is used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities.
The Company has elected to file its return under the consolidated
tax filing system in Japan. Transactions subject to consumption taxes are
recorded at amounts net of consumption taxes.
(i) Translation of foreign currencies
Foreign currency receivables and payables are translated into Japanese
yen at the exchange rates prevailing at the balance sheet date. Resulting
gains and losses are charged to income for the period.
Assets and liabilities of foreign subsidiaries are translated into Japanese
yen at fiscal year-end exchange rates, and income and expenses of same
are translated into Japanese yen at the average exchange rate for the
fiscal year. Shareholders’ equity of foreign subsidiaries is translated into
Japanese yen at the historical exchange rates. The translation differences
in Japanese yen amounts arising from the use of different rates are rec-
ognized as foreign currency translation adjustments in the consolidated
balance sheets. A portion of the foreign currency translation adjustment
is allocated to non-controlling interests and the Company’s portion is
presented as a separate component of net assets in the consolidated
balance sheets.
(b) Changes in presentation
Consolidated statements of income
In the fiscal year ended March 31, 2017, donations, which had previously
been included in others under non-operating expenses, exceeded 10% of
total non-operating expenses, and is reported separately. The consolidated
statements of income for the fiscal year ended March 31, 2016, have been
adjusted accordingly, resulting in others under non-operating expenses
being ¥851 million lower than previously reported, reflecting the separa-
tion of the same amount as donations.
(f) Significant revenue and expense recognition
i) Construction activities that are realizable as of fiscal year end
The percentage-of-completion method (progress of work is estimated using
the percentage of costs incurred to the total projected costs) is applied.
ii) Other construction activities
The completed-contract method is used.
(g) Financial instruments
i) Securities
Securities are classified into four categories: trading securities, held-to-
maturity debt securities, equity securities of unconsolidated subsidiaries and
affiliates, and other securities. At March 31, 2017 and 2016, the Company did
not have trading securities or held-to-maturity debt securities.
Equity securities of unconsolidated subsidiaries and affiliates are
accounted for, with minor exceptions due to immateriality, using the
equity method of accounting.
Other securities whose fair values are readily determinable are carried
at fair value with net unrealized gains or losses, net of income taxes,
being included as a component of net assets. Other securities whose
fair values are not readily determinable are stated at cost. In cases where
any significant decline in the realizable value is assessed to be other than
temporary, the cost of other securities is devalued by the impaired amount
and is charged to income. Realized gains and losses are determined using
the average cost method and are reflected in the consolidated income
statements.
ii) Derivative financial instruments
All derivatives are stated at fair value. Gains or losses arising from changes
in fair value are recognized in the period in which they arise, except for
3. Changes in significant accounting policies
(a) Changes in accounting policies
i) Application of revised implementation guidance on
recoverability of deferred tax assets
The Accounting Standards Board of Japan (ASBJ) issued revised Guidance
No. 26 “Implementation Guidance on Recoverability of Deferred Tax
Assets.” This revised guidance is applied from the fiscal year ended March
31, 2017. Accordingly, the method of accounting related to recoverability
of deferred tax assets has been partially amended.
In accordance with the transitional accounting provisions set forth
in Article 49, Paragraph 4, of the revised Guidance No. 26, the difference
between the amount of deferred tax assets at the beginning of the
fiscal year ended March 31, 2017, as calculated in accordance with the
applicable provisions of Article 49, Paragraph 3, Items 1 through 3, of the
revised Guidance No. 26, and the amount of deferred tax assets at the end
of the fiscal year ended March 31, 2016, is added to retained earnings at
the beginning of the fiscal year ended March 31, 2017.
The effect of this change on deferred tax assets (investments and other
assets) and retained earnings at the beginning of the fiscal year ended
March 31, 2017, is immaterial.
ii) Application of practical solution on a change in depreciation
method due to Tax Reform 2016
The ASBJ issued Practical Issues Task Force (PITF) No. 32 “Practical Solution
on a change in depreciation method due to Tax Reform 2016.” This
practical solution is applied from the fiscal year ended March 31, 2017.
Accordingly, the method of depreciation of buildings and accompanying
facilities and of structures has changed from the declining-balance
method to the straight-line method.
The effect of this change on operating income, ordinary income, and
income before income taxes during the fiscal year ended March 31, 2017,
is immaterial.
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4. Notes to Consolidated Balance Sheets
(a) Investment securities
Among investment securities, shares of unconsolidated subsidiaries and affiliates as of March 31, 2017 and 2016, amounted to ¥65,725 million (US$585,837
thousand) and ¥55,786 million, respectively. Included in those amounts are investments in joint ventures of ¥33,686 million (US$300,258 thousand) and
¥27,003 million, respectively.
(b) Pledged assets and secured debt
A summary of assets pledged as collateral and secured debt as of March 31, 2017 and 2016, is shown below:
Millions of yen
Thousands of U.S. dollars
Pledged assets:
Buildings and structures
Machinery, equipment and vehicles
Total pledged assets
Secured debt:
Short-term loans payable
Long-term loans payable
Total secured debt
2017
¥106
1
¥107
¥ 0
28
¥ 29
2016
¥118
1
¥120
¥ 1
77
¥ 78
2017
$945
9
$954
$ 0
250
$258
Besides the above, investment securities pledged to suppliers as transaction guarantees at March 31, 2017 and 2016, were ¥61 million (US$544
thousand) and ¥54 million, respectively.
(c) Contingent liabilities
In October 2015 Asahi Kasei Corp. disclosed that Asahi Kasei Construction Materials Corp., a consolidated subsidiary of Asahi Kasei Corp., which performed
pile installation work as a secondary subcontractor for the construction of a condominium complex in Yokohama, Kanagawa, Japan, submitted incorrect
data in the pile installation report for the precast concrete piles installed for this project. There was manipulation of ammeter data and flowmeter data for
the installation of piles.
Asahi Kasei Corp. established a task force and an internal fact-finding committee as well as an independent commission to advance an investigation,
and on October 22, 2015, Asahi Kasei Construction Materials Corp. reported its record of similar pile installation work over the past 10 years to Japan’s
Ministry of Land, Infrastructure, Transport and Tourism (MLIT).
On November 24, 2015, Asahi Kasei Construction Materials Corp. completed all possible investigation of whether or not there was manipulation of data
regarding the installation of precast concrete piles, and reported the results to the MLIT. Out of the 3,052 projects subject to investigation, manipulation of
data was found for 360 projects.
Regarding projects where manipulation of data was found, Asahi Kasei Construction Materials is cooperating with the prime contractors and the owners
of the buildings in efforts to confirm safety based on instructions from the MLIT. Regarding projects where a Specific Administrative Agency has confirmed
safety, the Specific Administrative Agency has issued a report to the MLIT. (At a meeting of the House of Councillors Committee on Land and Transport held
on April 5, 2016, it was reported that the safety of 357 of the 360 projects had been confirmed.)
Although there is a possibility that an effect on the consolidated results of Asahi Kasei Corp. may emerge such as the recording of an additional reserve,
etc., no such effect is reflected in the consolidated financial statements due to the difficulty of making a rational estimate of the amount of financial impact
from this matter as of the time of preparation of the consolidated financial statements.
Contingent liabilities at March 31, 2017 and 2016, arising in the ordinary course of business were as follows:
Loans guaranteed
Letters of awareness
Completion guarantees
Total
Millions of yen
Thousands of U.S. dollars
2017
¥35,774
—
10,185
¥45,959
2016
¥36,808
—
11,989
¥48,797
2017
$318,870
—
90,783
$409,653
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 impact to the Company’s consolidated financial statements.
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(d) Deferred gain on property, plant and equipment deducted for tax purposes
The accumulated reduced-value entries, which are directly deducted from property, plant and equipment, as of March 31, 2017 and 2016, were ¥9,572
million (US$85,320 thousand) and ¥9,684 million, respectively. The breakdown of reduced-value entries as of March 31, 2017 and 2016, was as follows:
Buildings and structures
Machinery, equipment and vehicles
Land
Other
Total
Millions of yen
Thousands of U.S. dollars
2017
¥3,394
5,865
167
146
¥9,572
2016
¥3,407
5,937
167
173
¥9,684
2017
$30,252
52,277
1,489
1,301
$85,320
5. Notes to Consolidated Statements of Income
(a) Selling, general and administrative expenses
Major components of selling, general and administrative expenses for the years ended March 31, 2017 and 2016, were as follows:
Salaries and benefits
Research and development*
Freight and storage
Millions of yen
Thousands of U.S. dollars
2017
¥165,337
59,476
37,450
2016
¥160,091
60,990
36,794
2017
$1,473,723
530,136
333,809
* The aggregate amounts of research and development expenses included in manufacturing costs and selling, general and administrative expenses for the years ended March 31, 2017 and 2016, were ¥79,566
million (US$709,208 thousand) and ¥81,118 million, respectively.
(b) Gain or loss on valuation of inventories
Inventories held for sale in the ordinary course of business are stated at the lower of cost or net realizable value. (Gain) loss on valuation of inventories for
the years ended March 31, 2017 and 2016, were as follows:
Millions of yen
Thousands of U.S. dollars
2017
¥(152)
2016
¥1,427
2017
$(1,355)
(c) Gain on sales of noncurrent assets
Major components of gain on sales of noncurrent assets for the years ended March 31, 2017 and 2016, were as follows:
Land
Machinery
Other
Millions of yen
Thousands of U.S. dollars
2017
¥146
14
4
2016
¥777
93
47
2017
$1,301
125
36
(d) Loss on disposal of noncurrent assets
Loss on disposal of noncurrent assets for the years ended March 31, 2017 and 2016, was primarily loss on abandonment and sale of buildings, machinery and
equipment, etc. The abandonment and sale of buildings, machinery and equipment, etc. was performed under a single, all-inclusive contract for each facility.
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(e) Impairment loss
Major components of impairment losses for the years ended March 31, 2017 and 2016, were as follows:
Millions of yen
Thousands of
U.S. dollars
Use
Asset class
Location
2017
2016
2017
Item on the Consolidated
Statements of Income
Joint sales rights of
pharmaceutical products
Underground uranium storage facility
Idle assets
Production facility
for semiconductors
Production facility
for performance paper
Production facility
for electronic devices
Office assets
Production facility for synthetic resin
Dormitory for employees
Others
Sales rights
Buildings, etc.
Buildings, etc.
Machinery and
equipment, etc.
Machinery and
equipment, etc.
Machinery and
equipment, etc.
Buildings, etc.
Machinery and
equipment, etc.
Buildings, etc.
Machinery and
equipment, etc.
Chiyoda-ku, Tokyo
Hyuga, Miyazaki
Fuji, Shizuoka, etc.
¥ —
—
—
¥3,942
1,850
817
Loss on discontinuation of
joint sales agreement
$ —
—
Impairment losses
— Impairment losses
Nobeoka, Miyazaki
Gobo, Wakayama
Hyuga, Miyazaki
Chiyoda-ku, Tokyo,
etc.
Sodegaura, Chiba
Izunokuni, Shizuoka
—
—
1,210
1,208
1,131
125
550
142
—
—
—
—
—
—
10,785
10,767
10,081
1,114
Fuji, Shizuoka, etc.
265
600
2,362
Impairment losses
Business structure improvement
expenses
Business structure improvement
expenses
Impairment losses
Business structure improvement
expenses
Impairment losses
Impairment losses and business
structure improvement expenses
Grouping of operating assets is based on managerial accounting categories, with consideration given to production process, geographic location, and
domain of authority for making investment decisions. Idle assets are recorded separately in each fixed assets class.
With respect to production facility for electronic devices, production facility for synthetic resin, and part of others, the book value was reduced to the
recoverable amount due to diminished profitability, and with respect to dormitory for employees and part of others, the book value was reduced to the
recoverable amount due to disappearance of prospects for future use. The recoverable amount is stated as value for future usage, which is calculated
based on discounted future cash flows within the applicable discount rate of 6% as of March 31, 2017 and 2016.
With respect to office assets, the entire book value is eliminated due to disappearance of prospects for future use.
Among the extraordinary losses under others, ¥115 million (US$1,025 thousand) and ¥324 million were recorded under business structure improvement
expenses for the years ended March 2017 and 2016, respectively.
(f) Business structure improvement expenses
Major components of business structure improvement expenses for the years ended March 31, 2017 and 2016, were as follows:
Impairment of fixed assets
Additional payment of retirement benefits due to application of early retirement, etc.
Loss on disposal and devaluation of inventory and others
Total
Millions of yen
Thousands of U.S. dollars
2017
¥2,456
—
3,734
¥6,189
2016
¥ 466
110
3,029
¥3,606
2017
$21,891
—
33,283
$55,165
(g) Loss on piling business
Asahi Kasei Construction Materials Corp., a consolidated subsidiary of Asahi Kasei Corp., submitted incorrect data within their pile installation report for
the precast concrete piles installed as a secondary subcontractor for the construction of a condominium complex in Yokohama, Kanagawa, Japan. There
was manipulation of ammeter data obtained when boring holes for installation, and manipulation of flowmeter data for the injection of cement milk for
consolidation of pile tips. As a result of this matter, Asahi Kasei Corp. has recorded an extraordinary loss in the year ended March 31, 2016, as “loss on piling
business” for expenses related to the investigation, etc., of the manipulation of such data.
(h) Loss on discontinuation of joint sales agreement
Impairment losses
Cancellation fee
Other
Total
Millions of yen
Thousands of U.S. dollars
2017
¥—
—
—
¥—
2016
¥3,942
1,303
22
¥5,266
2017
$—
—
—
$—
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6. Notes to Consolidated Statements of Comprehensive Income
Recycling adjustment and tax effects on other comprehensive income for the years ended March 31, 2017 and 2016, were as follows:
Net unrealized gain on other securities:
Changes during the fiscal year
Recycling adjustment
Pre-tax effect
Tax effect
Net unrealized gain on other securities
Deferred gains or losses on hedges:
Changes during the fiscal year
Recycling adjustment
Adjustment on the acquisition cost of assets
Pre-tax effect
Tax effect
Deferred gains or losses on hedges
Foreign currency translation adjustment:
Changes during the fiscal year
Recycling adjustment
Pre-tax effect
Tax effect
Foreign currency translation adjustment
Remeasurements of defined benefit plans:
Changes during the fiscal year
Recycling adjustment
Pre-tax effect
Tax effect
Remeasurements of defined benefit plans
Millions of yen
Thousands of U.S. dollars
2017
2016
2017
¥ 40,337
(9,858)
30,479
(9,302)
21,177
¥ (26,559)
(7,879)
(34,438)
13,341
(21,098)
$ 359,542
(87,869)
271,673
(82,913)
188,760
380
(170)
—
210
24
234
(8,073)
—
(8,073)
53
(8,020)
(74)
10,901
10,827
(2,713)
8,114
(5,649)
1,976
5,718
2.045
(527)
1,519
(49,549)
1,028
(48,522)
(338)
(48,860)
(50,607)
3,397
(47,210)
13,880
(33,331)
3,387
(1,515)
—
1,872
214
2,086
(71,958)
—
(71,958)
472
(71,486)
(660)
97,166
96,506
(24,182)
72,324
Share of other comprehensive income of affiliates accounted for using equity method:
Changes during the fiscal year
Recycling adjustment
Share of other comprehensive income of affiliates accounted for using equity method
Total other comprehensive income
866
(55)
810
¥ 22,315
(3,363)
(204)
(3,567)
¥(105,337)
7,719
(490)
7,220
$ 198,904
7. Notes to Consolidated Statements of Changes in Net Assets
For the year ended March 31, 2017
(a) Class and total number of issued and outstanding shares and treasury stock
Issued and outstanding shares
Common stock
Total
Treasury stock
Common stock (Notes 1 & 2)
Total
Number of shares
as of March 31, 2016
Increase in number of shares
during the fiscal year
Decrease in number of shares
during the fiscal year
Number of shares
as of March 31, 2017
Thousands of shares
1,402,616
1,402,616
5,862
5,862
—
—
99
99
—
—
2
2
1,402,616
1,402,616
5,959
5,959
Notes: 1. The increase of 99 thousand shares in common stock of treasury stock was due to the purchase of shares in quantities of less than one share unit.
2. The decrease of 2 thousand shares in common stock of treasury stock was due to the sale of shares in quantities of less than one share unit.
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(b) Dividends
i) Cash dividends paid
1) The following was resolved by the Board of Directors on May 11, 2016.
Dividends for common stock
Total dividends
Dividend per share
Date of record
Payment date
¥13,968 million (US$124,503 thousand)
¥10.00 (US$0.09)
March 31, 2016
June 6, 2016
2) The following was resolved by the Board of Directors on November 1, 2016.
Dividends for common stock
Total dividends
Dividend per share
Date of record
Payment date
¥13,967 million (US$124,494 thousand)
¥10.00 (US$0.09)
September 30, 2016
December 1, 2016
ii) Dividends for which the date of record falls within the fiscal year under review but the payment date occurs in the following fiscal year
The following was resolved by the Board of Directors on May 11, 2017.
Dividends for common stock
Total dividends
Source of dividends
Dividend per share
Date of record
Payment date
¥19,553 million (US$174,285 thousand)
Retained earnings
¥14.00 (US$0.12)
March 31, 2017
June 6, 2017
For the year ended March 31, 2016
(a) Class and total number of issued and outstanding shares and treasury stock
Issued and outstanding shares
Common stock
Total
Treasury stock
Common stock (Notes 1 & 2)
Total
Number of shares
as of March 31, 2015
Increase in number of shares
during the fiscal year
Decrease in number of shares
during the fiscal year
Number of shares
as of March 31, 2016
Thousands of shares
1,402,616
1,402,616
5,743
5,743
—
—
125
125
—
—
7
7
1,402,616
1,402,616
5,862
5,862
Notes: 1. The increase of 125 thousand shares in common stock of treasury stock was due to the purchase of shares in quantities of less than one share unit.
2. The decrease of 7 thousand shares in common stock of treasury stock was due to the sale of shares in quantities of less than one share unit.
(b) Dividends
i) Cash dividends paid
1) The following was resolved by the Board of Directors on May 12, 2015.
Dividends for common stock
Total dividends
Dividend per share
Date of record
Payment date
¥13,969 million
¥10.00
March 31, 2015
June 4, 2015
2) The following was resolved by the Board of Directors on November 6, 2015.
Dividends for common stock
Total dividends
Dividend per share
Date of record
Payment date
¥13,968 million
¥10.00
September 30, 2015
December 1, 2015
ii) Dividends for which the date of record falls within the fiscal year under review but the payment date occurs in the following fiscal year
The following was resolved by the Board of Directors on May 11, 2016.
Dividends for common stock
Total dividends
Source of dividends
Dividend per share
Date of record
Payment date
¥13,968 million
Retained earnings
¥10.00
March 31, 2016
June 6, 2016
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8. Notes to Consolidated Statements of Cash Flows
(a) Cash and cash equivalents
Reconciliation of cash and cash equivalents on the consolidated statements of cash flows to the amounts disclosed on the consolidated balance sheets at
March 31, 2017 and 2016, was as follows:
Cash and deposits
Time deposits with deposit term of over 3 months
Money market funds included in short-term investment securities
Cash and cash equivalents
9. Leases
(a) Financing lease transactions
Financing lease transactions without title transfer
Millions of yen
Thousands of U.S. dollars
2017
¥145,289
(1,212)
—
¥144,077
2016
¥146,054
(2,281)
1,534
¥145,307
2017
$1,295,026
(10,803)
—
$1,284,223
i) Components of lease assets are as follows:
1) Property, plant and equipment: Mainly model homes (buildings and structures) for housing business.
2) Intangible fixed assets: Software
ii) Depreciation of lease assets:
As stated in Note 2 “Significant accounting policies (c) Noncurrent assets and depreciation/amortization,” the financing lease transactions without title
transfer which occurred prior to March 31, 2008, are accounted for on a basis similar to an operating lease. For such leases, information for the cost and
related accumulated amortization, computed using the straight-line method over the term of the lease assuming such lease transactions accounted for as
an operating lease had been accounted for as a financing lease, is required to be disclosed. However, such disclosure is omitted due to immateriality.
(b) Operating lease transactions
Future lease payments for the non-cancelable portion of the Company’s operating leases at March 31, 2017 and 2016, were as follows:
Due within one year
Due after one year
Total
Millions of yen
Thousands of U.S. dollars
2017
¥ 5,753
33,899
¥39,652
2016
¥ 5,414
5,255
¥10,668
2017
$ 51,279
302,157
$353,436
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10. Financial instruments
(a) Overview of financial instruments
i) Policy related to financial instruments
The Company raises long-term funds as required mainly for its planned capital expenditures by borrowing from banks, borrowing from life insurance
companies, issuing bonds, etc. A portion of the surplus funds is invested only in highly stable financial assets. Short-term working funds are raised by bank
borrowings, issuance of commercial paper, etc. Derivative transactions are mainly entered into for the purpose of reducing risks related to assets and
liabilities which are exposed to risks of fluctuations of exchange rate and interest rate. Derivatives are not traded for speculative purposes.
ii) Components of financial instruments, their risks and risk management structure
As operating receivables, notes and accounts receivable—trade are exposed to credit risk of customers. As the business of the Company spans a wide
range of fields, operating receivables are not excessively concentrated on specific customers, but the parent company and each consolidated subsidiary
monitor and manage the credit condition of each customer.
Investment securities are exposed to the risk of fluctuations in market price, but they are mainly equity securities of companies with which the Company
has business relationships. These securities are held for the purpose of maintaining the business relationships. Fair value is periodically evaluated, and the
financial condition of the issuing company is monitored.
As operating liabilities, notes and accounts payable—trade generally have a payment term of 1 year or less.
Variable interest-rate borrowings are exposed to the risk of interest-rate fluctuations, but derivatives (interest-rate and currency swaps, interest-rate
swaps) are used as hedges to fix interest expenses for a portion of long-term variable interest-rate borrowings.
Operating receivables and operating liabilities include those denominated in currencies other than Japanese yen, and are thus exposed to the risk of
exchange-rate fluctuations. In order to minimize the effects of short-term exchange-rate fluctuations, the Company hedges with derivative transactions
(forward exchange contracts), in principle, within the range of the underlying receivables and liabilities amount.
Derivative transactions are exposed to the credit risk of transacting financial institutions, but the credit condition of those financial institutions is
reviewed through periodical monitoring. Such transactions are performed and managed in accordance with the Company’s internal regulations which
stipulate the related authority, procedures, limits, etc.
Borrowings are exposed to liquidity risk, but the parent company specifies standards for required on-hand funds based on the Company’s funding plans,
prepares and revises plans for cash receipts and disbursements as appropriate, and enters into commitment-line agreements with transacting financial
institutions to manage such risk.
Loan securitization in the housing business is exposed to the risk of interest-rate fluctuations between the time of origination of housing loans and the
time of execution of their securitization, but derivative transactions (interest-rate swaps) are entered into in order to reduce such risk.
iii) Supplementary explanation of fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. In the case where no quoted market price is available, a reasonably
estimated fair value is used. As variable factors are incorporated in its estimation, fair value may change due to the adoption of different assumptions, condi-
tions, etc. The stated amount of contracts regarding derivative transactions included in Note 12 “Derivative financial instruments” is not itself an indication of
the market risk of the derivative transactions.
(b) Fair value of financial instruments
Amounts carried on the consolidated balance sheets, their fair values, and the differences between them as of March 31, 2017 and 2016, were as shown below.
Financial instruments whose fair values are deemed extremely difficult to determine are not included in this table (See Notes 2), 3) and 4) below).
Cash and deposits
Notes and accounts receivable—trade
Allowance for doubtful accounts (*1)
Short-term investment securities and investment securities:
Investments in affiliates
Other securities
Long-term loans receivable
Total assets
Notes and accounts payable—trade
Short-term loans payable
Commercial paper
Income taxes payable
Bonds payable
Long-term loans payable
Lease obligations
Long-term guarantee deposits
Total liabilities
Derivative financial instruments (*2)
Millions of yen
2017
Fair value
¥145,289
Difference
¥ —
300,672
—
9,558
211,694
19,366
686,579
147,543
88,965
56,000
16,202
40,646
216,145
765
8,344
574,610
¥ (249)
(4,971)
—
(5)
(4,976)
—
—
—
—
(646)
949
8
(45)
266
¥ —
Carrying amount
¥145,289
302,751
(2,078)
300,672
14,529
211,694
19,371
691,554
147,543
88,965
56,000
16,202
40,000
217,094
773
8,299
574,876
¥ (249)
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Cash and deposits
Notes and accounts receivable—trade
Allowance for doubtful accounts (*1)
Short-term investment securities and investment securities:
Investments in affiliates
Other securities
Long-term loans receivable
Total assets
Notes and accounts payable—trade
Short-term loans payable
Income taxes payable
Bonds payable
Long-term loans payable
Lease obligations
Long-term guarantee deposits
Total liabilities
Derivative financial instruments (*2)
Cash and deposits
Notes and accounts receivable—trade
Allowance for doubtful accounts (*1)
Short-term investment securities and investment securities:
Investment in affiliates
Other securities
Long-term loans receivable
Total assets
Notes and accounts payable—trade
Short-term loans payable
Commercial paper
Income taxes payable
Bonds payable
Long-term loans payable
Lease obligations
Long-term guarantee deposits
Total liabilities
Derivative financial instruments (*2)
Millions of yen
2016
Fair value
¥146,054
Difference
¥ —
278,396
—
5,985
183,672
16,604
630,711
126,653
273,418
32,735
40,650
137,008
1,465
8,088
620,017
¥ 354
Thousands of U.S. dollars
2017
Fair value
$1,295,026
(4,905)
—
(3)
(4,908)
—
—
—
(650)
(2,207)
(9)
(55)
(2,921)
¥ —
Difference
$ —
2,680,025
—
85,195
1,886,924
172,618
6,119,788
1,315,117
792,985
499,153
144,416
362,296
1,926,598
6,819
74,374
5,121,758
$ (2,219)
(44,309)
—
(44)
(44,353)
—
—
—
—
(5,758)
8,459
71
(401)
2,371
$ —
Carrying amount
¥146,054
280,095
(1,699)
278,396
10,890
183,672
16,607
635,618
126,653
273,418
32,735
40,000
134,801
1,456
8,032
617,096
¥ 354
Carrying amount
$1,295,026
2,698,556
(18,522)
2,680,025
129,504
1,886,924
172,662
6,164,132
1,315,117
792,985
499,153
144.416
356,538
1,935,057
6,890
73,973
5,124,129
$ (2,219)
(*1) This reduction represents specific allowance for doubtful accounts related to notes and
accounts receivable—trade.
(*2) The amounts represent net amount of assets and liabilities resulting from derivative transac-
tions. In the case of a net liability, the amount is shown in parentheses.
Note 1) Method to determine the estimated fair value of financial instruments; securities and
ii) Liabilities
1) Notes and accounts payable–trade; short-term loans payable; commercial paper; income taxes
payable
As their fair values approximate book value due to their short maturity, the corresponding book
value amounts are used as fair value.
derivative financial instruments
i) Assets
1) Cash and deposits, notes and accounts receivable—trade
As their fair value approximates book value due to their short maturity, the corresponding book
value amount is used as fair value.
2) Short-term investment securities and investment securities
The stock exchange prices are used to determine fair value of traded stocks, and the correspond-
ing book value amount is used as fair value of money market funds, because their fair value
approximates book value. Refer to Note 11 “Marketable securities and investment securities” for
information on securities classified by holding purpose.
3) Long-term loans receivable
The carrying amounts shown include long-term loans receivable scheduled for repayment
within one year. Their fair values are determined based on the present value of principal and
interest, discounted using current assumed rates for similar long-term loans receivable. For
long-term loans receivable bearing variable interest rates, as they are deemed to reflect market
interest rates within a short term, book values are used as fair value.
2) Bonds payable
Fair value of the bonds payable issued by the parent company is based on the quoted market
price if available. For those without a quoted market price that are subject to special treatment
for interest-rate swaps, fair value is based on the present value by totaling the amount of
principal and interest, together with related interest-rate swaps, discounted by the interest rate
that would apply if equivalent bonds were newly issued.
3) Long-term loans payable
The carrying amounts shown include long-term loans payable that are scheduled for repayment
within one year of March 31, 2017 and 2016, amounting to ¥24,510 million (US$218,469 thou-
sand) and ¥40,169 million, respectively. Their fair values are based on present value of principal
and interest discounted using the current assumed rates for similar long-term loans payable.
For long-term loans payable bearing variable interest rates, fair value of those subject to special
treatment of interest rate-swaps is based on present value by totaling the amount of principal
and interest, together with related interest-rate swaps, discounted by the interest rate that would
apply if equivalent long-term loans were newly entered. For other long-term loans payable, book
value is used as fair value as they are deemed to reflect market interest rates within a short term.
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4) Lease obligations
The carrying amounts shown are the total amount of lease obligations under current liabilities
and lease obligations under noncurrent liabilities. Present value, calculated by discounting the
total amount of principal and interest using the presumed interest rate that would apply if lease
transactions were newly made, is used as the fair value.
5) Long-term guarantee deposits
In cases where the deposit period can be estimated, the fair value of long-term guarantee
deposits is determined using a discounted cash flow over that period.
iii) Derivative transactions
Refer to Note 12 “Derivative financial instruments.”
Note 2) For equity investments in nonpublic companies, with a carrying amount as of March 31,
2017 and 2016, amounting to ¥54,787 million (US$488,341 thousand) and ¥48,453 million,
respectively, fair value is not included in short-term investment securities and investment
securities, as no quoted market price is available and it is deemed extremely difficult to
determine fair value due to the impossibility of estimating future cash flows.
Note 3) For investment securities, with a carrying amount as of March 31, 2017 and 2016, amount-
ing to ¥3,127 million (US$27,872 thousand) and ¥3,117 million, respectively, fair value is
not included in short-term investment securities and investment securities, as no quoted
market price is available and it is deemed extremely difficult to determine fair value due to
the impossibility of estimating future cash flows.
Note 4) For long-term guarantee deposits, the fair value of a portion having a carrying amount as
of March 31, 2017 and 2016, amounting to ¥12,180 million (US$108,566 thousand) and
¥12,098 million, respectively, is not included as no quoted market price is available and it
is deemed extremely difficult to determine fair value due to the impossibility of estimating
future cash flows.
Note 5) For monetary credits and securities with maturity, the amounts scheduled for redemption subsequent to the closing date are as follows:
Cash and deposits
Notes and accounts receivable—trade
Long-term loans receivable
Total
Cash and deposits
Notes and accounts receivable—trade
Long-term loans receivable
Total
Cash and deposits
Notes and accounts receivable—trade
Long-term loans receivable
Total
Millions of yen
2017
Due within one year
Due after one year,
within five years
Due after five years,
within ten years
Due after more than
ten years
¥145,289
302,751
453
¥448,493
¥ —
—
18,912
¥18,912
¥—
—
5
¥ 5
¥—
—
—
¥—
Millions of yen
2016
Due within one year
Due after one year,
within five years
Due after five years,
within ten years
Due after more than
ten years
¥146,054
280,095
254
¥426,402
¥ —
—
16,353
¥16,353
¥—
—
—
¥—
¥—
—
—
¥—
Thousands of U.S. dollars
2017
Due within one year
Due after one year,
within five years
Due after five years,
within ten years
Due after more than
ten years
$1,295,026
2,698,556
4,038
$3,997,620
$ —
—
168,571
$168,571
$—
—
45
$45
$—
—
—
$—
Note 6) For bonds payable, long-term loans payable, lease obligations, and other interest-bearing debt, the amounts scheduled for repayment subsequent to the closing date are as follows:
Year ending March 31
2018
2019
2020
2021
2022
2023 and thereafter
Year ending March 31
2017
2018
2019
2020
2021
2022 and thereafter
Millions of yen
2017
Short-term loans
payable
Commercial paper
Bonds payable
Long-term loans
payable
Lease obligations
Total
¥88,965
—
—
—
—
—
¥56,000
—
—
—
—
—
¥20,000
—
20,000
—
—
—
¥24,510
59,796
21,279
22,900
32,790
55,819
Millions of yen
2016
¥305
186
143
112
26
—
¥189,780
59,982
41,422
23,012
32,816
55,819
Short-term loans
payable
Commercial paper
Bonds payable
Long-term loans
payable
Lease obligations
Total
¥273,418
—
—
—
—
—
¥—
—
—
—
—
—
¥ —
20,000
—
20,000
—
—
¥40,169
18,941
49,616
12,028
4,436
9,611
¥919
280
118
83
55
1
¥314,506
39,221
49,734
32,111
4,491
9,612
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Thousands of U.S. dollars
2017
Year ending March 31
2018
2019
2020
2021
2022
2023 and thereafter
Short-term loans
payable
Commercial paper
Bonds payable
Long-term loans
payable
Lease obligations
Total
$792,985
—
—
—
—
—
$499,153
—
—
—
—
—
$178,269
—
178,269
—
—
—
$218,469
532,989
189,669
204,118
292,272
497,540
$2,719
1,658
1,275
998
232
—
$1,691,595
534,647
369,213
205,116
292,504
497,540
11. Marketable securities and investment securities
(a) Other securities with available fair value
The aggregate cost, carrying amount which was identical to fair value, and gross unrealized gains and losses of debt and equity securities classified as other
securities for which fair values were available at March 31, 2017 and 2016, were as follows:
Securities with unrealized gains:
Equity securities
Others
Subtotal
Securities with unrealized losses:
Equity securities
Others
Subtotal
Total
Securities with unrealized gains:
Equity securities
Others
Subtotal
Securities with unrealized losses:
Equity securities
Others
Subtotal
Total
Securities with unrealized gains:
Equity securities
Others
Subtotal
Securities with unrealized losses:
Equity securities
Others
Subtotal
Total
Millions of yen
2017
Cost
¥35,723
—
35,723
12,690
—
12,690
¥48,414
Millions of yen
2016
Cost
¥36,960
—
36,960
12,439
1,534
13,973
¥50,934
Thousands of U.S. dollars
2017
Cost
$318,415
—
318,415
113,112
—
113,112
$431,536
Unrealized gains
(losses)
¥164,557
—
164,557
(1,277)
—
(1,277)
¥163,280
Unrealized gains
(losses)
¥135,107
—
135,107
(2,369)
—
(2,369)
¥132,738
Unrealized gains
(losses)
$1,466,771
—
1,466,771
(11,382)
—
(11,382)
$1,455,388
Carrying
amount
¥200,280
—
200,280
11,414
—
11,414
¥211,694
Carrying
amount
¥172,068
—
172,068
10,070
1,534
11,604
¥183,672
Carrying
amount
$1,785,186
—
1,785,186
101,738
—
101,738
$1,886,924
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(b) Realized gains and losses on the sale of other securities
The realized gains and losses on the sale of other securities during the years ended March 31, 2017 and 2016, were as follows:
Selling amount
Gain on sales of securities
Loss on sales of securities
Millions of yen
Thousands of U.S. dollars
2017
¥12,087
9,918
—
2016
¥10,396
8,275
—
2017
$107,737
88,404
—
(c) Loss on other devaluation of investment securities whose fair values are readily determinable
Loss on other devaluation of investment securities whose fair values are readily determinable for the year ended March 31, 2017, was ¥101 million (US$900
thousand), which is for other securities, and for the year ended March 31, 2016, ¥924 million, which is the sum of ¥796 million for equity securities of
unconsolidated subsidiaries and affiliates, and ¥127 million for other securities. Among the loss on other devaluation of investment securities for the year
ended March 31, 2016, ¥561 million was recorded under business structure improvement expenses.
12. Derivative financial instruments
(a) Derivative financial instruments for which hedge accounting is not applied
i) Foreign exchange forward contracts
Classification
Items
Amount of contract
Off-market transactions
Foreign exchange forward contracts:
Millions of yen
2017
Amount of contract
over 1 year
Fair value
Profit (loss) from
valuation
Selling:
U.S. dollar
Euro
Thai baht
Singapore dollar
British pound
Buying:
U.S. dollar
Euro
Thai baht
Total
¥24,981
9,289
879
11
52
1,827
45,868
4
¥82,911
¥—
—
—
—
—
—
—
—
¥—
¥ 100
(9)
11
(0)
0
(376)
(48)
(0)
¥(322)
¥ 100
(9)
11
(0)
0
(376)
(48)
0
¥(322)
Classification
Items
Amount of contract
Off-market transactions
Foreign exchange forward contracts:
Millions of yen
2016
Amount of contract
over 1 year
Fair value
Profit (loss) from
valuation
Selling:
U.S. dollar
Euro
Thai baht
Singapore dollar
British pound
Buying:
U.S. dollar
Euro
Thai baht
Total
¥21,694
6,137
1,115
396
—
2,679
0
9
¥32,030
¥ —
—
—
—
—
728
—
—
¥728
¥698
16
(0)
40
—
(148)
(0)
(0)
¥605
¥698
16
(0)
40
—
(148)
(0)
(0)
¥605
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Classification
Items
Amount of contract
Off-market transactions
Foreign exchange forward contracts:
Thousands of U.S. dollars
2017
Amount of contract
over 1 year
Fair value
Profit (loss) from
valuation
Selling:
U.S. dollar
Euro
Thai baht
Singapore dollar
British pound
Buying:
U.S. dollar
Euro
Thai baht
Total
$222,667
82,797
7,835
98
463
16,285
408,842
36
$739,023
$—
—
—
—
—
—
—
—
$—
$ 891
(80)
98
(0)
0
(3,351)
(428)
0
$(2,870)
$ 891
(80)
98
(0)
0
(3,351)
(428)
0
$(2,870)
(b) Derivative financial instruments for which hedge accounting is applied
i) Foreign exchange forward contracts
Classification
Items
Hedged assets/liabilities
Amount of contract
Principle-based accounting
Foreign exchange forward contracts:
Millions of yen
2017
Amount of contract
over 1 year
Fair value
Selling:
U.S. dollar
Euro
Thai baht
Singapore dollar
Buying:
U.S. dollar
Euro
Thai baht
Singapore dollar
Total
Accounts receivable—trade
Accounts receivable—trade
Accounts receivable—trade
Accounts receivable—trade
Accounts payable—trade
Accounts payable—trade
Accounts payable—trade
Accounts payable—trade
¥ 619
109
11
—
1,445
2
106
—
¥2,292
¥—
—
—
—
—
—
—
—
¥—
Classification
Items
Hedged assets/liabilities
Amount of contract
Principle-based accounting
Foreign exchange forward contracts:
Millions of yen
2016
Amount of contract
over 1 year
Selling:
U.S. dollar
Euro
Thai baht
Singapore dollar
Buying:
U.S. dollar
Euro
Thai baht
Singapore dollar
Total
Accounts receivable—trade
Accounts receivable—trade
Accounts receivable—trade
Accounts receivable—trade
Accounts payable—trade
Accounts payable—trade
Accounts payable—trade
Accounts payable—trade
¥2,953
111
—
289
2,018
21
177
29
¥5,596
¥—
—
—
—
—
—
—
—
¥—
¥36
1
(0)
—
32
(0)
6
—
¥74
Fair value
¥(170)
(2)
—
(12)
(62)
(0)
(6)
1
¥(251)
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Classification
Items
Hedged assets/liabilities
Amount of contract
Principle-based accounting
Foreign exchange forward contracts:
Thousands of U.S. dollars
2017
Amount of contract
over 1 year
Selling:
U.S. dollar
Euro
Thai baht
Singapore dollar
Buying:
U.S. dollar
Euro
Thai baht
Singapore dollar
Total
Accounts receivable—trade
Accounts receivable—trade
Accounts receivable—trade
Accounts receivable—trade
Accounts payable—trade
Accounts payable—trade
Accounts payable—trade
Accounts payable—trade
$ 5,517
972
98
—
12,880
18
945
—
$20,430
$—
—
—
—
—
—
—
—
$—
ii) Interest-rate swaps, and interest-rate and currency swaps
Classification
Items
Hedged assets/liabilities
Amount of contract
Millions of yen
2017
Amount of contract
over 1 year
Special treatment
for interest-rate swaps
Special treatment
for interest-rate
and currency swaps
Interest-rate swaps
Pay fixed/receive floating
Interest-rate and currency swaps
U.S. dollar receive floating/
Thai baht pay fixed
Total
Long-term loans payable
¥165,889
¥139,918
Long-term loans payable
324
¥166,213
162
¥140,080
Millions of yen
Fair value
$321
9
(0)
—
285
(0)
53
—
$660
Fair value
(*)
(*)
¥—
Classification
Items
Hedged assets/liabilities
Amount of contract
2016
Amount of contract
over 1 year
Fair value
Special treatment
for interest-rate swaps
Special treatment
for interest-rate
and currency swaps
Interest-rate swaps
Pay fixed/receive floating
Interest-rate and currency swaps
U.S. dollar receive floating/
Thai baht pay fixed
Total
Long-term loans payable
¥76,871
¥64,084
Long-term loans payable
477
¥77,349
318
¥64,403
(*)
(*)
¥—
Classification
Items
Hedged assets/liabilities
Amount of contract
Thousands of U.S. dollars
2017
Amount of contract
over 1 year
Fair value
Special treatment
for interest-rate swaps
Special treatment
for interest-rate
and currency swaps
Interest-rate swaps
Pay fixed/receive floating
Interest-rate and currency swaps
U.S. dollar receive floating/
Thai baht pay fixed
Total
Long-term loans payable
$1,478,643
$1,247,152
(*)
Long-term loans payable
2,888
$1,481,531
1,444
$1,248,596
(*)
$—
(*) Fair value of interest-rate swaps and interest-rate and currency swaps, for which special treatment is applied, is included in fair value of the corresponding long-term loans payable for which hedge account-
ing is applied.
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13. Provision for retirement benefits
Upon terminating employment, employees of the parent company and its subsidiaries are entitled, under most circumstances, to lump-sum severance
indemnities and/or pension payments determined by reference mainly to their current basic rate of pay and length of service and/or defined contribu-
tion plans. Additional benefits may be granted to employees depending on the conditions under which termination of employment occurs. Certain
consolidated subsidiaries adopt the simplified method in calculating expected defined benefit liability. Reconciliations of beginning and ending balances of
projected benefit obligations for the fiscal years ended March 31, 2017 and 2016, were as follows:
Beginning balance of the projected benefit obligations
Service cost
Interest cost
Actuarial gains/losses
Payment of retirement benefits
Other (*)
Ending balance of the projected benefit obligations
Millions of yen
Thousands of U.S. dollars
2017
¥398,588
15,581
677
2,133
(19,016)
169
¥398,132
2016
¥352,813
13,604
3,439
44,020
(18,549)
3,260
¥398,588
2017
$3,552,794
138,880
6,034
19,012
(169,498)
1,506
$3,548,730
(*) ¥3,101 million was recorded under Increase from changes in scope of consolidation for the years ended March 2016.
Reconciliations of beginning and ending balances of plan assets for the fiscal years ended March 31, 2017 and 2016, were as follows:
Beginning balance of plan assets
Expected return
Actuarial gains/losses
Contributions
Payment of retirement benefits
Other
Ending balance of plan assets
Millions of yen
Thousands of U.S. dollars
2017
¥212,288
5,265
2,056
9,799
(9,532)
(110)
¥219,765
2016
¥213,707
5,311
(6,598)
10,200
(10,146)
(186)
¥212,288
2017
$1,892,219
46,929
18,326
87,343
(84,963)
(980)
$1,958,864
Reconciliations of ending balance of projected benefit obligations and the plan assets, and of net defined benefit liability and net defined benefit asset,
as recorded in the consolidated balance sheet at March 31, 2017 and 2016, were as follows:
Projected benefit obligations of funded plans
Plan assets
Subtotal
Projected benefit obligations of unfunded plans
Net of liability and asset that have been recorded in the consolidated balance sheets
Net defined benefit liability
Net of liability and asset that have been recorded in the consolidated balance sheets
Millions of yen
Thousands of U.S. dollars
2017
¥ 256,082
(219,765)
36,318
142,050
¥ 178,368
¥ 178,368
¥ 178,368
2016
¥ 255,432
(212,288)
43,145
143,155
¥ 186,300
¥ 186,300
¥ 186,300
2017
$ 2,282,574
(1,958,864)
323,719
1,266,156
$ 1,589,874
$ 1,589,874
$ 1,589,874
Periodic retirement benefit expenses for employees and the breakdown of items for the years ended March 31, 2017 and 2016, were as follows:
Service cost (net of employee contributions)
Interest cost
Expected return on plan assets
Amortization of actuarial gains/losses
Amortization of prior service costs
Additional retirement benefits and other
Retirement benefit expenses of defined benefit plans
Millions of yen
Thousands of U.S. dollars
2017
¥13,952
677
(5,265)
10,763
142
506
¥20,775
2016
¥11,967
3,439
(5,311)
3,266
142
452
¥13,956
2017
$124,360
6,034
(46,929)
95,935
1,266
4,510
$185,177
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The components of other comprehensive income on defined benefit plans for the fiscal years ended March 31, 2017 and 2016, were as follows:
Prior service costs
Actuarial gains/losses
Total
Millions of yen
Thousands of U.S. dollars
2017
¥ 142
10,685
¥10,827
2016
¥ 142
(47,352)
¥(47,210)
2017
$ 1,266
95,240
$96,506
Accumulated other comprehensive income on defined benefit plans at March 31, 2017 and 2016, was as follows:
Unrecognized prior service costs
Unrecognized actuarial gains/losses
Total
Share by major classifications for plan assets at March 31, 2017 and 2016, was as follows:
Millions of yen
Thousands of U.S. dollars
2017
¥ 219
47,783
¥48,002
2016
¥ 361
58,468
¥58,829
2017
$ 1,952
425,911
$427,863
Bonds
Stock
Alternative investments
Life insurance
Cash and deposits
Other
Total
2017
37%
24
16
14
8
1
100%
2016
36%
21
16
14
10
3
100%
Note: Alternative investments include mainly investments in real estate and hedge funds.
The current and future allocation of plan assets, and the current and future long-term rate of expected return from the variety of assets that make up the
plan assets, are considered in determining the long-term rate of expected return on plan assets.
Major actuarial assumptions at March 31, 2017 and 2016, were as follows:
Discount rate
The long-term rate of expected return on plan assets
Expected rate of increase in salary
2017
Mainly 0.1%
Mainly 2.5%
2.3–7.1%
2016
Mainly 0.1%
Mainly 2.5%
2.3–7.1%
Required payments to defined contribution plans at March 31, 2017, amounted to ¥1,874 million (US$16,704 thousand), and at March 31, 2016,
amounted to ¥1,416 million.
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95
14. 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 deferred tax assets and liabilities at March 31, 2017 and 2016, were as follows:
Millions of yen
Thousands of U.S. dollars
2017
2016
2017
Deferred tax assets:
Net defined benefit liability
Accrued bonuses
Tax loss carry forwards
Foreign tax credit carry forwards
Unrealized gain on noncurrent assets and others
Impairment losses
Loss on disposal of noncurrent assets
Depreciation
Unrealized loss on investment securities
Provision for periodic repairs
Provision for product warranties
Accrued enterprise tax
Devaluation of inventories
Allowance for doubtful accounts
Asset retirement obligations
Other
Subtotal deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized gain on other securities
Identified intangible assets during business combination
Depreciation—overseas subsidiaries
Deferred gain on property, plant and equipment
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)
¥ 55,324
7,687
6,870
5,560
3,843
3,397
3,383
2,781
1,765
1,456
1,338
1,247
1,092
979
610
11,251
108,583
(10,054)
98,528
(51,508)
(50,049)
(13,405)
(8,388)
(5,388)
(128,738)
¥ (30,210)
¥ 57,150
7,682
8,105
5,319
4,004
4,332
4,198
2,696
2,073
1,283
1,168
2,074
1,057
821
813
10,197
112,969
(16,294)
96,676
(42,075)
(53,707)
(13,158)
(9,037)
(5,519)
(123,496)
¥ (26,820)
$ 493,128
68,518
61,235
49,559
34,254
30,279
30,154
24,788
15,732
12,978
11,926
11,115
9,733
8,726
5,437
100,285
967,849
(89,616)
878,224
(459,114)
(446,109)
(119,485)
(74,766)
(48,026)
(1,147,500)
$ (269,275)
Net deferred tax assets (liabilities) at March 31, 2017 and 2016, were included in the following line items on the consolidated balance sheets.
Current assets—deferred tax assets
Noncurrent assets—deferred tax assets
Current liabilities—other
Noncurrent liabilities—deferred tax liabilities
Millions of yen
Thousands of U.S. dollars
2017
¥ 20,279
9,309
(39)
(59,759)
2016
¥ 18,133
20,098
(120)
(64,930)
2017
$ 180,756
82,975
(348)
(532,659)
In the fiscal year ended March 31, 2017, environmental expenses, experiment and research expenses, deferred gains or losses on hedges, and acceler-
ated depreciation, which had previously been reported separately, are included in other due to immateriality. Accordingly, the figures for other for the fiscal
year ended March 31, 2016, includes ¥238 million in environmental expenses, ¥198 million in experiment and research expenses, ¥19 in deferred gains or
losses on hedges, and ¥(137) million in accelerated depreciation.
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Reconciliation of the differences between the statutory tax rate and the effective income tax rate for the years ended March 31, 2017 and 2016, was as follows:
Statutory tax rate
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 and negative goodwill
Equity in (losses) earnings of unconsolidated subsidiaries and affiliates
Undistributed earnings (losses) of foreign subsidiaries
Difference of tax rates for foreign subsidiaries
Valuation allowance
Decrease in deferred tax assets due to the change in statutory tax rate
Other
Effective income tax rate
2017
30.9%
1.1
0.3
(3.7)
3.5
(1.0)
0.2
(1.2)
(3.9)
—
(0.2)
25.9%
2016
33.1%
1.1
0.3
(4.6)
3.5
0.2
(0.1)
(1.0)
0.7
1.9
1.1
36.2%
Revision of deferred tax assets and liabilities due to change in corporate tax rate, etc.
The “Act for Partial Revision of the Act for Partial Revision of the Act for Consumption Tax for Drastic Reform of the Taxation System to Ensure Stable
Financial Resources for Social Security” (Act No. 85 of 2016) and the “Act for Partial Revision of the Act for Partial Revision of the Act for Local Tax and Local
Allocation Tax for Drastic Reform of the Taxation System to Ensure Stable Financial Resources for Social Security” (Act No. 86 of 2016) were issued on
November 18, 2016. Accordingly, the statutory effective tax rate applied to the calculation of deferred tax assets and deferred tax liabilities for the fiscal year
ended March 31, 2017, was changed from that applied to said calculation for the fiscal year ended March 31, 2016. The impact of this change is immaterial.
15. Business combinations
Transactions under common control, etc.
Merger by absorption of consolidated subsidiaries
(a) Outline of the transaction
i) Name and nature of business of merged companies
Surviving company
Name
Nature of business
Absorbed companies
Name
Nature of business
ii) Date of merger
April 1, 2016
Asahi Kasei Corp.
Diversified chemicals operations
Asahi Kasei Chemicals Corp.
Manufacture and
sale of chemical products
Asahi Kasei Fibers Corp.
Manufacture and
sale of fiber products
Asahi Kasei E-materials Corp.
Manufacture and
sale of electronic materials
iii) Statutory form of merger
Absorption-type merger with Asahi Kasei Corp. as the surviving company
iv) Name of surviving company
Asahi Kasei Corp.
v) Other items related to outline of the transaction
With the start of the Asahi Kasei Group’s new medium-term management initiative in fiscal 2016, the operating portfolio was realigned into three busi-
ness sectors of Material (currently the Chemicals & Fibers segment and the Electronics segment), Homes (currently the Homes & Construction Materials
segment), and Health Care. Within each business sector, portfolio-based management will be thoroughly implemented with optimum allocation of
management resources, and further growth will be pursued by creating synergy among the sectors. Together with this change, in order to obtain efficient
management and mutual coordination within the Material business sector and achieve greater corporate value, the decision was made to merge Asahi
Kasei Chemicals Corp., Asahi Kasei Fibers Corp., and Asahi Kasei E-materials Corp. with the Company.
(b) Outline of the accounting treatment implemented
The transaction was treated as a transaction under common control in accordance with the Accounting Standards Board of Japan (ASBJ) Statement
No. 21 “Accounting Standard for Business Combinations” and ASBJ Guidance No. 10 “Guidance on Accounting Standard for Business Combinations and
Accounting Standard for Business Divestitures.”
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16. Asset retirement obligations
(a) Outline of asset retirement obligations
Due to commitments pertaining to restoration to original state before vacating in accordance with land lease agreements such as for offices, and due to
commitments to dismantle leased buildings upon termination of lease period, etc., in accordance with lease agreements for model home parks, relevant
asset retirement obligations are recorded in the consolidated balance sheets.
In accordance with building lease agreements such as for the head offices, commitments pertaining to restoration to original state before vacating
are recognized as asset retirement obligations. However, instead of recording them as aforementioned asset retirement obligations under liabilities, the
amount of lease deposit that cannot ultimately be expected to be collected was estimated in a reasonable manner, and of that, the amount corresponding
to the fiscal year ended March 31, 2017, was recorded under operating expenses.
(b) Method of calculating the amount of relevant asset retirement obligations
The calculation of asset retirement obligations is based on the following: expected term of use of 4 to 55 years, inflation rate of 0.0% to 4.1%, and discount
rate of 0.0% to 5.4%.
(c) (Decrease) increase in the total amount of asset retirement obligations in the fiscal years ended March 31, 2017 and 2016
Balance at beginning of year
Increase due to asset retirement obligations accrued
Adjustment due to passage of time
Decrease due to fulfillment of asset retirement obligations
Decrease due to foreign exchange fluctuation
Balance at end of year
Millions of yen
Thousands of U.S. dollars
2017
¥4,047
37
136
(125)
(88)
¥4,007
2016
¥4,039
200
133
(193)
(131)
¥4,047
2017
$36,073
330
1,212
(1,114)
(784)
$35,716
The amount of lease deposit which will be written off for a certain percentage at the end of the lease period is charged to expense rather than recorded
under asset retirement obligations. Increase (decrease) in those expensed amounts for the fiscal years ended March 31, 2017 and 2016, were as follows:
Millions of yen
Thousands of U.S. dollars
2017
¥1,733
79
(46)
¥1,766
2016
¥1,650
126
(43)
¥1,733
2017
$15,447
704
(410)
$15,741
Electronics business
The Company manufactures, processes, and sells battery separator prod-
ucts (such as lithium-ion battery separator and lead-acid battery separator)
and electronic devices (such as mixed-signal LSIs and Hall elements).
Homes segment
Homes business
The Company constructs unit homes and apartment buildings, and
operates real estate businesses, remodeling businesses, and financial and
other services.
Construction Materials business
The Company manufactures and sells autoclaved aerated concrete (AAC)
panels, insulation panels, foundation systems, and structural components.
Health Care segment
Pharmaceuticals business
The Company manufactures and sells pharmaceuticals and diagnostic
reagents.
Medical Care business
The Company manufactures and sells artificial kidneys, therapeutic
apheresis devices, and virus removal filters.
Critical Care business
The Company manufactures and sells defibrillators and temperature
management systems.
Balance at beginning of year
Increase due to new lease agreements
Decrease due to the cancelation of existing lease agreements
Balance at end of year
17. Business segment information
(a) Overview of reportable segments
The Company’s business segments are based on organizational units
for which separate financial information is available, and the Board of
Directors carries out periodic review to allocate management resources
and evaluate business performance.
The Company is organized under an operating holding company
configuration with the operating holding company and core operating
companies performing operations in three business sectors. The operating
holding company and each core operating company lays out strategy and
develops business activities in Japan and abroad.
With the start of a new medium-term management initiative in April
2016, the Company realigned its business portfolio. As a result, beginning
with the first quarter of the year ended March 31, 2017, the Company’s
operations were reclassified from the four reportable segments “Chemicals
& Fibers,” “Homes & Construction Materials,” “Electronics,” and “Health Care,”
together with an “Others” category, to the three reportable segments of
“Material,” “Homes,” and “Health Care,” together with an “Others” category.
Main products of the three reportable segments are as follows:
Material segment
Fibers business
The Company manufactures, processes, and sells elastic polyurethane
filament, cupro fiber, nonwoven fabrics, and nylon 66 filament.
Chemicals business
The Company manufactures, processes, and sells petrochemical products
(such as acrylonitrile, styrene, polyethylene, and polystyrene), performance
polymer products (such as engineering plastics and synthetic rubber), and
performance material and consumable products (such as coating materi-
als, microcrystalline cellulose, explosives, explosion-bonded metal clad,
hollow-fiber filtration membranes, ion-exchange membranes, electronic
materials, food wrapping film, and plastic films, sheets, and foams).
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(b) Methods to determine net sales, income or loss, assets, and other items by reportable business segment
Profit by reportable business segment is stated on an operating income basis. Intersegment net sales and transfers are based on the values of transactions
undertaken between third parties.
(c) Information concerning net sales, income or loss, assets, and other items for each reportable segment
Sales:
External customers
Intersegment
Total
Operating income
Assets
Other items:
Depreciation and amortization (Note 2)
Amortization of goodwill
Investments in affiliates accounted
for using equity method
Increase in property, plant and equipment,
and intangible assets
Millions of yen
2017
Material
Homes
Health Care
Subtotal
Others (Note 1)
Total
¥ 973,169
4,174
977,342
84,472
1,231,592
¥618,964
1,761
620,725
64,100
455,242
50,836
8,766
35,055
9,411
—
4,796
¥270,120
34
270,154
31,921
459,251
18,187
8,780
¥1,862,252
5,969
1,868,221
180,493
2,146,086
¥ 20,738
30,384
51,122
6,041
109,178
¥1,882,991
36,352
1,919,343
186,534
2,255,264
78,435
17,546
4,637
260
83,072
17,806
111
39,962
17,873
57,835
47,205
12,139
15,604
74,947
6,836
81,783
Notes: 1. The “Others” category includes electricity supply, plant engineering and environmental engineering, research and analysis, and employment agency/staffing operations.
2. Amortization of goodwill is not included.
Sales:
External customers
Intersegment
Total
Operating income
Assets
Other items:
Depreciation and amortization (Note 2)
Amortization of goodwill
Investments in affiliates accounted
for using equity method
Increase in property, plant and equipment,
and intangible assets
Millions of yen
2016
Material
Homes
Health Care
Subtotal
Others (Note 1)
Total
¥1,004,438
3,761
1,008,198
79,209
1,224,287
51,337
5,887
31,993
¥632,418
53
632,472
71,000
449,289
9,529
—
—
¥285,404
48
285,452
36,235
474,265
21,539
9,646
¥1,922,261
3,862
1,926,123
186,444
2,147,842
¥ 18,653
41,854
60,508
3,781
101,418
¥1,940,914
45,716
1,986,630
190,225
2,249,260
82,406
15,533
4,624
288
87,030
15,821
—
31,993
17,541
49,534
57,185
11,947
19,382
88,514
4,706
93,220
Notes: 1. The “Others” category includes electricity supply, plant engineering and environmental engineering, research and analysis, and employment agency/staffing operations.
2. Amortization of goodwill is not included.
Sales:
External customers
Intersegment
Total
Operating income
Assets
Other items:
Thousands of U.S. dollars
2017
Material
Homes
Health Care
Subtotal
Others (Note 1)
Total
$ 8,674,294
37,205
8,711,489
752,937
10,977,734
$5,517,105
15,697
5,532,801
571,352
4,057,777
$2,407,701
303
2,408,004
284,526
4,093,511
$16,599,091
53,204
16,652,295
1,608,815
19,129,031
$184,847
270,826
455,673
53,846
973,153
$16,783,947
324,022
17,107,969
1,662,662
20,102,184
Depreciation and amortization (Note 2)
Amortization of goodwill
Investments in affiliates accounted
for using equity method
Increase in property, plant and equipment,
and intangible assets
453,124
78,135
83,884
—
162,109
78,260
699,126
156,395
41,332
2,317
740,458
158,713
312,461
42,749
989
356,199
159,310
515,509
420,759
108,200
139,085
668,036
60,932
728,969
Notes: 1. The “Others” category includes electricity supply, plant engineering and environmental engineering, research and analysis, and employment agency/staffing operations.
2. Amortization of goodwill is not included.
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(d) Reconciliation of differences between total amounts of reportable segments and amounts appearing in the consolidated financial
statements (adjustment of difference)
Sales
Total of reporting segments
Net sales in “Others” category
Elimination of intersegment transactions
Net sales on consolidated statements of income
Operating income
Total of reporting segments
Operating income in “Others” category
Elimination of intersegment transactions
Corporate expenses, etc.*
Operating income on consolidated statements of income
Millions of yen
Thousands of U.S. dollars
2017
¥1,868,221
51,122
(36,352)
¥1,882,991
2016
¥1,926,123
60,508
(45,716)
¥1,940,914
2017
$16,652,295
455,673
(324,022)
$16,783,947
Millions of yen
Thousands of U.S. dollars
2017
¥180,493
6,041
220
(27,525)
¥159,229
2016
¥186,444
3,781
149
(25,171)
¥165,203
2017
$1,608,815
53,846
1,961
(245,343)
$1,419,280
* Corporate expenses, etc. include corporate revenue, basic research expense, and group management expense, etc. which are not allocated to reporting segments.
Assets
Total of reporting segments
Assets in “Others” category
Elimination of intersegment transactions
Corporate assets*
Total assets on consolidated balance sheets
Millions of yen
Thousands of U.S. dollars
2017
¥2,146,086
109,178
(304,452)
303,688
¥2,254,500
2016
¥2,147,842
101,418
(318,969)
281,439
¥2,211,729
2017
$19,129,031
973,153
(2,713,718)
2,706,908
$20,095,374
* Corporate assets include assets of the parent company—surplus operating funds (cash and deposits), long-term investment capital (investment securities, etc.), and land, etc.
Total of reportable segments
Others
Adjustments (Note 1)
Amounts from consolidated
financial statements
Millions of yen
Thousands of
U.S. dollars
Millions of yen
Thousands of
U.S. dollars
Millions of yen
Thousands of
U.S. dollars
Millions of yen
Thousands of
U.S. dollars
Other items
2017
2016
2017
2017
2016
2017
2017
2016
2017
2017
2016
2017
Depreciation and amortization
(Note 2)
Amortization of goodwill
Investments in affiliates accounted
for using equity method
Increase in property, plant and
equipment, and intangible assets
¥78,435
17,546
¥82,406
15,533
$699,126
156,395
¥ 4,637
260
¥ 4,624
288
$ 41,332
2,317
¥8,315
—
¥6,782
—
$74,115
—
¥91,387
17,806
¥93,811
15,821
$814,573
158,713
39,962
31,993
356,199
17,873
17,541
159,310
—
—
—
57,835
49,534
515,509
74,947
88,514
668,036
6,836
4,706
60,932
8,790
5,780
78,349
90,573
99,000
807,318
Notes: 1. Adjustments include elimination of intersegment transactions and corporate expenses, etc.
2. Amortization of goodwill is not included.
(e) Related information
i) Information on products and services
Please refer to (c) Information concerning net sales, income or loss, assets, and other items for each reportable segment.
ii) Geographic information
1) Net sales
Millions of yen
2017
2016
Thousands of U.S. dollars
2017
Japan
China
Other regions
Total
Japan
China
Other regions
Total
Japan
China
Other regions
Total
¥1,226,633
¥165,481
¥490,877
¥1,882,991
¥1,261,203
¥185,241
¥494,470
¥1,940,914
$10,933,532 $1,475,007
$4,375,408 $16,783,947
2) Property, plant and equipment.
Millions of yen
Thousands of U.S. dollars
2017
United States Other regions
Japan
Total
Japan
2016
United States Other regions
Total
Japan
2017
United States Other regions
Total
¥371,654
¥86,780
¥98,447
¥556,881
¥361,825
¥91,425
¥102,739
¥555,989
$3,312,719
$773,509
$877,502
$4,963,731
3) Information by major customer
Information by major customer is not shown because no customer accounts for 10% or more of net sales on the consolidated statements of income.
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18. Information on related parties
Related party transactions
(a) Transactions between the company submitting the consolidated financial statements and related parties
i) Unconsolidated subsidiaries, affiliates, etc. of the company submitting the consolidated financial statements
For the year ended March 31, 2017:
Type of related party
Name of company
Location
Paid-in capital
Business line
Share of voting rights held by the company (of which, indirectly held)
Relationship with the related party
Nature of transaction
Transaction amount
Amount name
Balance at end of year
An affiliated company
PTT Asahi Chemical Co., Ltd.
Rayong, Thailand
13,819 million Thai baht
Chemicals
50.0% (50.0%)
Debt guarantee and seconded executive
Guarantee for completion of manufacturing facilities
¥10,185 million (US$90,783 thousand)
—
—
For the year ended March 31, 2016: None
(b) Transactions between consolidated subsidiaries of the company submitting the consolidated financial statements and related parties
i) Unconsolidated subsidiaries, affiliates, etc. of the company submitting the consolidated financial statements
For the year ended March 31, 2017: None
For the year ended March 31, 2016:
Type of related party
Name of company
Location
Paid-in capital
Business line
Share of voting rights held by the company (of which, indirectly held)
Relationship with the related party
Nature of transaction
Transaction amount
Amount name
Balance at end of year
An affiliated company
PTT Asahi Chemical Co., Ltd.
Rayong, Thailand
14,246 million Thai baht in the year ended March 31, 2016
Chemicals
48.5% (48.5%) in the year ended March 31, 2016
Debt guarantee
Guarantee for completion of manufacturing facilities
¥11,989 million
—
—
ii) Directors, Corporate Auditors, major shareholders, etc. of the company submitting the consolidated financial statements
For the year ended March 31, 2017: None
For the year ended March 31, 2016:
Type of related party
A company in which close relative(s) of a Director or
Corporate Auditor of the Company hold(s) a majority
of voting rights
Miwa-Syouji Co., Ltd.
Nobeoka, Miyazaki, Japan
¥65 million
Wholesale trade
Name of company
Location
Paid-in capital
Business line
Share of voting rights held by the company 0.0%
Relationship with the related party
Nature of transaction
Transaction amount
Account recorded
Purchasing consumable goods
Purchasing consumable goods
¥225 million
Accrued expenses
Balance at end of year
¥23 million
A company in which close relative(s) of a Director or
Corporate Auditor of the Company hold(s) a majority
of voting rights
Miwa Vinyl Co., Ltd.
Nobeoka, Miyazaki, Japan
¥10 million
Manufacture and sale of plastic packaging material
0.0%
Purchasing consumable goods and raw materials
Purchasing consumable goods and raw materials
¥45 million
Accrued expenses and notes and accounts
payable—trade
¥3 million
Notes: 1. Transaction amounts are shown net of consumption taxes, while balances at end of year include consumption taxes.
2. Transaction terms and the policy of deciding transaction terms: Ordinary transaction terms are applied to the purchase of products.
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19. Per share information
Basic and diluted net assets per share and net income per share for the years ended March 31, 2017 and 2016, were as follows:
Basic net assets per share
Basic net income per share
(a) Basis for calculation of net assets per share
Total net assets
Amount deducted from total net assets
of which, non-controlling interests
Net assets allocated to capital stock
Number of shares of capital stock outstanding at fiscal year end used in calculation of
net assets per share (thousand)
(b) Basis for calculation of net income per share
Net income attributable to owners of the parent
Amount not attributable to common stock shareholders
Net income attributable to common stock owners of the parent
Weighted-average number of shares of capital stock (thousand)
Yen
2017
¥824.36
82.34
2016
¥745.94
65.69
U.S. dollars
2017
$7.35
0.73
Millions of yen
Thousands of U.S. dollars
2017
¥1,168,115
16,771
(16,771)
¥1,151,344
2016
¥1,057,399
15,498
(15,498)
¥1,041,901
2017
$10,411,935
149,487
(149,487)
$10,262,448
1,396,657
1,396,755
1,396,657
Millions of yen
Thousands of U.S. dollars
2017
¥ 115,000
—
¥ 115,000
1,396,715
2016
¥ 91,754
—
¥ 91,754
1,396,812
2017
$1,025,047
—
$1,025,047
1,396,715
Note: As the Company had no dilutive securities at March 31, 2017 and 2016, the Company does not disclose diluted net income per share for the years ended March 31, 2017 and 2016.
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20. Borrowings
(a) Bonds payable at March 31, 2017 and 2016, comprised the following:
Unsecured 1.46% yen bonds due in 2019
Unsecured 0.30% yen bonds due in 2017
Total
Notes: 1. The current portion of bonds payable is recorded under current liabilities on the consolidated balance sheets.
2. The aggregate annual maturities of long-term debt after March 31, 2017, are as follows:
Year ending March 31
2018
2019
2020
2021
2022
2023 and thereafter
Total
Millions of yen
Thousands of U.S. dollars
2017
¥20,000
20,000
¥40,000
2016
¥20,000
20,000
¥40,000
2017
$178,269
178,269
$356,538
Millions of yen
Thousands of U.S. dollars
¥20,000
—
20,000
—
—
—
¥40,000
$178,269
—
178,269
—
—
—
$356,538
(b) Loans payable at March 31, 2017 and 2016, comprised the following:
Short-term loans payable with an interest rate of 0.90%
Current portion of long-term loans payable with an interest rate of 1.56%
Current portion of lease obligations with an interest rate of 1.44%
Long-term loans payable (except portion due within one year) with an interest rate of 1.06%
Lease obligations (except portion due within one year) with an interest rate of 1.48%
Commercial papers (portion due within one year) with an interest rate of (0.02)%
Total
Notes: 1. Interest rates shown are weighted average interest rates for the balance outstanding at March 31, 2017.
Millions of yen
Thousands of U.S. dollars
2017
¥ 88,965
24,510
305
192,584
467
56,000
¥362,832
2016
¥273,418
40,169
919
94,632
537
—
¥409,675
2017
$ 792,985
218,469
2,718
1,716,588
4,163
499,153
$3,234,085
2. The aggregate annual maturities of long-term loans payable and lease obligations (except portion due within one year) after March 31, 2017, are as follows:
Year ending March 31
2018
2019
2020
2021
2022 and thereafter
21. Others
Long-term loans payable
Lease obligations
Millions of yen
Thousands of U.S. dollars
Millions of yen
Thousands of U.S. dollars
¥59,796
21,279
22,900
32,790
55,819
$532,989
189,670
204,118
292,272
497,540
¥186
143
112
26
—
$1,658
1,275
998
232
—
Litigation
On June 18, 2010, Koninklijke Philips Electronics N.V. and Philips Electronics North America Corporation (hereinafter collectively “Philips”) sued our subsidiary,
ZOLL Medical Corporation (hereinafter “ZOLL”), in the United States District Court for the District of Massachusetts, alleging that several patents owned
by Philips are infringed by certain ZOLL defibrillator products. On July 12, 2010, ZOLL sued Philips in the same court alleging that several ZOLL patents are
infringed by certain Philips defibrillator products. The two cases were consolidated and bifurcated into an initial liability portion and a later damages por-
tion. The liability portion was tried to a jury in December 2013, and the court entered an interlocutory judgment that ZOLL and Philips each infringe certain
of the other’s patent rights. On August 18, 2016, following the conclusion of the appeal process relating to the interlocutory judgment, the United States
District Court for the District of Massachusetts began a jury trial for the damages portion on July 24, 2017. The Company and ZOLL consider the allegations
of Philips to be baseless, and will vigorously contest this litigation.
102
Asahi Kasei Report 2017
Asahi Kasei Report 2017
103
102
Asahi Kasei Report 2017
Asahi Kasei Report 2017
103
Major Subsidiaries and Affiliates
(As of April 1, 2017)
Company
Material Segment
Asahi Kasei Fibers Nobeoka Co., Ltd.*
Asahi Kasei Leona Filament Co., Ltd.*
Asahi Cord Co., Ltd.*
Kyokujitsu Textile Mills Co., Ltd.*
Asahiozu Corp.
Kyuasa Co., Ltd.*
Fuji Seisen Co., Ltd.*
Merci Co., Ltd.*
Hangzhou Asahikasei Textiles Co., Ltd.*
Hangzhou Asahikasei Spandex Co., Ltd.*
Asahi Kasei Advance (Shanghai) Co., Ltd.
Formosa Asahi Spandex Co., Ltd.
Thai Asahi Kasei Spandex Co., Ltd.*
Asahi Kasei Spunbond (Thailand) Co., Ltd.*
Asahi Kasei Spandex Europe GmbH*
Asahi Kasei Mitsubishi Chemical Ethylene Corp.
PS Japan Corp.*
Okayama Butadiene Co., Ltd.
Tongsuh Petrochemical Corp., Ltd.*
PTT Asahi Chemical Co., Ltd.
Asahikasei Color Tech Co., Ltd.*
Asahi Kasei Technoplus Co., Ltd.*
Wacker Asahikasei Silicone Co., Ltd.
Kakuichi Rubber Industry Co., Ltd.
Japan Elastomer Co., Ltd.*
Nobeoka Plastic Processing Co., Ltd.*
Asahi Kasei Plastics (Guangzhou) Co., Ltd.*
Asahikasei (Suzhou) Plastics Compound Co., Ltd.
Asahikasei Plastics (Shanghai) Co., Ltd.*
Asahi Kasei POM (Zhangjiagang) Co., Ltd.*
Asahikasei Plastics (Thailand) Co., Ltd.*
Asahi Kasei Plastics Singapore Pte. Ltd.*
Asahi Kasei Synthetic Rubber Singapore Pte. Ltd.*
Asahikasei Plastics (America) Inc.*
Asahi Kasei Plastics North America, Inc.*
Asahi Kasei Plastics Mexico S.A. de C.V.*
Asahi Kasei Epoxy Co., Ltd.*
Asahi Kasei Finechem Co., Ltd.*
Asahi Kasei Metals Ltd.*
Asahi Kasei EMS Co., Ltd.*
Asahi SKB Co., Ltd.*
Asahi Chemitech Co., Ltd.*
Asahi-Schwebel Co., Ltd.*
Kayaku Japan Co., Ltd.
Asahi Kasei Performance Chemicals Corp.*
Asahi Kasei Microza (Hangzhou) Co., Ltd.*
* Consolidated subsidiary
Major products/business line
Paid-in capital
(million)
Equity
interest (%)
Processing of fibers
Packaging, packing, and storage of fiber products
Processing of tire cord, etc.
Woven fabrics
Processing of nonwovens
Stockings and innerwear
Dyeing and finishing of yarns and fabrics
Sale of linings and interlinings
Warp-knit spandex textiles
Spandex
Processing and sale of fibers and textiles
Spandex
Spandex
Spunbond nonwovens
Spandex
Basic petrochemicals
Polystyrene
Butadiene
Acrylonitrile, sodium cyanide, acrylamide, EDTA
Acrylonitrile, methyl methacrylate
Plastic coloring & compounding
Processed plastic products
Silicone
Manufacturing
Synthetic rubber
Plastic compounding
Sale of performance resin
Coloring and compounding of performance resin
Sale of performance resin
Polyacetal
Coloring and compounding of performance resin
Performance resin
Synthetic rubber
Compounded performance resin operations
Coloring and compounding of performance resin
Sale of performance plastic compounds
Epoxy resin
Specialty chemicals
Aluminum paste
Electronic materials and devices
Defense explosives
Resin anchors, detonator housings/leads
Glass fabric
Industrial explosives
High-performance HDI-based polyisocyanate
Industrial filtration membranes and systems
50
¥
11
¥
50
¥
99
¥
20
¥
90
¥
50
¥
10
¥
78
CNY
154
CNY
11
CNY
1,003
NT$
1,350
THB
1,835
THB
28.4
€
2,000
¥
5,000
¥
490
¥
KRW 237,642
THB 13,818
110
¥
160
¥
1,050
¥
10
¥
1,000
¥
10
¥
10
CNY
50
CNY
18
CNY
265
CNY
140
THB
46.0
US$
160
US$
32
US$
22
US$
2
US$
300
¥
325
¥
250
¥
10
¥
100
¥
10
¥
50
¥
60
¥
285
CNY
70
CNY
100.0
100.0
100.0
100.0
50.0
94.0
78.7
100.0
93.0
100.0
100.0
50.0
60.0
84.3
100.0
50.0
62.1
50.0
100.0
50.0
100.0
99.0
50.0
50.0
75.0
100.0
100.0
51.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
50.0
100.0
100.0
104
Asahi Kasei Report 2017
Asahi Kasei Report 2017
105
Company
Major products/business line
Asahi Kasei Electronics Materials (Changshu) Co., Ltd.* Photosensitive dry film
Photosensitive dry film
Asahi Kasei Electronics Materials (Suzhou) Co., Ltd.*
Photosensitive dry film
Asahi Kasei Wah Lee Hi-Tech Corp.*
Glass fabric
Asahi-Schwebel (Taiwan) Co., Ltd.*
Sale of photopolymer, printing-plate making systems
Asahi Photoproducts (UK) Ltd.*
Sale of photopolymer, printing-plate making systems
Asahi Photoproducts (Europe) SA/NV*
Packaging products and solutions
Asahi Kasei Pax Corp.*
Cling film, other household products
Asahi Kasei Home Products Corp.*
Sale of purging compound
Sun Plastech Inc.*
Biaxially oriented polystyrene sheet
Sundic Inc.
Energy and electronic materials
Asahi Kasei E-materials Korea Inc.*
Lithium-ion battery separator
Celgard Korea, Ltd.*
Battery separators
Polypore International, LP*
Lithium-ion battery separator
Celgard, LLC*
Lead-acid battery separator
Daramic, LLC*
Lead-acid battery separator
Daramic Battery Separator India Pvt. Ltd.*
Lead-acid battery separator
Daramic S.A.S.*
Lead-acid battery separator
Daramic (Thailand) Ltd.*
Lithium-ion battery separator
Polypore (Shanghai) Membrane Products Co., Ltd.*
Lead-acid battery separator
Daramic Tianjin PE Separator Co., Ltd.*
Lithium-ion and lead-acid battery separator
Polypore K.K.*
Lead-acid battery separator
Daramic Separadores de Baterias Ltda.*
Lead-acid battery separator
Daramic Xiangyang Battery Separator Co., Ltd.*
Hall elements
Asahi Kasei Electronics Co., Ltd.*
LSIs
Asahi Kasei Microsystems Co., Ltd.*
Electronic devices marketing and technical support
Asahi Kasei Microdevices Korea Corp.
Sale of LSIs
AKM Semiconductor, Inc.*
Paid-in capital
(million)
305
CNY
181
CNY
49
NT$
326
NT$
0.3
£
3
€
490
¥
250
¥
1.0
US$
¥
1,500
KRW 1,890
KRW 25,920
2,233
US$
22
US$
12
US$
0.3
INR
€
73
2,317
THB
7
CNY
149
CNY
16
¥
BRL
0.3
194
CNY
50
¥
¥
50
820
KRW
2.9
US$
Equity
interest (%)
100.0
100.0
80.6
51.0
100.0
100.0
100.0
100.0
100.0
50.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
65.0
100.0
100.0
100.0
100.0
Homes Segment
Asahi Kasei Jyuko Co., Ltd.*
Asahi Kasei Home Construction Corp.*
Asahi Kasei Chintai Support Corp.*
Asahi Kasei Fudousan Community Corp.*
Asahi Kasei Realty & Residence Corp.*
Asahi Kasei Reform Co., Ltd.*
Asahi Kasei Mortgage Corp.*
Asahi Kasei Lifeline Corp.*
Asahi Kasei Sekkei Corp.*
AJEX Corp.*
Asahi Kasei Jyuko Vietnam Corp.*
Asahi Kasei Foundation Systems Corp.*
Asahi Kasei Extech Corp.*
Iwakuni Sun Products Co., Ltd.*
Sakai Kako Co., Ltd.*
Hozumi Kako Co., Ltd.*
* Consolidated subsidiary
¥
Steel frames
¥
Construction of homes
¥
Rental home agency
Condominium management
¥
Real estate development, brokerage, and related business ¥
¥
Home maintenance and remodeling
¥
Financial services
¥
Plumbing and wiring work
¥
Building design and supervision
¥
External work
US$
Steel-frame members
¥
Installation of piles
¥
Exterior wall panel installation
¥
Construction materials processing
¥
Construction materials processing
¥
Construction materials processing
2,820
100
50
200
3,200
250
1,000
100
30
100.0
13.9
200
50
30
10
10.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
80.0
100.0
100.0
100.0
100.0
100.0
104
Asahi Kasei Report 2017
Asahi Kasei Report 2017
105
Major Subsidiaries and Affiliates
Company
Health Care Segment
Asahi Kasei Medical MT Corp.*
Med-Tech Inc.*
Asahi Kasei Medical (Hangzhou) Co., Ltd.*
GLT Medical Co., Ltd.
Asahi Kasei Medical Trading (Korea) Co., Ltd.*
Asahi Kasei Medical America Inc.*
Asahi Kasei Bioprocess America, Inc.*
Asahi Kasei Medical Europe GmbH*
Asahi Kasei Bioprocess Europe SA/NV*
Asahi Kasei Pharma America Corp.*
ZOLL Medical Corporation*
ZOLL LifeVest Holdings LLC*
ZOLL Data Systems, Inc.*
ZOLL Circulation, Inc.*
Others
Asahi Kasei Advance Corp.*
Asahi Kasei Amidas Co., Ltd.*
Asahi Kasei NS Energy Corp.*
Asahi Kasei Engineering Corp.*
Asahi Kasei Office One Co., Ltd.*
Asahi Kasei New Port Terminal Co., Ltd.*
Asahi Kasei Networks Corp.
Asahi Kasei Benefits Management Corp.*
Asahi Kasei AS Tech Co., Ltd.
Asahi Kasei EIC Solutions Corp.
Asahi Yukizai Corp.
Asahi Kasei Ability Corp.
New Asahi Services Co., Ltd.*
Asahi Research Center Co., Ltd.*
Cable Media Waiwai Co., Ltd.*
ELORTO Corp.
AJS Inc.
Koyo Machinery Works Co., Ltd.*
Asahi Kasei (China) Co., Ltd.*
Asahi Kasei Advance (Thailand) Co., Ltd.*
Asahi Kasei India Pvt. Ltd.
Crystal IS, Inc.*
Asahi Kasei America, Inc.*
Asahi Kasei Europe GmbH*
* Consolidated subsidiary
Major products/business line
Paid-in capital
(million)
Equity
interest (%)
Medical devices, bioprocess products
Medical devices
Hemodialyzers; sale of medical devices
Medical devices
Sale of medical devices, medical systems
Sale of medical devices, medical systems
Bioprocess equipment and systems
Sale of medical devices, medical systems
Sale of virus removal filters
Clinical trials for new drugs
Acute critical care devices and systems
Holding company for wearable defibrillator business
IT solutions for acute critical care
Intravascular temperature management systems
10
¥
140
¥
165
CNY
CNY
24.7
KRW 1,000
0.5
US$
30
US$
18
€
0.5
€
49
US$
1,723
US$
10
US$
1
US$
23
US$
Sale of Asahi Kasei products
Employment agency, consulting
Electricity and steam
Plant, equipment, process engineering
Real estate rental
Receiving and storage of fuel and feedstocks
IT-related business
Company housing, recreational facilities
Processing of polyethylene pipe
Electrical, IT, and control engineering
Synthetic resin, fabricated plastic products
Printing, bookbinding, and office work
Insurance agency, cellular phone sales, bowling alley
Information and analysis
Cable TV
Travel agency
Computer software, IT systems
Machinery installation
Investment and business support services
Processed yarn
Business support services
Development of aluminum nitride substrates and UV LEDs US$
US$
Business support services
€
Business support services, sale of performance resin
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
CNY
THB
Rs
500
80
10
400
160
100
400
20
10
100
5,000
40
30
1,000
414
30
800
100
2,214
134
45
40
0.1
1
100.0
100.0
100.0
81.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
61.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
29.5
100.0
100.0
100.0
50.0
34.0
49.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
106
Asahi Kasei Report 2017
Asahi Kasei Report 2017
PB
Company Information/Investors Information
(as of March 31, 2017)
■ Corporate Profile
Asahi Kasei IR Website
Company Name
Asahi Kasei Corporation
Date of Establishment
May 21, 1931
Paid-in Capital
¥103,389 million
Employees
33,720 (consolidated)
7,356 (non-consolidated)
Asahi Kasei’s financial results and other materials
for investors are available in our IR website.
http://www.asahi-kasei.co.jp/asahi/en/ir
■ Asahi Kasei Group Offices
Asahi Kasei Corporation
Core Operating Companies
Tokyo Head Office
1-105 Kanda Jinbocho, Chiyoda-ku, Tokyo 101-8101 Japan
Phone: +81-3-3296-3000 Fax: +81-3-3296-3161
Asahi Kasei Microdevices
1-105 Kanda Jinbocho, Chiyoda-ku, Tokyo 101-8101 Japan
Phone: +81-3-3296-3911
Asahi Kasei (China) Co., Ltd.
8/F, One ICC, Shanghai International Commerce Centre
No. 999 Huai Hai Zhong Road, Shanghai 200031 China
Phone: +86-21-6391-6111 Fax: +86-21-6391-6686
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
Asahi Kasei America, Inc.
800 Third Avenue, 30th Floor, New York, NY 10022 USA
Phone: +1-212-371-9900 Fax: +1-212-371-9050
Asahi Kasei Europe GmbH
Am Seestern 4, 40547 Düsseldorf, Germany
Phone: +49-211-8822-030 Fax: +49-211-8822-0333
Asahi Kasei India Pvt. Ltd.
The Capital 801C, Plot No. C70, G Block,
Bandra Kurla Complex, Bandra (East), Mumbai 400051 India
Phone: +91-22-6710-3962
■ Investors Information
Stock Listing
Stock Code
Authorized Shares
Outstanding Shares
Transfer Agent
Independent Auditors
Number of Shareholders
Tokyo
3407
4,000,000,000
1,402,616,332
Sumitomo Mitsui Trust Bank, Ltd.
PricewaterhouseCoopers Aarata LLC
76,784
Asahi Kasei Homes
1-24-1 Nishi-shinjuku, Shinjuku-ku, Tokyo 160-8345 Japan
Phone: +81-3-3344-7111
Asahi Kasei Construction Materials
1-105 Kanda Jinbocho, Chiyoda-ku, Tokyo 101-8101 Japan
Phone: +81-3-3296-3500
Asahi Kasei Pharma
1-105 Kanda Jinbocho, Chiyoda-ku, Tokyo 101-8101 Japan
Phone: +81-3-3296-3600
Asahi Kasei Medical
1-105 Kanda Jinbocho, Chiyoda-ku, Tokyo 101-8101 Japan
Phone: +81-3-3296-3750
ZOLL Medical Corporation
269 Mill Rd., Chelmsford, MA 01824-4105 USA
Phone: +1-978-421-9655
Largest Shareholders
JP Morgan Chase Bank 380055
The Master Trust Bank of Japan, Ltd. (trust account)
Nippon Life Insurance Co.
Japan Trustee Services Bank, Ltd. (trust account)
Sumitomo Mitsui Banking Corp.
Asahi Kasei Group Employee Stockholding Assn.
Japan Trustee Services Bank, Ltd. (trust account 9)
Japan Trustee Services Bank, Ltd. (trust account 5)
Mizuho Bank, Ltd.
Tokio Marine & Nichido Fire Insurance Co., Ltd.
* Percentage of equity ownership after exclusion of treasury stock.
% of equity*
6.28
5.19
4.68
3.68
2.52
2.44
2.03
1.71
1.45
1.43
Asahi Kasei Report 2017
107
1-105 Kanda Jinbocho, Chiyoda-ku,
Tokyo 101-8101 Japan
www.asahi-kasei.co.jp/asahi/en
Corporate Communications
Tel: +81-3-3296-3008, Fax: +81-3-3296-3162
Printed in Japan
2017.12