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9
Asahi Kasei Report 2019
Creating
for
Tomorrow
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
Contents
02 Message from the President
10 “Cs+ for Tomorrow 2021”
Medium-Term Management Initiative
16 Business Portfolio Transformation
Providing Solutions to Society
18 Competitive Products and Businesses
19 At a Glance
20 Global Executive Interview
22 Financial and Non-Financial Highlights
24 Interview with the CFO
26 Operating Segments: Material
27 Operating Segments: Homes
28 Operating Segments: Health Care
29 R&D
32 Corporate Governance
34 Directors
36 Outside Director Interview
38 Global Environment
39 Society: Quality & Procurement
40 Society: Human Resources
41 Responsible Care
42 Feature Profiles of Employees Pursuing Sustainability
• Gas sensor business
• Housing business for seniors
• Bioprocess business
Financial Section
46 Consolidated Financial Statements
Corporate Information
79 Company Information/Investors Information
■ Editorial policy
For greater ease of understanding among our stake-
holders regarding the Asahi Kasei Group’s operating
climate and overall business activities, the Asahi Kasei
Report focuses on areas of particular interest such as
our management strategy, financial and non-financial
highlights, business conditions, and management
configuration, as well as our efforts toward sustainabil-
ity in society. Details of our financial performance and
CSR activities are disclosed on our website.
■ Period under review
The period under review is fiscal 2018 (April 2018 to
March 2019). Some qualitative information pertaining
to April to September 2019 has also been included.
■ Organizational scope
The scope of the report is Asahi Kasei Corp. and its
consolidated subsidiaries, except with respect to
Responsible Care (see p. 41) and non-financial high-
lights, in which case the scope is operations in Japan
and overseas that perform the relevant activities.
Asahi Kasei’s three operating segments are
Material, Homes, and Health Care. The titles and
positions of corporate officers and other personnel as
shown in this report are current as of October 2019.
■ Guidelines consulted
The GRI Standards, ISO 26000, and other guidelines
were consulted during the preparation of this report.
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.
01
Asahi Kasei Report 2019 Message from the President
Our new management initiative Cs+
for Tomorrow 2021 for the 3-year
period from fiscal 2019 is focused on
two mutually reinforcing aspects of
sustainability—contributing to the
sustainability of society through our
business operations, and the sustainable
increase in our corporate value.
Hideki Kobori
President
02
Asahi Kasei Report 2019
Review of Cs for Tomorrow 2018
During our previous management initiative from fiscal 2016 to 2018, we enjoyed relatively favorable
operating conditions such as exchange rates and feedstock prices. With firm business perfor-
mance overall, we achieved our financial targets. Net sales and operating income in fiscal 2018
each reached new record highs, and both profitability and capital efficiency exceeded our targets.
Regarding shareholder returns, we decided to perform our first share buyback in 17 years, and
our total return ratio for fiscal 2018 reached 39%, above the 35% we had targeted.
Long-term investments for future growth were a particular focus, and we adopted decisions on
some ¥670 billion over the 3-year period. We also worked to reinforce our operating foundations
with thorough compliance, development of human resources, and digital transformation, and we
will continue to expand and extend these efforts.
At the same time, we see new challenges ahead. We need to accelerate our efforts to provide
solutions to the world’s challenges. In the midst of dramatic changes in society and technological
advancement, our pace of new business creation and portfolio transformation needs to rise
commensurately.
Overview of Cs+ for Tomorrow 2021
Throughout the world, issues of sustainability are the subject of increasing concern, as evidenced
by the SDGs1 and ESG2. Under the new management initiative, Asahi Kasei expresses its stance
for contribution to sustainability as “Care for People, Care for Earth.” With this new “C” in addition
to the four “Cs” from the previous initiative, we adopted “Cs+” in the name.
“Cs” in
previous initiative
Compliance
Communication
Challenge
Connect
New “C”
Care for People, Care for Earth
1 The Sustainable Development Goals adopted by the United Nations in 2015.
2 Environmental, social, and governance aspects of corporate management.
03
Asahi Kasei Report 2019
Message from the President
This initiative reaffirms Asahi Kasei’s commitment to contribute to society by providing solutions
to social issues through our businesses. This has always been our path of growth, stated by our
founder Shitagau Noguchi, and enduring today in our Group Mission.
Our financial targets include operating income of ¥240 billion and an operating margin of 10%
in fiscal 2021. While our previous outlook for operating income in fiscal 2025 was ¥280 billion, this
was raised to ¥300 billion based on recent firm performance.
Other key performance indicators include
ROIC3 indicating investment efficiency, ROE indi-
cating capital efficiency, and EBITDA4 indicating
cash-flow generation.
To maintain a proactive pace of investments
for growth, we are planning a total of ¥800 billion
in long-term investments over the 3-year period.
While many businesses are very keen to invest,
we are selecting new investments by carefully
studying their potential returns to ensure that
they will contribute to increased corporate value.
Vision of our founder Shitagau Noguchi
The diversity of our businesses means that
a single standard doesn’t apply. Instead, we
prioritize based on a comprehensive judgment
of the risks, competitive environment, growth
strategy, and growth stage of each business,
and adopt investment decisions accordingly.
For shareholder returns, we intend to
maintain stable dividends while aiming to
As industrialists, we must always
remember that our ultimate mission
is to improve people’s standard of
living by supplying an abundance of
the highest-quality daily necessities
at the lowest prices.
—1933
continuously raise dividends through sustained earnings growth. Our basic standard is for a payout
ratio of 30–40%.
In addition to our financial targets, we have declared a new target for reduction of GHG
emissions relative to net sales. We aim to reduce this by 35% from the fiscal 2013 level by fiscal
2030. Aside from this target for the reduction of our own emissions, we will continue to proactively
advance businesses which contribute to reduced emissions around the world.
Providing solutions to society’s challenges through our businesses in all three sectors
When we mapped our materiality in fiscal 2018, we identified the highest priority areas for
contributing to solutions for society through our businesses. Under the new management initiative
we specified 5 priority fields for provision of value, and are executing our growth strategies
accordingly.
In the Material business sector we are flexibly allocating management resources to the priority
fields of Environment & Energy to reduce environmental burdens, Mobility for safety and comfort,
3 (Operating income − income taxes) / average annual invested capital
4 Operating income, depreciation, and amortization (tangible, intangible, and goodwill)
04
Asahi Kasei Report 2019
and Life Material for comfortable daily life. In the Homes business sector we are supporting
fulfilment and contentment in the priority field of Home & Living. In the Health Care business sector
we are contributing to healthy longevity in the eponymous priority field of Health Care.
By providing new value toward a sustainable society in all three sectors, we aim to achieve
sustainable growth in corporate value.
Materiality of the Asahi Kasei Group
■ Harmony with the environment ■ Living in health and comfort ■ Basic activity
Extremely
important
l
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k
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f
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n
a
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p
m
I
■ Greenhouse gas
■ Wastewater
■ Industrial waste
■ Global environment
■ Health and longevity
■ Comfortable life
Business
contribution to
■ Supply chain
management
■ Communication
with stakeholders
■ Biodiversity
■ Social contribution
■ Human resources
■ Diversity
■ Risk management
Important
Importance for the Asahi Kasei Group
Extremely
important
Highest priority for mapping above
■ Governance
■ Human rights
■ Compliance/sincerity
■ Safety/quality
Asahi Kasei Group’s priority fields for provision of value
Material
Homes
Health Care
Environment
& Energy
Mobility
Life Material
Home &
Living
Health Care
05
Asahi Kasei Report 2019
Message from the President
Creating new value through “diversity” and “capability to change”
Ever since our founding, we have always discerned the needs of society in each age, and continu-
ously transformed our business portfolio focused on solutions that meet emerging changes. Asahi
Kasei’s strengths are our diversity and our capability to change. The diverse human resources,
businesses, and technologies we have today are the result of decades of tackling the world’s
challenges.
Now, in today’s fast-changing world, we need to pick up our pace and change more dynami-
cally than before. Otherwise we risk being left behind. Digital technology is no longer simply a tool
for performing tasks. The utilization of an ample amount of high-quality data can not only create
new business models but also transform the industrial structure.
In such an age of uncertainty, our portfolio in three business sectors with diverse human
resources and diverse technologies is a great strength as we execute our new growth strategy. It
will be vital for us to leverage our wide range of business fields to gain information across a broad
swath of industries and customer segments, and to combine our various technologies in new ways
as we exert the combined strength of the Asahi Kasei Group.
Asahi Kasei has created many unique products and technologies by combining various
know-how and technologies. We provide the venue for R&D personnel from throughout the group
to gather together for open-minded discussions among specialists in a wide variety of fields.
Such mutually stimulating exchanges lead to the creation of new value. In addition to information
exchange and collaboration, we transfer personnel across different sectors to gain synergy in many
different ways.
Contributing to
sustainable society
Grasping social needs,
dynamic portfolio transformation,
developing business that makes life better
Social need:
Higher standard of living
in developing countries
Acceleration
of globalization
Social need:
Comfort and
convenience
Const. mat./homes
Healthcare
Electronic devices/materials
Diversity
&
Capability
to
change
Social need:
Abundance of goods
Petrochemicals/synthetic fibers
Social need:
Establishment of
livelihood base
Chemical fertilizer/regenerated fiber/explosives
1920s
1950s
1970s
2000s
06
Asahi Kasei Report 2019
New business creation and business portfolio transformation
Several concrete measures under the new management initiative will accelerate our pace of
change. We established Marketing & Innovation as a new organization to foster new business
creation from new perspectives straddling across different fields, without limitation based on our
existing technologies. At the same time, we reorganized our Material sector into fewer and larger
units to facilitate prioritized allocation of management resources.
We are also advancing digital transformation to dramatically raise productivity and speed. In
fiscal 2019 we established an Informatics Initiative within Corporate Research & Development, and
by March 2022 we plan to increase digital professional personnel to over 150 people.
To strengthen overseas operations, we are promoting the employment and development of
local management personnel while advancing business strategies in accordance with the charac-
teristics of each region.
We adopted “high profitability,” “high market growth,” “priority fields,” and “sustainability” as
four key perspectives to ensure that our ongoing business portfolio transformation generates
higher added value. Allocation of human resources and capital will be prioritized based on these
perspectives.
Taking stock of our core technologies and current R&D projects, we refined our focus. Efforts
for new business development are not only in-house—we are expanding corporate venture capital
(CVC) activities mainly on the US, while flexibly forming alliances with other companies, universities,
and governmental bodies, to advance quickly with a broad outlook.
M&A is also a crucially effective means to achieve strategic growth and to exit struggling fields.
We will continue to study and proactively execute opportunities.
By further leveraging connections both inside and outside the company, we will accelerate our
portfolio transformation and new business creation to achieve a portfolio of high-profitability and
high value-added businesses.
Demonstration facility for green hydrogen production in
Herten, North Rhine-Westphalia, Germany
07
Asahi Kasei Report 2019
Message from the President
Corporate governance to tie diverse businesses together
We continue to enhance our corporate governance. Among the 9 members of our Board of
Directors, 3 are Independent Outside Directors. The Outside Directors actively take part in man-
agement by offering their opinions and suggestions from an objective external perspective based
on their experience and knowledge. They attend various briefings and events to deepen their
understanding of Asahi Kasei, and are given detailed explanation of items in the Board of Directors
agenda in advance.
Other than me, the Directors from inside the company include 2 with executive responsibility to
oversee technology functions and business management functions, and 3 with executive responsi-
bility to oversee each of the business sectors, respectively.
We have frank and unreserved discussions at Board of Directors meetings regarding each
business, and determine where to concentrate resources for expansion in accordance with
circumstances. Rather than the current optimum or even the overall optimum, we aim for the future
optimum for the Asahi Kasei Group as a whole.
With regard to succession planning, we have delineated attributes required of future leaders.
These include not only management ability and personal traits, but also the ability to make judg-
ments about the whole Asahi Kasei Group, not only their own field of business, which is essential
to a company like ours that has a wide variety of businesses. In order for such promising personnel
to better understand different businesses, we give them experience in various fields.
We now have non-Japanese members among our Executive Officers, including those who
joined the Asahi Kasei Group through acquisition. They offer opinions from a different perspective,
yet profoundly understand our corporate philosophy and strategic outlook. The Chairman of ZOLL,
for instance, is now also responsible for joint oversight of our whole Health Care sector.
Moving forward we will need to further leverage our global human resources, while promoting
more women and younger personnel. Such efforts to build a management team that can guide
our wide-ranging businesses through a period of dramatic change and pass the baton to the next
group are an essential facet of sustainably raising corporate value.
Strengthening management foundations to swiftly respond to risks
In a rapidly changing world, we must be watchful of new risks emerging. We constantly review
changes as they develop to identify any risks.
Climate change risks are the subject of particular attention around the world. In May 2019 we
announced our support for the recommendations of the Task Force on Climate-related Financial
Disclosures (TFCD). We are currently analyzing our climate-related risks, and studying future
scenarios and what measures we should implement. Meanwhile we are intensifying our search
for more opportunities to apply our products and technologies to reduce the impact of climate
change.
We are also closely following changes in the situation of international commerce, such as trade
friction between the US and China, and the British withdrawal from the EU. While our overseas
08
Asahi Kasei Report 2019 operations have expanded through acquisitions and opening new sites, we are establishing a
flexible configuration for global operations considering various aspects of trade policy, supply chain
changes, and business continuity planning.
Digital transformation is a game changer. It’s an extremely fast field, and we need to take
appropriate steps to stay in front. Depending on how we handle information and build alliances
with other companies, it has the potential to open vast business opportunities.
Risk Management & Compliance serves as our organization for unified management of
individual business risks. Our strengths of quality and safety can also be risks. On-site compliance
and communication are the surest ways to nip risks in the bud. We will continue to further reinforce
our foundations for compliance and communication across the company.
Human resources as the most important key
During the 3-year period of our current management initiative, we can expect that changes
around the world will only accelerate. Asahi Kasei is changing as well, concentrating management
resources on businesses that contribute to the sustainability of society, with a clear awareness of
“Care for People, Care for Earth.” We will continue to advance connections inside and outside the
company as a vital source of strength through communication.
I truly believe that human resources are the most important key to success. No matter how
good a strategy is, success depends on the people who execute it. What sets Asahi Kasei apart
is our on-site strength based on our Group Values of Sincerity, Challenge, and Creativity. In each
business, and at each site, our employees take the initiative. By continuously taking challenges
to provide solutions to issues in society, by leveraging our diversity and our capability to change,
our people are driving the transformation to a portfolio of high-profitability and high value-added
businesses. This is how we will contribute to sustainable society for the benefit of all stakeholders.
09
Asahi Kasei Report 2019
Asahi Kasei’s Growth Strategy
New medium-term management initiative
“Cs+ for Tomorrow 2021”
■ Vision and goals
2 mutually reinforcing aspects of sustainability
Contributing to sustainable society
Providing solutions to the world’s challenges
Business
development;
Innovation
Internal and external
connections/dialogue
High profitability
Return to
stakeholders
Sustainable growth of corporate value
Sincerity, Challenge, Creativity
10
Asahi Kasei Report 2019 Asahi Kasei has advanced in accordance with its Group Mission of contributing to life and living for people
around the world. As the world faces many challenges for a sustainable society, we will continue to provide
new value by leveraging our strengths of “diversity” and “capability to change.”
■ Value creation concept
New perspective: “Care for People, Care for Earth”
Contributing to sustainable society
Group Mission
Contributing to life and living for people around the world
Material
Homes
Health Care
Priority fields
for provision
of value
Environment
& Energy
Mobility
Life Material
Home &
Living
Health Care
Reduced burden
Safety and
comfort
Comfort and
convenience
Security and
fulfillment
Healthy
longevity
New “C”
Care for People, Care for Earth
“Cs” in
previous initiative
Strengths
Employee action principles
Compliance
Communication
Challenge
Creating new value
Connect
Diversity & Capability to change
11
Asahi Kasei Report 2019 New medium-term management initiative “Cs+ for Tomorrow 2021”
■ Financial objectives
Sustainable profit growth exceeding global GDP growth
“Portfolio of high-profitability and high value-added businesses”
(¥ billion)
500
Operating income
Net sales
e
m
o
c
n
i
g
n
i
t
a
r
e
p
O
400
300
200
100
0
198.5
209.6
165.2
159.2
2015
2016
2017
2018
Note: Exchange rate assumptions are ¥110/$ and ¥130/€
Next stage
Operating margin
≥10%
EBITDA margin
≥16%
≥¥300 billion
New target
Operating margin
10%
EBITDA margin
15%
Operating income
¥240 billion
(¥ billion)
3,000
2,400
1,800
1,200
600
N
e
t
s
a
e
s
l
2021
target
0
2025
outlook
(FY)
(¥ billion, unless
otherwise
specified)
Profitability
Capital
efficiency
Financial
health
Net sales
Operating income
Operating margin
EBITDA1
EBITDA margin
Net income attributable to owners of the parent
EPS (¥)
ROIC2
Net income per shareholders’ equity (ROE)
D/E ratio
Exchange rate (¥/$)
FY2015
FY2018
FY2021 target
1,940.9
2,170.4
2,400.0
165.2
8.5%
274.8
14.2%
91.8
66
7.9%
8.6%
0.43
120
209.6
9.7%
313.6
14.5%
147.5
106
8.8%
11.1%
0.31
111
240.0
10.0%
370.0
15.4%
180.0
130
9.0%
11.1%
≈0.5
110
18–21
annual
growth
4.6%
5.7%
7.2%
FY2025 outlook
3,000.0
≥300.0
≥10.0%
≥480.0
≥16.0%
Aiming for FY2021
level or above
1 Operating income, depreciation, and amortization (tangible, intangible, and goodwill)
2 (Operating income − income taxes) / average annual invested capital
Operating cash flow
Capital expenditure
Shareholder returns
3-year total
3-year total
¥600 to ¥700 billion
≈¥800 billion
(decision-adopted basis, including M&A)
Grow dividends per share
as earnings expand
payout ratio around
30 to 40%
12
Asahi Kasei Report 2019
GHG emissions/net sales
(index)
100
3
5
%
r
e
d
u
c
ti
o
n
(2013=100)
Reducing our own GHG emissions
(cid:127) Further reduction in GHG emissions
Installing lower-emission equipment, optimizing plant operation
(cid:127) Greater use of low-carbon energy
Increasing renewables and LNG
(cid:127) R&D for further GHG reduction
Toward a sustainable society
Contributing to reduce the world’s GHG emissions
(cid:127) Businesses that contribute to energy conservation
and reduced GHG emissions
Battery separators, lightweighting resins,
net zero energy houses, CO2 sensors, etc.
(cid:127) Technology development/commercialization
for clean environmental energy
Green hydrogen production, CO2 chemistry, etc.
2013
2018
2030
(FY)
75
50
25
0
■ Company-wide actions and building the base
Portfolio of high-profitability and high value-added businesses
Business portfolio transformation & new business creation
4 perspectives
of judgement
High profitability
High
market growth
Priority fields
Sustainability
Various core
technologies
Marketing
functions
Connections
Creating for Tomorrow
13
Asahi Kasei Report 2019 New medium-term management initiative “Cs+ for Tomorrow 2021”
Heightening by digital transformation
Strengthening global operations
Digital
Marketing
Materials
Informatics
▼
Establishing an effective
and efficient strategy
▼
Dramatically improving
development speed
Production
Technology Innovation
▼
Enhancing productivity
by IoT
IP Landscape
▼
Formulating strategies
based on IP
Leading region of environmental
and automotive trends
EU
China
Enormous market
Source of new business models
Leading region of health care
US
FY18 FY25
Average annual sales growth rate +11%
FY18 FY25
Average annual sales growth rate +6%
FY18 FY25
Average annual sales growth rate +10%
Strengthen the IT infrastructure
(data platform, tools, human resources)
Increase digital professional personnel to over 150 people
by March 2022 to accelerate digital transformation
■ Strategy by sector
Material
(¥ billion)
200
(figures are approximate)
Expansion of high value-added businesses
100
80
105
High value-added
businesses*
135
e
m
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n
i
g
n
i
t
a
r
e
p
O
0
FY2018
Commodity businesses
(earnings base)
FY2021
target
FY2025
outlook
* Fibers, synthetic rubber, engineering plastics, coating materials, ion-exchange membranes,
electronic materials, consumables, battery separators, electronic devices, etc.
Environment & Energy
Care for Earth
Clean energy
Battery separators
Alkaline water electrolysis system
to produce green hydrogen
Low-carbon society
Next-generation CO2 chemistry
New CO2 separation/recovery system
Energy conservation/environmental improvement
CO2 sensors
Water filtration modules
Ion-exchange membranes
Mobility
Life Material
Care for People
Care for Earth
Care for People
Care for Earth
Safety and security
Airbag material
Alcohol sensor
Fuel economy
S-SBR for tires
Lightweighting materials
Contactless pulse sensing
Lead-acid battery separator
Comfortable space
EV/HEV
LamousTM artificial suede
LIB separator
Low-VOC* material
A/C CO2 sensors
* Volatile organic compounds
LIB-related material
Comfort/convenience
Disposable diaper material
5G-related (glass fabric, etc.)
Regenerated cellulose fiber
Health
Pharmaceutical/food additives
UVC LEDs for disinfection
Reducing food loss/
reduced environmental burden
Saran WrapTM
ZiplocTM
Water-washable printing plates
14
Potential growth market
India
ASEAN
Potential growth market
Major production sites
Homes
Overseas
Seniors
Medium-rise
Remodeling
New businesses and services
to drive growth
(¥ billion)
100
(figures are approximate)
Home & Living
Care for People
Care for Earth
17
50
27
e
m
o
c
n
i
g
n
i
t
a
r
e
p
O
44
Safety/security
Environment
Rental management
Brokerage
60-year long-life homes
Disaster-resistance
Net zero energy houses/
photovoltaic power
Long-term retention of asset value
High-performance insulation
New businesses
Services
Order-built/condominiums
Construction Materials
Comfort/health
Living in a good thermal environment
Diverse modes of residence
0
FY2018
FY2021
target
FY2025
outlook
(¥ billion)
100
(figures are approximate)
Profit growth in overseas markets
e
m
o
c
n
i
g
n
i
t
a
r
e
p
O
50
44
35
Overseas
Japan
0
FY2018
FY2021
target
FY2025
outlook
Health Care
Health Care
Care for People
Critical care
Bioprocess
New areas
65
Treatment
Biosafety
Acute conditions (critical care, circulatory)
Supporting the safety of
RecomodulinTM, ThermogardTM,
therapeutic apheresis, defibrillators,
LifeVestTM,
biotherapeutics
Virus removal filters
acute myocardial infarction, stroke
Bioprocess equipment
Chronic conditions (orthopedics, dialysis)
TeriboneTM, ReclastTM, KevzaraTM, dialysis,
autoimmune disease, pain relief
Blue indicates under development
Asahi Kasei Report 2019
Digital
Marketing
▼
Materials
Informatics
▼
Establishing an effective
and efficient strategy
Dramatically improving
development speed
Enhancing productivity
Formulating strategies
Production
Technology Innovation
▼
by IoT
IP Landscape
▼
based on IP
Strengthen the IT infrastructure
(data platform, tools, human resources)
Increase digital professional personnel to over 150 people
by March 2022 to accelerate digital transformation
(¥ billion)
200
(figures are approximate)
Expansion of high value-added businesses
Environment & Energy
High value-added
businesses*
135
Care for Earth
Clean energy
Battery separators
Low-carbon society
Next-generation CO2 chemistry
100
80
105
Alkaline water electrolysis system
New CO2 separation/recovery system
to produce green hydrogen
e
m
o
c
n
i
g
n
i
t
a
r
e
p
O
Energy conservation/environmental improvement
CO2 sensors
Water filtration modules
Ion-exchange membranes
0
FY2018
Commodity businesses
(earnings base)
FY2021
target
FY2025
outlook
* Fibers, synthetic rubber, engineering plastics, coating materials, ion-exchange membranes,
electronic materials, consumables, battery separators, electronic devices, etc.
Mobility
Life Material
Care for People
Care for Earth
Care for People
Care for Earth
Safety and security
Airbag material
Alcohol sensor
Fuel economy
S-SBR for tires
Lightweighting materials
Contactless pulse sensing
Lead-acid battery separator
Comfortable space
EV/HEV
LamousTM artificial suede
LIB separator
LIB-related material
Low-VOC* material
A/C CO2 sensors
* Volatile organic compounds
Comfort/convenience
Reducing food loss/
reduced environmental burden
Saran WrapTM
ZiplocTM
Water-washable printing plates
Disposable diaper material
5G-related (glass fabric, etc.)
Regenerated cellulose fiber
Health
Pharmaceutical/food additives
UVC LEDs for disinfection
Heightening by digital transformation
Strengthening global operations
Leading region of environmental
and automotive trends
EU
Average annual sales growth rate +11%
FY18 FY25
Enormous market
China
Average annual sales growth rate +6%
FY18 FY25
Source of new business models
Leading region of health care
US
Average annual sales growth rate +10%
FY18 FY25
Potential growth market
India
ASEAN
Potential growth market
Major production sites
Material
Homes
New businesses and services
to drive growth
Home & Living
(¥ billion)
100
(figures are approximate)
17
50
27
e
m
o
c
n
i
g
n
i
t
a
r
e
p
O
44
Overseas
Seniors
Medium-rise
Remodeling
Rental management
Brokerage
Care for People
Care for Earth
Safety/security
Environment
60-year long-life homes
Disaster-resistance
Net zero energy houses/
photovoltaic power
Long-term retention of asset value
High-performance insulation
New businesses
Services
Order-built/condominiums
Construction Materials
Comfort/health
Living in a good thermal environment
Diverse modes of residence
0
FY2018
FY2021
target
FY2025
outlook
Health Care
(¥ billion)
100
(figures are approximate)
Profit growth in overseas markets
Critical care
Bioprocess
New areas
65
e
m
o
c
n
i
g
n
i
t
a
r
e
p
O
50
44
35
Overseas
Japan
0
FY2018
FY2021
target
FY2025
outlook
Health Care
Care for People
Treatment
Acute conditions (critical care, circulatory)
RecomodulinTM, ThermogardTM,
therapeutic apheresis, defibrillators,
LifeVestTM,
acute myocardial infarction, stroke
Chronic conditions (orthopedics, dialysis)
TeriboneTM, ReclastTM, KevzaraTM, dialysis,
autoimmune disease, pain relief
Biosafety
Supporting the safety of
biotherapeutics
Virus removal filters
Bioprocess equipment
Blue indicates under development
15
Asahi Kasei Report 2019
Business Portfolio Transformation Providing Solutions to 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™ cupro fiber, part of a diverse
range of business operations that included
chemical fertilizer and viscose rayon. As
industry modernized and the economy of
Japan achieved self-sustainable growth,
our operations made important contribu-
tions 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 develop-
ment of petrochemical operations. Our
products during this period supported
improvements in the quality of life during
Japan’s high-growth period.
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.
Part of the ammonia plant completed in 1923
(Nobeoka, Miyazaki, Japan)
Saran Wrap™ launched in Japan in 1960
Naphtha cracker (Kurashiki, Okayama, Japan)
The Bemberg™ plant which started operation
in 1931 (Nobeoka, Miyazaki, Japan)
Portfolio transformation
Chemicals
Fiscal 1940
Net sales
¥56 million
Foods
Fibers
Fiscal 1960
Net sales
¥44.9 billion
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
● Development of chemical industry and
modern agriculture
Sufficiency of daily necessities, improvement in quality of homes,
development of public infrastructure
● Post-war recovery and
modernization of industry
● Stable economic growth
● Economic bubble
● Interbellum economic downturn and
● Period of high economic growth
World War II
16
Asahi Kasei Report 2019 We are Creating for
Tomorrow, providing
new value to society
by enabling living in
health and comfort
and harmony with the
natural environment
From 2010
Major overseas acquisitions drove the
proactive expansion of our operations.
We acquired ZOLL Medical Corporation,
US manufacturer of medical devices for
acute critical care, in 2012; Polypore
International LP, US manufacturer of
battery separators, in 2015; and Sage
Automotive Interiors, Inc., US manufac-
turer of automotive interior materials,
in 2018. Our Cs+ for Tomorrow 2021
medium-term management initiative
launched in fiscal 2019 focuses on “sus-
tainability” by contributing to sustainable
society while achieving sustainable
growth of corporate value.
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
operations, divesting our food business
and closing some fiber businesses,
achieving selective diversification. From
2000 onward, we also established
many overseas operations, mainly in
Asia, laying the foundation for global
management.
Pharmaceuticals just after the Toyo Jozo merger
The LifeVest™ wearable defibrillator of ZOLL
Dinamica™ automotive interior material of
Sage (made with Lamous™ artificial suede)
Asahi Kasei Electronics Materials (Suzhou)
Co., Ltd., a major manufacturing base for
photosensitive dry film
Critical Care
Fibers
Others
Celgard™ Li-ion battery separator of Polypore
Others
Fibers
Health Care
Construction
Materials
Health Care
Construction
Materials
Fiscal 2000
Net sales
¥1,269.4 billion
Fiscal 2018
Net sales
¥2,170.4 billion
Homes
Chemicals
Homes
Chemicals
Electronics
Increased comfort and
convenience
● Two decades of meager growth
after collapse of bubble
● Effect of global economic crisis
Electronics
Heightened environmental consciousness, evolution of ICT
● Reduced dependence on fossil fuels, greater use of renewables
● The fourth industrial revolution by IoT, AI, Big Data, etc.
17
Asahi Kasei Report 2019 Competitive Products and Businesses
Advancing various businesses to meet the needs of the world, we have accumulated and acquired a wide
range of competitive technologies, products, and businesses.
Material
Compound Semiconductors & LSIs
Catalysts & Processes
Electronic compass
Global No. 1
Magnetic sensor
Global No. 1
Acrylonitrile
Global No. 2
Catalysis/
inorganic
synthesis
Foam insulation
Compound
semiconductors
Software
algorithms
Polymers & Processing
Synthetic rubber for
fuel-efficient tires
Global No. 1
Chemical
process
Polymer design/
polymerization/
processing
Functional
polymer
Fibers & Textiles
Bemberg™ cupro fiber
Global No. 1
Accumulated and
acquired technologies
Anti-quake/
construction
methods/
anti-fire/
durability
Bio
pharmaceuticals
Biological
information
processing
Polymerization/
spinning/
cellulose
Virus removal/
blood purification
Phase separation/
electrochemistry
Membranes & Separation
Ion-exchange membranes
Global No. 1
Professional defibrillator
Global No. 1
18
Hipore™ & Celgard™
Li-ion battery separator
Daramic™
lead-acid battery separator
Global No. 1
Global No. 1
Homes
Homes & Construction Materials
Condominiums
Hebel™ autoclaved aerated
No. 1 for condominium
redevelopment in Japan1
concrete (AAC)
No. 1 sales volume in Japan2
1 As of April 11, 2018, based on number
2 Thick panels and thin panels in total,
of reconstruction association permits
according to internal research.
issued in accordance with Japan’s Act
on Facilitation of Reconstruction of
Condominiums, according to research by
Industrial Marketing Consultants Co., Ltd.
Health Care
Health Care
Planova™ virus removal filters
Wearable defibrillator
Global No. 1
世界 No.1
Asahi Kasei Report 2019 Homes
Homes & Construction Materials
Condominiums
No. 1 for condominium
redevelopment in Japan1
Hebel™ autoclaved aerated
concrete (AAC)
No. 1 sales volume in Japan2
1 As of April 11, 2018, based on number
of reconstruction association permits
issued in accordance with Japan’s Act
on Facilitation of Reconstruction of
Condominiums, according to research by
Industrial Marketing Consultants Co., Ltd.
2 Thick panels and thin panels in total,
according to internal research.
Health Care
Health Care
Planova™ virus removal filters
Wearable defibrillator
Global No. 1
世界 No.1
Ion-exchange membranes
Global No. 1
Professional defibrillator
Global No. 1
Material
Compound Semiconductors & LSIs
Catalysts & Processes
Electronic compass
Global No. 1
Magnetic sensor
Global No. 1
Acrylonitrile
Global No. 2
Catalysis/
inorganic
synthesis
Foam insulation
Compound
semiconductors
Software
algorithms
Polymers & Processing
Synthetic rubber for
fuel-efficient tires
Global No. 1
Anti-quake/
construction
methods/
anti-fire/
durability
Bio
pharmaceuticals
Biological
information
processing
Accumulated and
acquired technologies
Polymerization/
spinning/
cellulose
Virus removal/
blood purification
Phase separation/
electrochemistry
Membranes & Separation
Chemical
process
Polymer design/
polymerization/
processing
Functional
polymer
Fibers & Textiles
Bemberg™ cupro fiber
Global No. 1
Hipore™ & Celgard™
Li-ion battery separator
Daramic™
lead-acid battery separator
Global No. 1
Global No. 1
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 management initiative focused
on raising corporate value through optimal
allocation of management resources across
the three sectors. The new initiative for the
three-year period from April 2019, “Cs+ for
Tomorrow 2021” focuses on contributing to a
sustainable society while achieving sustainable
growth of corporate value. (see p. 10 for more)
■ Fiscal 2018 net sales and
operating income
New record highs in both net sales and operating
income
Health Care
14.7%
Material
54.7%
FY2018
Net sales
¥2,170.4 billion
Homes
30.7%
Health Care
17.5%
Material
54.1%
FY2018
Operating income
¥209.6 billion
Homes
28.5%
Percentages shown exclude “Others” category and “corporate
expenses and eliminations”
19
Asahi Kasei Report 2019 Global Executive Interview
John W. Moyer
Senior Executive Officer
Asahi Kasei Corp.
Chairman/CEO
Asahi Kasei Plastics North America, Inc.
John Moyer, Senior Executive Officer of Asahi Kasei Corp. and Chairman/CEO of Asahi Kasei Plastics North America,
Inc., shares his view on the strengths of Asahi Kasei and describes group-wide initiatives in North America.
What do you see as Asahi Kasei’s strengths, and where
do you see further potential?
One of the many strengths of Asahi Kasei is how we develop
our top people; we give them the opportunity to gain respon-
sibilities in completely different areas than what they are used
to. Talented personnel will experience various jobs within the
company; for example, we have someone who worked in
R&D for construction materials for a long time, and now he’s
doing a great job as the CEO of an overseas subsidiary in a
totally different field.
Very few Western companies would do that. Asahi Kasei
has the vision to say, “Hey! This person has a lot of capability,
let's go see what they can do.”
Sometimes the top leaders are able to expand their
own boundaries. You couldn’t do that in the US, where the
job structure is like Tetris, with all the pieces fitting nicely
together. At Asahi Kasei, it’s more like an ameba, where
the boundaries and responsibilities of your job can merge
together.
For people who are top performers, I am happy to say
we offer almost unlimited potential to grow. I myself spent 24
years in manufacturing at the Dow Chemical Company before
joining Asahi Kasei Plastics as President in 2005. It was an
extraordinary opportunity for me.
That said, Asahi Kasei has even more potential to grow if
they continue to focus on the following: utilizing more of the
talent we have in women, letting younger people have more
authority to make decisions earlier in their careers, and giving
local employees at overseas sites more responsibility—
especially in Europe and Asia. I know Asahi Kasei’s
management is aware of this, and it’s changing. I’ve seen
it change a lot in my 14 years here, but we need to press
further. That would make us a better global company.
What kind of group-wide initiatives are being
implemented to generate synergies across Asahi Kasei
operations in North America?
We’ve grown to about 7,000 employees and about $2
billion revenue in North America, so now we have a critical
mass. This growth is mostly from M&A and the growth of the
companies Asahi Kasei purchased. For example, ZOLL which
has tripled in size since Asahi Kasei purchased it.
20
Asahi Kasei Report 2019
Asahi Kasei’s style is to let each company align with the
business unit in Japan—not by region. Each company is
independent in North America so creating synergy among
us is a big challenge. We, however, see great advantages
in working together as a team under the Group, to integrate
various functions, learn each other’s excellent know-how,
and so on.
Those initiatives have been bearing fruit in such areas
as human resources, finance, insurance, IT systems,
procurement, and logistics. We are now setting up teams
for Maintenance and EHS (Environment, Health, and Safety).
These synergies are voluntary, but I think we have shown a
lot of value. These days we are also doing more and more
to build positive growth, such as marketing activity in the
automotive field combining Sage, Celgard, Daramic, Asahi
Kasei Plastics North America, Crystal IS, and even some
venture companies from CVC (Corporate Venture Capital).
We also want to give people the chance to gain experi-
ence by moving around different Asahi Kasei companies in
North America.
All of these initiatives are only possible through a network
of leaders who know one another and understand the
different businesses. This year, we had a gathering with
President Kobori and North American leaders in a larger,
more diverse group than ever. We had a total of 95 people
gather for a 1 ½ day summit from 14 different Asahi Kasei
North American companies and executives coming from
Japan. Each company made a presentation on its strategies,
goals and challenges. We also had group discussions on
several business themes. The meeting really helped to
develop relationships that will drive further synergies as Team
Asahi Kasei.
Team AK Meeting held in the US
What is your view of Asahi Kasei’s management as
an Executive Officer of the company and CEO of a US
subsidiary?
Asahi Kasei takes a long-term perspective when it makes
business decisions, which is a very good thing. When you
make a decision, there are several discussions along with
detailed examinations. It may take time, but when it comes to
implementation, it goes fast because everybody understands
its purpose and value. However, it sometimes seems to me
that simpler decisions which could be made faster end up
following the same process, too.
In the US, we deliberate on complicated issues but overall
we make a decision faster than a traditional Japanese com-
pany. Sometimes the downside is when we move fast and
the rest of the people in the company do not understand it
nor are ready to change, so implementation can take longer.
If we could design “hybrid” business culture in Asahi
Kasei that takes the positive attributes of both Japanese and
Western business styles, this would give us a great advan-
tage. If some decisions could be pushed down to a lower
level, you would be able to make simple decisions faster. It is
not easy to make a good balance, but I believe we can find
a way by understanding positive and negative sides of both
styles and applying them according to the situation.
I’ve seen Asahi Kasei change tremendously compared to
14 years ago when I joined. We are much more focused on
growth and aggressively advancing strategies through large
M&A and capital expenditure. The company is aware of the
need to further open up to different cultures and diversify its
leadership. I look forward to seeing this happen.
21
Asahi Kasei Report 2019
Financial and Non-Financial Highlights
■ Financial ■ Non-Financial
Net sales (domestic & overseas), operating income,
operating margin
Total assets, book value of goodwill
Domestic sales
Overseas sales
(¥ billion)
3,000
Total assets
Book value of goodwill
Operating
income
(¥ billion)
300
Operating
margin
(%)
25
2,211.7
2,254.5
2,307.2
2,575.2
1,986.4
1,940.9
1,883.0
2,042.2
2,170.4
198.5
209.6
240
20
2,000
2,014.5
157.9
165.2
159.2
180
15
8.0
8.5
8.5
9.7
9.7
120
10
1,000
60
5
153.8
305.1
285.6
252.7
319.9
2014
2015
2017
2016
The highest ever net sales and operating income were recorded
in fiscal 2018, with operating income growth mainly in the Material
sector. The operating margin is gradually increasing. Overseas sales
reached approximately 40% of total net sales in fiscal 2018 with
expansion of overseas business, including through M&A.
2018
0
(FY)
0
0
2014
2015
2016
2017
2018
(FY)
Both total assets and the book value of goodwill are increasing with
large-scale acquisitions such as Polypore International, LP in fiscal
2015 and Sage Automotive Interiors, Inc. in fiscal 2018.
EBITDA*, depreciation and amortization (tangible,
intangible, and goodwill), and EBITDA margin
Interest-bearing debt, D/E ratio
EBITDA
Depreciation and amortization (tangible, intangible, and goodwill)
EBITDA margin
(%)
20
Interest-bearing debt
(¥ billion)
500
274.8
268.4
14.2
14.3
311.9
313.6
15.3
14.5
253.3
12.8
95.4
109.6
109.2
113.5
104.0
2014
2015
2016
2017
2018
(FY)
15
10
5
0
400
300
200
100
0
449.7
0.43
402.8
269.0
0.25
0.35
301.7
0.23
D/E ratio
0.50
0.40
424.9
0.31
0.30
0.20
0.10
(¥ billion)
2,500
2,000
1,500
1,000
500
0
(¥ billion)
400
300
200
100
0
2014
2015
2016
2017
2018
(FY)
0.00
* Operating income, depreciation, and amortization (tangible, intangible, and goodwill)
The amount of depreciation and amortization is increasing with
proactive capital expenditures and M&A activity. EBITDA is regarded
as a key performance indicator (KPI) signifying the generation of cash
flow. The decrease in depreciation and amortization in fiscal 2018
resulted from a change in the method of depreciation of property,
plant and equipment from the declining-balance method to the
straight-line method.
While interest-bearing debt increased in fiscal 2015 and fiscal 2018
to fund acquisitions, the D/E ratio of 0.31 at the end of fiscal 2018 is
considered to indicate a sound financial condition.
Net income attributable to owners of the parent, ROE
ROE
(%)
20
Net income attributable to owners of the parent
(¥ billion)
200
170.2
147.5
14.0
11.1
105.7
10.6
91.8
8.6
115.0
10.5
2014
2015
2016
2017
2018
(FY)
15
10
5
0
150
100
50
0
Capital expenditure, R&D expenses
(¥ billion)
150
Capital expenditure
R&D expenses
136.2
100
89.1
75.5
99.0
81.1
90.6
79.6
101.3
85.7
90.1
50
0
2014
2015
2016
2017
2018
(FY)
Although fiscal 2018 net income attributable to owners of the parent
decreased from the record-high level of fiscal 2017, this was largely
attributable to the US tax reform which temporarily reduced income
tax expenses in fiscal 2017, and the fiscal 2018 result was maintained
at a high level. Increased ROE is pursued by raising profitability.
Proactive investments are focused on growth fields in each segment,
such as capital expenditure to expand production capacity in
Material and R&D in Health Care.
22
Asahi Kasei Report 2019 Operating cash flow, investing cash flow, free cash flow
Number of women working as managers*
(¥ billion)
300
200
100
0
–100
–200
–300
Operating cash flow
Investing cash flow
Free cash flow
216.2
169.0
137.6
249.9
212.1
139.6
37.1
79.0
–69.1
–100.5
–89.9
–110.3
–285.3
13.1
–198.9
700
600
500
400
300
200
100
0
2014
2016
2015
2018
Net cash flow provided by operating activities decreased in fiscal
2018 with higher income taxes paid and an increase in operating
funds accompanying strong business performance. Net cash flow
used in investing activities increased with greater capital expenditure
and the acquisition of Sage Automotive Interiors, Inc.
2017
(FY)
Environmental and safety investment*
(¥ billion)
10
Environmental investment
Safety investment
9.52
7.88
5.20
2.78
2.42
2.63
6.28
6.71
5.38
5.25
3.30
3.35
2.03
2.98
2.81
2014
2015
2016
2017
2018
(FY)
Responsible Care program (see page 41).
Management resources are proactively invested for the global envi-
ronment, operational safety, workplace safety, hygiene, and health as
preeminent management tasks.
Greenhouse gas (GHG) emissions/net sales*
(Index)
100
96
92
85
77
72
8
6
4
2
0
80
60
40
20
0
500
534
454
622
575
2015/6
2016/6
2017/6
2018/6
2019/6
* 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., and Asahi Kasei E-materials Corp. included in FY2015).
A workplace environment that allows people from diverse backgrounds to
work positively and energetically is considered to be essential for sustainable
business growth. For this purpose, various measures are advanced to nurture
and promote female personnel to positions of organizational management.
Employees using parental leave*
700
600
500
400
300
200
100
0
Women
Men
457
231
556
582
582
631
316
316
346
392
226
240
266
236
239
2014
2015
2016
2017
2018
(FY)
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 FY2014 and FY2015).
Parental leave is made available through the fiscal year in which the
child turns three years old. Over 40% of the qualified male employees
have taken parental leave for four consecutive years since fiscal 2015.
Employment of persons with disabilities*
Asahi Kasei Ability Corp.
Other than Asahi Kasei Ability Corp.
600
500
489
511
400
179
2.06
190
211
2.06
Rate of employment
Legal minimum
548
560
574
2.21
224
2.24
195
2.23
(%)
2.30
2.20
2.10
2.00
1.90
1.80
0.00
2014
2015
2016
2017
2018
(FY)
300
200
100
0
310
321
337
335
379
2014
2015
2016
2017
2018
(FY)
* Indexed to GHG emissions from production processes (tons-CO2 equivalent)/
net sales (¥ billion) in FY2013 as 100. Data for Asahi Kasei Group companies in
Japan and overseas performing the Responsible Care program (see page 41).
Under the new medium-term management initiative, Asahi Kasei is
targeting a 35% decrease in the index of GHG emissions/net sales
from the fiscal 2013 level. Various efforts to further reduce emissions
are being applied to achieve this target.
* Average for applicable Group companies in each fiscal year.
Asahi Kasei Ability Corp. was established as a special subsidiary for
the employment of persons with disabilities. Recruitment activities
also continue to increase the employment of persons with disabilities
at Group companies other than Asahi Kasei Ability.
23
* Data for Asahi Kasei Group companies in Japan and overseas performing the
* Results for personnel employed by Asahi Kasei Corp., Asahi Kasei
Asahi Kasei Report 2019 Interview with the CFO
Leveraging our strengths of “diversity”
and “capability to change” we are
investing for growth to raise corporate
value and increase dividends.
Yutaka Shibata
Director, Vice-Presidential Executive Officer
■ Asahi Kasei Group’s source of growth
The Asahi Kasei Group has grown through dynamic
expansion into peripheral businesses and creation of new
businesses by identifying business opportunities presented
by changes in society’s issues and market needs. We will
celebrate our centenary in 2022, and throughout our history
we have continuously shifted financial and human resources
from mature markets and businesses to markets with new
needs. This proactive shifting of resources is the source of
the Asahi Kasei Group’s sustainable growth. When entering
a new field, we don’t only look at the market scale and rate
of growth. We analyze the market and the competition to
find our own unique ability to provide added value, focusing
on fields where we can succeed. By repeating this process,
we have continuously grown as a company having a unique
portfolio of high value-added businesses. Our people and
management know-how to effect such change, and the
distinctive diversity of our operations, are the strengths that
support our growth and the fount of our value.
■ Financial strategy for sustainable growth
During the 3-year period of our previous management
initiative, we adopted decisions on a total of some ¥670
billion in long-term investments, mainly to expand competitive
businesses and to enter new growth markets. Notable
investments were to expand capacity for lithium-ion battery
separators and to perform a large-scale acquisition of Sage
Automotive Interiors of the US. This acquisition will enhance
our ability to capture growth opportunities from the transfor-
mation of automotive markets referred to as CASE*.
In our new management initiative “Cs+ for Tomorrow
Framework for capital allocation (FY2019–FY2021 3-year period)
Pursuing returns above cost of capital
Financing for growth
(while maintaining financial discipline)
Capital expenditure
Borrowing capacity
3-year total
≈¥800 billion
(Decision-adopted basis, including M&A)
D/E ratio around 0.5
Increase in interest-bearing debt
¥200 to ¥400 billion
Shareholder returns
Grow dividends per share
as earnings expand
Payout ratio around 30 to 40%
Share buybacks performed flexibly
according to circumstances
Operating cash flow
3-year total
¥600 to ¥700 billion
24
Asahi Kasei Report 2019
2021” we will continue to proactively invest in selected fields.
Many of our businesses continue to be eager to invest,
and we will continue to study M&A opportunities for further
growth. Although uncertainty in the global economic outlook
due to US-China trade friction and the slowdown in Chinese
economic growth pose investment risks, we still see many
growth opportunities in our targeted markets and fields. We
must continue to invest in order to securely capture these
growth opportunities.
My responsibility as CFO is to ensure that our financial
structure enables such long-term investments to support the
Asahi Kasei Group’s sustainable growth. While reinforcing
competitive businesses to increase our cash flow, we seek
optimum allocation of resources. We expect operating
cash flow over the 3-year period of the new management
initiative to total ¥600 to ¥700 billion, providing resources to
invest for growth. In addition, by borrowing within a range
that maintains our healthy balance sheet, we are positioned
to make some ¥800 billion of long-term investments over
the 3-year period, including M&A. We strictly evaluate each
potential investment in terms of ROIC and other measures,
while judging whether they contribute to sustainable growth.
We also adopted a new target for EBITDA. Asahi Kasei
follows Japanese accounting standards, so goodwill from
acquisitions is amortized. Because we plan to continue to
use M&A as a means of further growth, the EBITDA target
was adopted to enable appropriate evaluation of our perfor-
mance unaffected by amortization of goodwill.
* Connected, Autonomous, Shared, Electric
■ Policy for shareholder returns
Our results in fiscal 2018 exceeded our May 2018 forecast,
and considering the state of our cash flow we decided to
perform our first share buyback in 17 years. Our total return
ratio in fiscal 2018 was 39%, above the 35% targeted in the
previous initiative.
For shareholder returns we will mainly focus on dividends,
with our policy of aiming for stable dividends and continuous
dividend increases unchanged. We will continue to consider
share buybacks based on the state of our financial perfor-
mance and cash flow. We intend to further enhance share-
holder returns by achieving sustainable business growth,
increased earnings, and continuous dividend increases.
Dividends per share and payout ratio
Dividends per share
(¥)
40
30
25.1
20
19
34
34
27.9
30.4
20
29.1
24
Payout ratio
(%)
40
32.2
10
0
2014
2015
2016
2017
2018
(FY)
Primary financial metrics
EBITDA1 (¥ billion)
Net cash provided by operating activities (¥ billion)
Net cash used in investing activities (¥ billion)
Free cash flows (¥ billion)
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)2
D/E ratio
FY2014
253.3
137.6
(100.5)
37.1
¥75.62
5.4%
10.6%
5.3%
1.01
2.0
8.3%
0.25
1 Operating income, depreciation, and amortization (tangible, intangible, and goodwill)
2 (Operating income − income taxes) / average annual invested capital
FY2015
274.8
216.2
(285.3)
(69.1)
¥65.69
4.3%
8.6%
4.7%
0.92
2.0
7.9%
0.43
FY2016
FY2017
FY2018
268.4
169.0
(89.9)
79.0
¥82.34
5.1%
10.5%
6.1%
0.84
2.0
7.8%
0.35
311.9
249.9
(110.3)
139.6
313.6
212.1
(198.9)
13.1
¥121.93
¥105.66
7.5%
14.0%
8.3%
0.90
1.9
9.7%
0.23
6.0%
11.1%
6.8%
0.89
1.8
8.8%
0.31
30
20
10
0
25
Asahi Kasei Report 2019
Operating Segments
Material
With basic chemicals as feedstock for resins, etc., unique fiber materials,
environmentally friendly performance materials, consumables such as Saran
Wrap™ cling film, 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
Operating income composition
Net sales & operating income
54.7%
54.1%
Net sales
(¥ billion)
1,200
1,176.2
1,197.0
Operating income
(¥ billion)
150
129.6
121.0
Fiscal 2018
Not including “Others” category and
corporate expenses and eliminations.
Highlights
900
600
300
0
100
50
2018
2019 (forecast)
0
(FY)
Acquisition of Sage Automotive Interiors
In September 2018, we acquired Sage Automotive
Interiors, Inc., South Carolina–based manufacturer
of automotive interior material, for a cash transac-
tion price of approximately $700 million1. Various
innovations such as CASE2 are emerging in the
automotive industry. We will expand our business
in the field of mobility leveraging Sage’s brand and
ability to provide proposals to vehicle manufacturers
and parts suppliers.
Sage has been supplying car interior material
made with Asahi Kasei’s Lamous™ artificial suede
1 Total acquisition price of $1.06 billion including Sage’s net interest-bearing debt.
2 Connected, Autonomous, Shared, and Electric
Recent major investments for growth in the Material segment
(decisions adopted FY2017–2018)
Fiscal
2017
Capacity expansion for S-SBR (solution-polymerized styrene-butadiene rubber)
for fuel-efficient tires in Singapore
New plant to manufacture plastic compounds in China
Capacity expansion for Lamous™ artificial suede in Japan
Capacity expansion for Leona™ nylon 66 filament in Japan
Capacity expansion for Hipore™ LIB separator in Japan
Capacity expansion for Celgard™ LIB separator in the US
Acquisition of Senseair AB, Swedish manufacturer of gas sensor modules
Fiscal
2018
Acquisition of Sage Automotive Interiors, Inc.,
US manufacturer of automotive interior material
Capacity expansion for spunbond nonwovens in Thailand
Capacity expansion for Hipore™ LIB separator in Japan
Capacity expansion for Celgard™ LIB separator in the US
Hiroshi Yoshida
Executive Officer for
Material business sector
Director, Vice-Presidential
Executive Officer, Asahi Kasei Corp.
Main products
■ Acrylonitrile (AN)
■ Styrene
■ Polyethylene (PE)
■ Bemberg™ cupro fiber
■ Roica™ premium stretch fiber
■ Spunbond nonwovens
■ Bemliese™ continuous-filament
cellulose nonwoven
■ Lamous™ artificial suede
■ Leona™ nylon 66 filament
■ Engineering plastics
■ Synthetic rubber
■ Saran Wrap™ cling film
■ Ceolus™ microcrystalline
cellulose
■ Microza™ hollow-fiber filtration
membranes
■ Ion-exchange membranes
■ Sunfort™ photosensitive dry film
■ Hipore™ and Celgard™ Li-ion
battery separators
■ Daramic™ lead-acid battery
separator
■ Mixed-signal LSIs
■ Hall elements
26
Asahi Kasei Report 2019
Homes
We set the stage for a rich and fulfilling lifestyle with our homes business that
provides high-quality products and services for Long Life Homes which earn
high customer satisfaction that lasts for more than half a century, and with
our construction materials business that provides innovative and original high
value-added products and services.
Sales composition
Operating income composition
Net sales & operating income
30.7%
28.5%
Net sales
(¥ billion)
800
Operating income
(¥ billion)
100
Fumitoshi Kawabata
Executive Officer for Homes
business sector
Director, Primary Executive Officer,
Asahi Kasei Corp.
President & Representative Director,
Asahi Kasei Homes Corp.
Director, Asahi Kasei Construction
Materials Corp.
Fiscal 2018
Not including “Others” category and
corporate expenses and eliminations.
Highlights
659.8
68.2
727.0
72.5
75
50
25
2018
2019 (forecast)
0
(FY)
600
400
200
0
Main products
Net sales & operating income breakdown
■ Hebel Haus™ unit homes
Net sales
Operating income
■ Hebel Maison™ apartment
buildings
■ Atlas™ condominiums
■ Hebel Maison™ apartment
rental network
■ Remodeling
■ Hebel™ AAC panels
■ Neoma Foam™ and Neoma
Zeus™ phenolic foam
insulation panels
■ Foundation systems
■ Structural systems and
components
(¥ billion)
800
600
400
200
0
Order-built homes
Other housing-related, etc.
Real estate
Construction Materials
Remodeling
2014
2015
2016
2017
2018
(FY)
(¥ billion)
80
60
40
20
0
Order-built homes
Other housing-related, etc.
Real estate
Construction Materials
Remodeling
2014
2015
2016
2017
2018
(FY)
Hebel Village™ apartments for seniors
Our homes business is focusing on homes for seniors as a new area of growth. Hebel
Village™ apartments for seniors are designed for residents who are self-dependent whether
healthy or frail. The apartments feature various senior-friendly services such as regular visits
by social workers, health monitoring, on-call health services, and cooperative arrangements
with nearby medical facilities.
Hebel Village™ orders received
100
80
60
40
20
0
100
buildings
(1,200 units)
46
buildings
(600 units)
37
buildings
(458 units)
27
buildings
(412 units)
12
buildings
(141 units)
7
buildings
(79 units)
2015
2016
2017
2018
2019
target
2025
target
(FY)
Cumulative orders received as of March 31, 2019
27
Asahi Kasei Report 2019 Operating Segments
Health Care
Shuichi Sakamoto
Executive Officer for Health Care
business sector (joint)
Director, Primary Executive Officer,
Asahi Kasei Corp.
Chairman & Director,
Asahi Kasei Pharma Corp.
Chairman & Director,
Asahi Kasei Medical Co., Ltd.
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
biopharmaceuticals and other new drugs. Our products in the field of acute
critical care including AEDs, defibrillators for professional use, and intravascu-
lar temperature management systems help to save people’s lives.
Sales composition
Operating income composition
Net sales & operating income
14.7%
17.5%
Net sales
(¥ billion)
400
Operating income
(¥ billion)
60
300
200
100
0
316.2
327.0
41.8
41.5
40
20
2018
2019 (forecast)
0
(FY)
Fiscal 2018
Not including “Others” category and
corporate expenses and eliminations.
Highlights
Richard A. 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
■ Kevzara™ rheumatoid arthritis
drug
■ APS™ polysulfone-membrane
dialyzers
■ Therapeutic apheresis devices
■ Planova™ virus removal filters
Kevzara™ subcutaneous autoinjector for treatment of rheumatoid arthritis
New subcutaneous autoinjector formulations of
Kevzara™ [generic name: sarilumab (rDNA origin)]
were launched in December 2018, in addition to
the conventional syringe formulation launched in
February 2018. Featuring an easy-to-handle ergo-
nomic shape, the new 150 mg and 200 mg subcu-
taneous autoinjector formulations of Kevzara™ were
developed based on user-centered design for form
and function to meet the needs of rheumatoid arthritis patients. Kevzara™ is indicated for
rheumatoid arthritis not responding well to conventional treatments. Both the conventional
syringe and the new autoinjector formulations of Kevzara™ are subject to a guidance and
management fee for self-injection at home.
Growth of acute critical care business
Our acute critical care business is operated by ZOLL Medical Corporation, which we
acquired in 2012. It continues to achieve remarkable growth with revenue increasing by an
average annual rate of 15% from fiscal 2008 to 2018.
ZOLL revenue growth
(million US$)
2,000
■ Defibrillators for professional use
■ LifeVest™ wearable defibrillator
1,500
Acquisition by Asahi Kasei
■ AED Plus™ automated external
defibrillator
■ Thermogard System™
temperature management system
1,000
500
0
28
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
(FY)
Asahi Kasei Report 2019
R&D
Shigeki Takayama
Representative Director
Vice-Presidential Executive Officer
Executive Officer for Technology Functions
Our R&D Efforts
We are creating new businesses and advancing business activities by leveraging various core technologies,
enhanced marketing functions, and both internal and external connections while utilizing digital technologies.
from a short-term perspective. Consider our development of
the alkaline water electrolysis system for hydrogen produc-
tion. We are still in the technology demonstration stage, and
commercialization will take more time considering the cost
aspects. But we have high expectations for this business
because of the appeal of hydrogen energy, its future poten-
tial, and ecological performance.
In the case of moving into white space through M&A, the
business platform of the acquired company, as well as its
technology, is a vital consideration. The acquired business
platform would form the core for launching a new business,
so strict criteria are applied to M&A in a white space. If the
targeted company’s business platform is below our expected
level, we wait until the company develops its platform
sufficiently before conducting M&A.
There are always various difficulties when entering a
new field, but we understand that it’s necessary to take
challenges when tackling issues for the world.
■ Our R&D objectives
“Creating for Tomorrow” is the commitment of the Asahi
Kasei Group. R&D plays a key role in meeting unsolved global
needs. Innovation would be stifled if we just carry on with
the conventional ways. We are working to take maximum
advantage of the diversity of our operations while building
connections as we further hone our core technologies.
Our R&D is not only to create new businesses, but also
to heighten the earnings, advance the development, and
strengthen the foundations of established businesses.
■ Concept of new business creation
In the past, there was reluctance to launch a business in
so-called “white space” because of the absence of any
direct link to existing businesses. Today, however, as the
boundaries between businesses are in flux, it is essential to
commercialize white space. We have two criteria for discern-
ing what white space to target. One is consistency with the
Asahi Kasei Group Mission. The other is certainty of future
growth. Evaluating these two criteria requires comprehensive
judgement including objective assessment of business
conditions, attributes needed for human resources, and the
surrounding environment. This judgement cannot be made
29
Asahi Kasei Report 2019
R&D
■ Notable R&D efforts
Developing materials for cells and batteries
We are the world’s leading manufacturer, developer, and supplier of separators for lithium-ion batteries (LIB) and lead-acid
batteries, and Asahi Kasei Honorary Fellow Dr. Akira Yoshino is the inventor of the LIB. Leveraging our know-how and core
technologies, we continue to develop various materials for cells and batteries.
Technology strategy for automotive cells and batteries
(Wh/kg) 103
)
i
e
g
n
a
r
g
n
v
i
r
d
r
e
g
n
o
l
(
y
t
i
s
n
e
d
y
g
r
e
n
E
102
10
0
10
Fuel cell
High-strength dry-process
LIB separator
Improved safety
LIB
(for EV)
LIB with
cutting-edge
electrolyte
Solid-
state
battery
Materials
Achieving solid-state LIB
(rapid charging, high-temperature durability, and downsizing)
Revolutionary EV-LIB with cutting-edge electrolyte
(driving range, charging time, low-temperature performance)
Possibility of replacing 12V lead-acid batteries
Lead-acid battery
Separator for ISS
NiMH
(for HEV)
Substitution
Innovative
LIC
High-output cell to revolutionize HV/PHV
(high efficiency, LIB substitute)
Longer service life,
reduced lead requirement
LIC
Electric double-layer
capacitor (EDLC)
Capacitors
Cell
104
103
102
Power density (quick charge, high power, efficiency)
105
(W/kg)
Red underline indicates
development by Asahi Kasei
Development of separators for lead-acid batteries
used with ISS
We are the world’s No. 1 supplier of separators for lead-acid
batteries, and currently we have next-generation separators
for lead-acid batteries used with idling stop systems (ISS),
which require frequent charging and discharging that tends
to degrade the electrolyte. In order to increase battery life and
to decrease the amount of lead required, we developed new
separator rib configurations and coating techniques.
Development of high-strength dry-process LIB
separators
Although dry-process LIB separators have some advantages
over wet-process LIB separators, their low mechanical
strength needs to be raised to obtain higher performance for
automotive LIBs.
Development of cutting-edge electrolytes
With better ion conductivity and durability of the LIB elec-
trolyte, we aim to increase driving range, shorten charging
time, and improve low-temperature performance. Selecting
the best additives is a key factor, and by leveraging materials
informatics (MI) we hope LIBs can replace lead-acid batteries
over the long term.
30
Development of cutting-edge materials for
solid-state batteries
We are developing solid electrolyte material to enable rapid
charging, high-temperature durability, and downsizing of
solid-state LIBs. By using a thin film of solid electrolyte sup-
ported on a carrier, we aim to achieve high battery capacity.
Development of innovative lithium ion capacitors
The lithium ion capacitor (LIC) features better cycle life and
power output characteristics than the LIB. We are developing
pre-doping technology to intercalate lithium ions in the anode
material in advance for lower cost. While working to raise LIC
performance, we are studying various applications that can
make the most of the LIC.
When developing these materials, we also need to have cell
assembly and evaluation technology. We believe it is import-
ant to actually assemble cells and evaluate their performance
in addition to evaluating materials, in order to deepen our
understanding of our clients’ needs and their final products.
Asahi Kasei Report 2019
Utilizing materials informatics (MI)
Developing resin compounds
Developing resins with various characteristics that meet clients’ needs
Resin compounds
Applications
Molding/
processing
· Polyamide
· Polyacetal
· Polyolefin
· Polyphenylene
ether
· Polystyrene
etc.
· Home electronics
· Office equipment
· Automotive
components
· Daily goods
· Packaging
material
etc.
Polymer + other polymer + glass fiber
+ flame retardant + other additives
Processing
Demand characteristics: market needs
Impact strength, flame retardancy,
stiffness, flowability,
dimensional precision, etc.
Adjusting composition to add functions and obtain required properties
Accelerating product development
MI is utilized to formulate compounds of engineering resins,
which are used in various fields such as automotive parts,
household electrical appliances, and office equipment.
Thus, our clients have diverse needs for properties such
as impact strength, flame retardancy, and stiffness. To
meet their needs, we compound glass fibers and flame
retardants into engineering polymers to obtain the needed
performance characteristics. In the past, we relied on the
skill of experienced engineers to find the best composition.
Currently with the help of MI, the best composition can be
found more quickly and with lower cost. Development time
can be shortened to one-third of the previously required time.
MI also enables us to share in-house know-how and skills,
preserving technology for the next generation. We also use
MI in the development of catalysts for petrochemicals, which
has shortened development times by 80–90%. Currently we
are applying MI to R&D projects for new businesses such as
battery materials.
Prompt response to various clients’ needs
In the mobility field, clients’ needs are changing dramatically
with the emergence of trends such as CASE (connected,
autonomous, shared, electric) and MaaS (Mobility as a
Service). Even more dynamic and complex changes are
expected as service providers and IT companies enter the
field of mobility in addition to automobile manufacturers. In
order to swiftly meet changing needs in these circumstances,
product development utilizing MI is essential. We have begun
using MI tools in sales departments as well as R&D to enable
quick and precise grade proposals on the spot by leveraging
our accumulated information on clients’ needs.
MI originates from informatics, which has the potential
to transform industrial structures and create completely new
businesses by breaking down barriers between different fields
and facilitating collaboration among them. Informatics can also
be effective for the creation and nurturing of a new business,
for example when scaling up the business of a small-sized
venture company which is acquired. While we currently focus
on strengthening our existing businesses, we are also looking
for ways to leverage informatics in new businesses, and have
begun discussions with Asahi Kasei Homes regarding a data
business with the house as a platform.
31
Asahi Kasei Report 2019 Corporate Governance
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.
Corporate Governance Configuration
Shareholders Meeting
Key points
• 1/3 of Directors are independent
• 1 female Director
• Directors have diverse backgrounds
• 3/5 of Corporate Auditors are independent
• Corporate Auditors Office to support
Corporate Auditors
• Internal Audit Department reports to both the
President and the Board of Directors
Audit
Election
Oversight
Election
Board of Corporate Auditors
(5 Corporate Auditors, including
3 Independent Outside Corporate Auditors)
Audit
Board of Directors
(9 Directors, including
3 Independent Outside Directors)
Cooperation
Independent Auditors
Nomination Advisory Committee
Remuneration Advisory Committee
Execution of
operations
Audit
Cooperation
Cooperation
Management Council
Report
President
Internal Audit Department
Incentives for Directors (fiscal 2018)
Fixed base remuneration
50%
Performance-linked
remuneration
39%
Stock-based
remuneration
11%
(percentages shown for Directors who have executive responsibilities)
• Performance-linked remuneration
➝ commitment to results
• Stock-based remuneration
➝ perspective of shareholders
(Outside Directors receive fixed base remuneration only)
Meetings of Board of Directors, Advisory Committees, and Board of Corporate Auditors (fiscal 2018)
No. of
meetings held
Average attendance
Main subjects of agenda
Board of Directors
15
Nomination Advisory
Committee*
Remuneration
Advisory Committee*
Board of
Corporate Auditors
3
2
17
98.6%
(Directors and
Corporate Auditors)
100%
(all members)
100%
(all members)
• Business investment
• Medium-term management initiative
• Risk management and compliance
• Optimum composition and size of Board of Directors
• Policy for nomination of candidates to be Directors and
Corporate Auditors
• Standards for judging independence of Outside Directors and
Corporate Auditors
• Policy and system for remuneration of Directors
• Studying remuneration of Directors based on individual
performance evaluation
97.7%
(Corporate Auditors)
• Auditing state of performance of Directors’ duties
• Auditing state of operations and financial affairs
• Evaluation of Independent Auditors
* Beginning in June 2019, the Nomination Advisory Committee and Remuneration Advisory Committee are comprised of the 3 Outside Directors and Representative
Directors Hideki Kobori and Shigeki Takayama as members, with the Nomination Advisory Committee chaired by Hideki Kobori and the Remuneration Advisory
Committee chaired by Outside Director Tsuyoshi Okamoto.
32
Asahi Kasei Report 2019 Composition of Board of Directors (beginning in June 2019)
Hideki Kobori
Presidential Executive Officer
Hiroshi Yoshida
Vice-Presidential Executive Officer
Fumitoshi Kawabata
Primary Executive Officer
Shuichi Sakamoto
Primary Executive Officer
Overall management
Material business sector
Homes business sector
Health Care business sector
Masumi Shiraishi
Outside Director
Economics and society
Shigeki Takayama
Vice-Presidential Executive Officer
Technology functions
Yutaka Shibata
Vice-Presidential Executive Officer
Business management functions
Tsuyoshi Okamoto
Outside Director
Corporate management
Tsuneyoshi Tatsuoka
Outside Director
Industrial and economic policy
The 6 Directors within the company respectively have responsibility for overall management, technology functions, business
management functions, and the Material, Homes, and Health Care business sectors, while the 3 Outside Directors have a
diverse range of backgrounds.
Evaluation of Effectiveness of Board of Directors
The effectiveness of our Board of Directors is regularly evaluated after each fiscal year, and results of evaluation are disclosed.
Measures implemented in fiscal 2018
Moving forward
The Board of Directors implemented the following measures in
Based on deliberations of the effectiveness of the Board of Directors
fiscal 2018 based on evaluation of the previous fiscal year.
during fiscal 2018, we will continue and expand the aforementioned
1. Enhanced provision of information to Outside Directors and
Outside Corporate Auditors
2. Sharing information on IR activities and opinions of investors
3. Preparations for the new medium-term management initiative
efforts in the future. Further, for enriched deliberation by the Board
of Directors, we will work to further improve the operation of Board
of Directors meetings by reviewing standards for agenda items,
improving the format of materials, and securing ample deliberation
time. In addition, we will continue to study the further enrichment of
the effective operation of the Nomination and Remuneration Advisory
Committees, and the optimum size and composition of the Board of
Directors, on an ongoing basis.
33
Asahi Kasei Report 2019 Directors
1. President &
Representative Director
Presidential Executive
Officer
1978 Joined Asahi Kasei
2008 Asahi Kasei Microdevices Director,
Senior Executive Officer
2009 Asahi Kasei Microdevices Director,
Primary Executive Officer
Hideki Kobori
2. Representative Director
Vice-Presidential
Executive Officer
Shigeki Takayama
2010 Asahi Kasei Microdevices President & Representative
Director, Presidential Executive Officer
2012 Asahi Kasei Senior Executive Officer, Director*
2014 Asahi Kasei Representative Director*,
Primary Executive Officer
2016 Asahi Kasei President and Director*,
Presidential Executive Officer*
1980 Joined Asahi Kasei
2009 Asahi Kasei E-materials Executive Officer
2010 Asahi Kasei E-materials Director
2012 Asahi Kasei E-materials Senior Executive Officer
2013 Asahi Kasei E-materials President & Representative
Director, Presidential Executive Officer
2015 Polypore International President & CEO
2016 Asahi Kasei Senior Executive Officer,
President of Separators SBU
2018 Asahi Kasei Primary Executive Officer
2019 Asahi Kasei Vice-Presidential Executive Officer*,
Director*, Representative Director*
3. Director
Vice-Presidential
Executive Officer
Yutaka Shibata
4. Director
Vice-Presidential
Executive Officer
Hiroshi Yoshida
1979 Joined Asahi Kasei
2008 Asahi Kasei Executive Officer
2009 Asahi Kasei Lead Executive Officer
2011 Asahi Kasei Kuraray Medical President & Representative
Director, Presidential Executive Officer
Asahi Kasei Medical President & Representative Director,
Presidential Executive Officer
Asahi Kasei Pharma Director
2016 Asahi Kasei Primary Executive Officer
2017 Asahi Kasei Pharma President & Representative Director,
Presidential Executive Officer
Asahi Kasei Medical Director
2018 Asahi Kasei Director*
2019 Asahi Kasei Vice-Presidential Executive Officer*
1979 Joined Asahi Kasei
2012 Asahi Kasei Chemicals Executive Officer
2014 Asahi Kasei Chemicals Director, Senior Executive Officer
2016 Asahi Kasei Lead Executive Officer,
President of Performance Polymers SBU
2017 Asahi Kasei Senior Executive Officer
2018 Asahi Kasei Primary Executive Officer
2019 Asahi Kasei Vice-Presidential Executive Officer*,
Director*
34
Asahi Kasei Report 2019
5. Director
Primary Executive
Officer
Shuichi Sakamoto
6. Director
Primary Executive
Officer
Fumitoshi Kawabata
7. Outside Director
Masumi Shiraishi
* Position held at present.
1981 Joined Asahi Kasei
2011 Asahi Kasei Chemicals Executive Officer
2014 Asahi Kasei Chemicals Director, Senior Executive Officer
Asahi Kasei Lead Executive Officer,
Corporate Strategy General Manager
2016 Asahi Kasei Senior Executive Officer, Director*
2018 Asahi Kasei Pharma Director and Chairman*
Asahi Kasei Medical Director and Chairman*
2019 Asahi Kasei Primary Executive Officer*
1982 Joined Asahi Kasei
2012 Asahi Kasei Homes Executive Officer
2013 Asahi Kasei Homes Director*, Senior Executive Officer
2014 Asahi Kasei Homes Marketing Division General Manager
2016 Asahi Kasei Homes Chubu Sales Division General Manager
2017 Asahi Kasei Senior Executive Officer
Asahi Kasei Homes President & Representative Director*,
Presidential Executive Officer*
Asahi Kasei Construction Materials Director*
2019 Asahi Kasei Primary Executive Officer*, Director*
1989 Joined NLI Research Institute
2001 Head Researcher, NLI Research Institute
2002 Assistant Professor, Department of Economics,
Toyo University
2006 Professor, Department of Economics,
Toyo University
2007 Professor, Faculty of Policy Studies,
Kansai University*
2013 Asahi Kasei Director*
8. Outside Director
Tsuneyoshi Tatsuoka
1980 Joined Ministry of International Trade and Industry
2010 Councilor, Cabinet Secretariat
2011 Deputy Vice-Minister of Economy, Trade and Industry
2013 Vice-Minister of Economy, Trade and Industry
2015 Retired from Ministry of Economy, Trade and Industry
2016 Asahi Kasei Director*
9. Outside Director
Tsuyoshi Okamoto
1970 Joined Tokyo Gas Co., Ltd.
2002 Tokyo Gas Co., Ltd. Executive Officer
2004 Tokyo Gas Co., Ltd. Senior Executive Officer, Director
2007 Tokyo Gas Co., Ltd. Representative Director,
Executive Vice President
2010 Tokyo Gas Co., Ltd. Representative Director, President
2014 Tokyo Gas Co., Ltd. Director, Chairman
2018 Tokyo Gas Co., Ltd. Director, Senior Corporate Advisor
Asahi Kasei Director*
Tokyo Gas Co., Ltd. Senior Corporate Advisor*
6
3
9
4
8
1
7
2
5
35
Asahi Kasei Report 2019
Outside Director Interview
Asahi Kasei’s governance system to heighten
management effectiveness
Tsuyoshi Okamoto, Outside Director since June 2018, shares his view on the effectiveness of Asahi Kasei’s
corporate governance system.
Tsuyoshi Okamoto
Outside Director
Profile
April 1970
Joined Tokyo Gas Co., Ltd.
June 2002 Tokyo Gas Co., Ltd. Executive Officer
April 2004 Tokyo Gas Co., Ltd. Senior Executive Officer
June 2004 Tokyo Gas Co., Ltd. Director
April 2007
Tokyo Gas Co., Ltd. Representative Director,
Executive Vice President
April 2010 Tokyo Gas Co., Ltd. Representative Director, President
April 2014 Tokyo Gas Co., Ltd. Director, Chairman
April 2018 Tokyo Gas Co., Ltd. Director, Senior Corporate Advisor
June 2018 Asahi Kasei Corp. Outside Director*
June 2018 Tokyo Gas Co., Ltd. Senior Corporate Advisor*
* Position held at present
36
Responsibility as Outside Director
The most important thing expected of an Outside Director
is objectivity. At Board of Directors meetings, I objectively
evaluate the operation of the company, raise questions as
necessary, and offer my opinions. I feel that my responsibility
is to convey my thoughts based on objective assessment
of whether an appropriate overall balance is being achieved
among Asahi Kasei’s 3 sectors, and whether the objectives
of the strategic management initiative are being met.
Evaluating the corporate governance
system
I judge Asahi Kasei’s governance system to be appropriate
as a company having a Board of Corporate Auditors. I also
find the composition of the Board of Directors to be appro-
priate, including the number of Outside Directors, and I think
it is particularly outstanding that people with responsibility
for each of the 3 business sectors have been installed
as Directors. The voluntarily established Nomination and
Remuneration Advisory Committees are functioning suitably.
Asahi Kasei Report 2019 The concept of “diversity” is critical for corporate
governance. For the Board of Directors as well, it’s essential
to maintain a diversity of perspectives and opinions. To me,
that’s more important than having numerical targets for
diversity by gender, nationality, or age, for instance. Asahi
Kasei is conscious of the need for diverse perspectives in
the management team and the Board of Directors to ensure
appropriate response to changes in the external environment.
The company strives to ensure that its governance system
reflects this.
An effective Board of Directors supports
effective management
Frank and lively discussions are held at Board of Directors
meetings. The opinions and advice of Outside Directors are
given sincere consideration, and incorporated into decisions
and policy formulations. Through tours of operating sites
and detailed explanations by business managers, ample
information is provided to Outside Directors.
The agenda of the Board of Directors includes more and
more large-scale investment and acquisition proposals in
recent years. I always ask for explanations about the risks.
While there is no such thing as a risk-free business, the key is
to clearly foresee the potential risks and understand how they
can be mitigated if they materialize. The most important part
of risk management is to be able to explain how the company
will cope in the case of risks emerging.
Asahi Kasei’s strengths and potential for
growth
Asahi Kasei’s 3 business sectors are each highly autono-
mous, and there isn’t necessarily firm mutual linkage among
them. I see this as a strength. Having highly independent
businesses means that even if an individual business slips
into a low-growth phase, the company’s overall foundations
remain unshaken. This is not only a risk hedge for manage-
ment, it’s also a huge structural strength.
I also sense that the corporate philosophy is effectively
leveraged as a source of strength. With a Group Mission of
“contributing to life and living for people around the world,”
the company has set forth “Care for People, Care for Earth”
as the key message of its new medium-term initiative. This
enables employees to perform their duties with pride, in the
knowledge that their work provides value to the world.
I think this is particularly meaningful for personnel working
behind the scenes. In contrast to the front-line people in
sales or new business development, those working in fields
like accounting, maintenance, and call centers are required
to swiftly execute their tasks without garnering attention. But
the company would not function without them—they are the
unsung heroes. Awareness of the company’s mission and
strategic concepts can greatly reinforce the engagement
of such employees performing such essential but often
thankless tasks. To me, one of the most important tasks for
management is to disseminate corporate philosophy and
management concepts throughout the company’s ranks. I
have long felt that the heart and soul of a company lie in its
on-site people. It’s vital to keep them motivated.
Fostering leaders for the future
Discussions at Board of Directors meetings are always
premised on the importance of succession planning and
fostering leadership personnel. I think the best way to foster
future leaders is to let people make decisions. If the supervi-
sor says, “I’ll take the responsibility, you go ahead and make
the decision,” good results are sure to follow. At the same
time, those being groomed to be leaders must consider their
supervisor’s position. They should ask themselves, “If I were
the supervisor, what would I do in this case?”
The way of evaluating people is another key issue. In my
experience, I’ve found it best to perform evaluation based
on 4 different perspectives: The person’s supervisor, the
person’s subordinates, the human resources department,
and finally an outsider such as a lecturer or specialist enlisted
for training sessions. Having evaluation based on multiple
perspectives is the best way to ensure unbiased objectivity.
My expectations
I’ve seen that Asahi Kasei’s employees go about their work
with pride, confidence, and a sense of responsibility. They
can feel proud to work at a company with an admirable
corporate philosophy, they are confident in their ability to
accomplish their goals, and they are committed to fulfilling
their responsibilities to the end. With employees like these, I
expect that a bright future awaits for the Asahi Kasei Group.
37
Asahi Kasei Report 2019
Global Environment
With “Care for Earth” emphasized under our new management initiative, we consider contributing to improving
the global environment through our business operations as well as efforts to improve our own environmental
performance to be important tasks.
Our major focuses are on measures for climate change, preservation of biodiversity, and promotion of a
recycling-oriented society.
Overview of Environmental Measures
Regarding measures for climate change, we set a new target for reducing our own GHG emissions in fiscal
2030 which was announced together with the new initiative in May 2019.
As part of our effort to reduce the impact of our business activities on biodiversity, we launched a new
group-wide program called “Town Woods.” To contribute to the establishment of a recycling-oriented society,
we continue to reduce final disposal of industrial waste as well as to increase the rate of resource recycling.
As a chemical company, we are also working to promote the safe handling of chemical substances and
actively provide the related information.
New target for GHG emissions reduction
We adopted a new target of 35% reduction in GHG emis-
sions as a ratio of net sales by fiscal 2030 compared with
that of fiscal 2013. Our previous reduction target was based
on the amount of emissions at our major domestic Japanese
production sites, and we are on track to achieving this target.
Now, to reduce our global environmental burden, the amount
of emissions included in our reduction target has been
changed to include our overseas production sites, all consol-
idated subsidiaries, and generation of power sold to outside
companies as well as our major domestic production sites.
To meet this new goal, we are advancing the conversion of
fuel used in our thermoelectric power plants and raising the
efficiency of our hydroelectric power plants.
Climate-change effort ranked “A–” by CDP
Our effort with respect to climate change was given an
evaluation of “A–” by the CDP* for 3 consecutive years.
* 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 an 8-rank
scale of A, A–, B, B–, C, C–, D, and D–.
“Town Woods” program
Planting modules called “Town Woods Pots” are used to
enhance green spaces at Asahi Kasei Group operating sites.
This program contributes to biodiversity preservation while
deepening understanding and increasing awareness of the
value of biodiversity among personnel.
About “Town Woods Pots”
“Town Woods Pots” provide eco-friendly green spaces and
enhance their value. A combination of greenery in 4 different
heights are planted: tall, medium, short, and groundcover.
The phytosociological method is used to classify green
spaces for the selection of the most suitable combination of
plants to improve a monotonous biological environment.
“Town Woods” program targets for fiscal
2019–2021
Target 1: Installing “Town Woods Pots” at 42 operating sites
Target 2: Accumulating 1,200 Town Woods Points during the
period
Renovating hydroelectric power plants in the Nobeoka area to raise supply of
clean energy
Ever since our founding, we have supplied our business operations in the Nobeoka area
with power from hydroelectric plants on the Gokase River system in the surrounding
parts of Miyazaki and Kumamoto. We now have 9 hydroelectric power plants with a
maximum total output of 56,840 kW. As part of our management policy of “contributing
to sustainable society,” we decided to perform a large-scale renovation of the Gokase
River Hydroelectric Plant to increase the reliability of equipment for stable long-term
supply of clean energy. The work is scheduled for completion in October 2021. We are
currently studying plans to renovate our other hydroelectric plants as well.
The Gokase River Hydroelectric Plant
38
Asahi Kasei Report 2019 Society: Quality & Procurement
With “Care for People” as an important focus of our new management initiative, we prioritize contributing to
solutions to social issues through our businesses while emphasizing responsibility to our stakeholders.
CSR Procurement Effort with Suppliers
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, revised in 2011. To this end, we are
placing greater emphasis on CSR in accordance with our
Procurement Policy.
Accordingly, we consider suppliers from environmental
aspects including energy use, climate change, biodiversity,
pollution, waste management, and resource use, and social
aspects including discrimination, equal opportunity, freedom
of association, and compliance with local laws concerning
working hours, wages, health, and safety. A relationship of
mutual trust with our suppliers is fostered through fair and
transparent purchasing practices based on regulatory com-
pliance and respect for the environment and human rights.
Our purchasing departments conduct a CSR survey every
year in order to better understand our suppliers' efforts to
promote CSR, and identify any areas where improvement
may be requested.
It is a global trend that more and more countries are
banning the procurement of minerals from inhumane armed
groups, particularly in the Democratic Republic of the Congo
and neighboring countries. In the US, this is required by the
Dodd-Frank Act of 2010. The Asahi Kasei Group considers
conflict minerals to be a serious issue, and our policy is to
ensure transparency in our supply chains and to procure
minerals responsibly. We do not obtain, procure, or utilize
minerals from armed groups, and avoid supporting conflict
and inhumane activities.
Quality & Procurement
Quality Assurance
Corporate Quality Ensurance was established as an inde-
pendent organization with a Quality Ensurance Group and
Chemicals Management Group as subordinate organizations
in July 2018 in a reorganization from the prior Corporate ESH
& QA. In April 2019, an Executive Officer of Quality Assurance
was assigned while the prior Regulatory Affairs & Reliability
Assurance Dept. in Corporate Research & Development was
moved to Corporate Quality Ensurance.
The reorganization is to strengthen and maintain a higher
level of quality assurance 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 addition to its role as the central hub for the
provision and sharing of QA-related information throughout all
operations, the Quality Assurance Group holds QA Forums
with lectures by eminent professors in the field of quality
control to augment the training of QA personnel.
In fiscal 2018, 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.
Effort to maintain zero serious product
safety incidents
As part of the effort to prevent serious product safety
incidents and to secure and strengthen product safety, we
established new quality assurance bylaws that stipulate
quality assurance activities for RC Administrators of strategic
business units and core operating companies to perform.
Quality Assurance Managers of each organization, whose
central role in activities to enhance quality assurance is
defined in the bylaws, are appointed and perform their
activities accordingly.
Our product safety guidelines are applied in concert with
the bylaws by all business units of the Asahi Kasei Group to
assure the quality of products and services.
39
Asahi Kasei Report 2019
Society
Human Resources
Human Resources Development
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 October 2018, 180 Group Masters are designated,
those whose rank and remuneration are commensurate with
Senior General Manager, General Manager, and Section
Manager, respectively number 15, 62, and 103. 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 2021” 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 philosophy, intercultural commu-
nication, and management training.
Valuing Human Rights and Diversity
Basic policy
The Asahi Kasei Group strives to ensure that there will be
no discrimination and to maintain a lively workplace culture
which enables personnel to perform at their best. 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,
and we disseminate a corporate policy of not condoning
harassment in any form. In fiscal 2018 and 2019 we held
workshops across the Asahi Kasei Group focused on foster-
ing a workplace culture free of power harassment.
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 nation-
ality 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 brief-
ing sessions and student internships, as part of an ongoing
effort to attract talent. In April 2019, 471 new graduates were
hired: 373 men and 98 women. In addition, 253 persons
were hired in mid-career between April 2018 and March
2019.
Workplace Safety and Hygiene
The effort to prevent workplace accidents is integrated
in a comprehensive OHSMS* program that combines
conventional 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.
* 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.
Integration of workplace safety initiatives
Conventional safety
initiatives
Risk assessments
PDCA
management system
OHSMS
Occurrence of workplace injuries
Incidence of lost-workday
injury by event category,
FY2018 in Japan
Total 23 cases
Incidence of lost-workday
injury by event category,
FY2008–2017 in Japan
Total 130 cases
Fall on same level ......................... 44%
Kickback/overexertion .................. 18%
Contact with high temperature
substance/object.......................... 17%
Collision........................................ 13%
Caught in/between machinery ........ 4%
Hit by flying/falling object ................ 4%
Fall on same level ......................... 26%
Traffic accident ............................. 23%
Kickback/overexertion .................. 12%
Fall from height............................. 10%
Caught in/between machinery ........ 9%
Contact with high temperature
substance/object............................ 6%
Caught in something else ............... 3%
Hit by flying/falling object ................ 2%
Collision.......................................... 2%
Contact with harmful substance ..... 2%
Others ............................................ 5%
40
Asahi Kasei Report 2019
Responsible Care
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 environmental preservation, quality assurance (including product safety),
operational safety, workplace safety and hygiene, health maintenance, and community outreach.
Message from
the Executive for RC
Shigeki Takayama
Representative Director,
Vice-Presidential Executive Officer,
Asahi Kasei Corp.
Asahi Kasei started the three-year medium-term management initiative “Cs+ for Tomorrow
2021” emphasizing sustainability in FY2019. We aim to raise our corporate value by
implementing various measures to achieve our business targets as well as by contributing to
a sustainable society as indicated by the SDGs. The current 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 ensure the stable provision of
solutions that our customers can rely on while focusing on the three fundamental “actuals”
of the actual place, actual thing, and actual fact, with active connections inside and outside
the company to further heighten RC. We regard RC as a most crucial management issue,
and to raise our corporate value for our various stakeholders we work to achieve our annual
RC objectives while advancing RC activities from a broader perspective, reinforcing R&D to
provide solutions to global warming and other environmental issues.
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 encompasses operations in all fields,
including homes, health care, electronics, and construction
materials.
* JRCC: Operated as the Japan Chemical Industry Association’s RC
Committee since April 2011.
Asahi Kasei Group RC Principles
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 informa-
tion disclosure and communication to gain public understanding and trust.
Revised on April 1, 2016*
* A statement regarding quality assurance was added, and the six elements were condensed into four.
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 strategic
business unit, and within each Region and Works*.
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
environmental protection and ISO 9001 quality management
system certification for product safety. An Occupational
Health and 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 business
units. The Senor General Manager of each Region and Works is responsible for
the unified implementation of RC in the respective Region or Works.
41
Asahi Kasei Report 2019
Feature
Profiles of Employees Pursuing Sustainability
Under the new medium-term management initiative “Cs+ for Tomorrow 2021,” Asahi Kasei expresses its
commitment to sustainability as “Care for People, Care for Earth.” Here we profile three employees who are
deeply involved in various aspects of sustainability through their work.
■ Gas sensor business
Solving energy problems and eliminating drunken driving
A physics major in college, Nishida was recommended to
work for Asahi Kasei during a visit to the SPring-8 synchro-
tron radiation facility. He was attracted by the simple phrase,
“People at Asahi Kasei are so bright and cheerful.” Having
also admired Ichiro Shibasaki, a developer of Hall elements
and former Asahi Kasei Fellow, Nishida decided to join Asahi
Kasei.
After entering the company, he was engaged in product
planning for compound semiconductor devices such as
magnetic sensors and infrared sensors at Asahi Kasei
Microdevices (AKM). Nishida is currently involved in marketing
gas sensor modules made with AKM’s infrared sensors,
together with Senseair AB, a Swedish manufacturer of NDIR1
gas sensor modules acquired by AKM in 2018.
He has two targets in sight. One is CO2 sensors for air
conditioning systems and the other is automotive alcohol
detection sensors. Energy is a serious subject of concern
these days, and CO2 sensors can raise the efficiency of air
conditioning systems. When heating or cooling homes and
automobiles, efficiency is drastically improved by controlling
the intake of air from outside. By measuring the CO2
concentration of the inside air, the sensors enable optimum
ventilation to minimize the amount of energy needed to
maintain a comfortable environment.
Alcohol sensor
42
Sosuke Nishida
Solution Development Dept. 4
Marketing & Sales Center
Asahi Kasei Microdevices
Hired in 2004
The market for automotive alcohol detection may be even
bigger. Drunk driving claims thousands of lives every year in
the US alone. A public-private partnership called the DADSS2
program is evaluating Senseair’s alcohol sensor as a prom-
ising technology to prevent vehicles from being operated by
drunk drivers. Nishida is determined to make this a reality.
“Since the cost is high, we can only target high-end mod-
els in both applications for now,” notes Nishida. But what if
we could develop high value-added and low-cost products
with mass-production by combining the technology of
Senseair and AKM? That’s Nishida’s dream, and the object
of his passion. “AKM’s compound semiconductor technology
and Senseair’s gas sensor technology are the best in the
world.” His voice sounds bright and cheerful—he belongs to
Asahi Kasei now.
1 Nondispersive Infrared (NDIR) sensors use nondispersive emission to irradiate
specimen samples and measure the change of infrared intensity for a certain
wavelength.
2 Driver Alcohol Detection System for Safety
Asahi Kasei Report 2019
■ Housing business for seniors
Housing for seniors that seamlessly meets changing needs
Am I sincere to my customers? Masaki asks himself as he
recollects the sales representative when his parents rebuilt
their house. He admired the sincerity of that sales rep who
earned the trust of his parents, and decided to enter the hous-
ing industry himself. Something as consequential as a house
cannot be sold without trust. Working in sales at Asahi Kasei
Homes (AKH), Masaki strives to keep learning every day.
Currently Masaki is working to expand the rental housing
business for seniors, a strategic area of growth for AKH. As
people get older, they tend to become more frail. Many will
You Masaki
Homes for Seniors & Medium-Rise Buildings Business Division
Asahi Kasei Homes
Hired in 1995
go on to need a living environment where care services are
provided. AKH provides homes that seamlessly meet these
changing needs. While constructing more Hebel Village
apartments for frail seniors, it is launching its first Village
Riche serviced housing complex for residents requiring care.
AKH began its housing business for seniors by focusing
on healthy active seniors who do not require care. There
is currently a short supply of housing designed for active
seniors who can enjoy living at their own pace. Hebel Village
apartments for seniors are a solution to meet this social need.
As the population of Japan continues to age, the number of
active seniors is increasing. This means more good tenants
for this type of housing. While other companies focused on
apartments with care services and nursing homes, AKH
discerned an unmet need ahead of the competition. Now that
other companies have begun to imitate this successful model,
Masaki spends his days working to maintain AKH’s lead.
His dream is to establish a brand for housing that enables
people to stay healthy for longer. He constantly tries to
learn more, meeting people in the nursing care industry and
reading specialist publications. Masaki feels a deep respon-
sibility, knowing that the knowledge he gains will become the
knowledge of AKH.
October 2019 marks the launch of AKH’s first Village Riche
residential development providing care services. Over the past
few years, Masaki was busy negotiating with care service
contractors regarding the location and contract conditions. At
times it seemed that there was no hope of reaching agreement.
But he persistently explained his position, taking pains to earn
his counterparties’ trust. Masaki’s sincere attitude eventually
won them over. “If you say so, Masaki-san, we accept.” He
continues to pursue the ideal of the sales rep that inspired him.
Low
Healthy
Care dependency
Frail
High
Care needed
Hebel Haus™
unit homes
Hebel Village
apartments for seniors
Village Riche
apartments with care services provided
October 2019 launch
43
Asahi Kasei Report 2019
Profiles of Employees Pursuing Sustainability
■ Bioprocess business
Heightening biotherapeutics safety and contributing to
the dissemination of high-quality drugs
Shang learned of Asahi Kasei at graduate school in Japan.
She was studying hollow-fiber membranes, and her professor
was doing joint research with the company. Intrigued by
Asahi Kasei’s history of fiber and membrane technology, she
felt that it would allow her to apply her specialist knowledge,
and joined the company in 2004.
Her first assignment was as a technical sales represen-
tative for Microza™ hollow-fiber membranes used in water
purification and wastewater treatment. She was pleased to
be involved in the water treatment business in China, as her
work contributed to improving the environment of her mother
country.
In 2012 Shang was transferred to Asahi Kasei Medical.
Though it still involved hollow-fiber membranes, the product
was totally different. Planova™ is a virus removal filter used
during the manufacturing process of biotherapeutics such as
plasma derivatives and biopharmaceuticals. She has served
as a technical sales representative in this field since then.
Mengxian Shang, Ph.D.
Global Sales & Customer Services Dept.
Bioprocess Division
Asahi Kasei Medical
Hired in 2004, specialist of hollow-fiber membrane
44
PlanovaTM virus removal filters
For Shang, the important thing is not which field of
business to work in. She simply finds it rewarding to be
able to contribute to society by utilizing her knowledge of
cutting-edge hollow-fiber membrane technology. “Our job
is more than just supplying products.” She has thorough
discussions with customers in order to fully understand their
concerns and propose solutions. For example, when a cus-
tomer needs to conduct a virus validation test* for regulatory
approval, there can be no mistakes. To ensure a successful
test, she joins consultations with the authorities, and
organizes seminars on Planova™ technology. Shang’s huge
contribution to improving the reliability of blood products
with Planova™ in China was recognized with an Asahi Kasei
Medical President’s Award.
Planova™ still has potential for sales growth in other Asian
markets. Now Shang is working to get Planova™ adopted
by biotherapeutic manufacturers in Asia, for the provision of
safe biotherapeutics to more patients. “We’re fortunate to
have you as our contact.” Such words of appreciation from a
customer inspire Shang to keep pressing forward every day,
helping improve people’s lives around the world.
* Viruses are intentionally added in a laboratory replicating actual manufacturing
conditions, and the rate of decrease after the virus removal process is
measured.
Asahi Kasei Report 2019
Financial Section
Contents
46 Consolidated Financial Statements
46 Consolidated Balance Sheets
48 Consolidated Statements of Income
49 Consolidated Statements of Comprehensive Income
50 Consolidated Statements of Changes in Net Assets
51 Consolidated Statements of Cash Flows
52 Notes to Consolidated Financial Statements
52 1. Major policies for preparing the consolidated financial statements
52 2. Significant accounting policies
53 3. Changes in significant accounting policies
54 4. Notes to Consolidated Balance Sheets
55 5. Notes to Consolidated Statements of Income
56 6. Notes to Consolidated Statements of Comprehensive Income
57 7. Notes to Consolidated Statements of Changes in Net Assets
58 8. Notes to Consolidated Statements of Cash Flows
59 9. Leases
60 10. Financial instruments
63 11. Marketable securities and investment securities
64 12. Derivative financial instruments
67 13. Provision for retirement benefits
69 14. Taxes
69 15. Business combinations
72 16. Business segment information
75 17. Information on related parties
75 18. Per share information
76 19. Subsequent events
77 20. Borrowings
77 21. Supplementary schedule of asset retirement obligations
77 22. Others
78 Independent Auditor’s Report
45
Asahi Kasei Report 2019 Consolidated Financial Statements
Consolidated Balance Sheets
Asahi Kasei Corporation and Consolidated Subsidiaries
March 31, 2019 and 2018
ASSETS
Current assets:
Cash and deposits (Notes 8 and 10)
Notes and accounts receivable—trade (Note 4 (e))
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets:
Property, plant and equipment:
Buildings and structures (Note 4 (d))
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles (Note 4 (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:
Millions of yen
Thousands of
U.S. dollars (Note 1)
2019
2018
2019
¥ 193,893
¥ 156,318
$ 1,746,784
350,716
201,699
131,686
93,961
82,900
(3,461)
1,051,393
547,422
(294,536)
252,886
1,439,166
(1,222,201)
216,966
63,889
10,159
(9,423)
736
64,188
160,631
(137,930)
22,701
621,366
341,396
169,948
109,486
80,253
83,956
(2,411)
938,947
517,562
(285,760)
231,802
1,399,081
(1,200,504)
198,577
62,938
11,698
(10,901)
798
50,502
153,002
(135,571)
17,431
562,048
3,159,604
1,817,108
1,186,360
846,495
746,847
(31,180)
9,472,009
4,931,730
(2,653,477)
2,278,252
12,965,459
(11,010,820)
1,954,649
575,577
91,523
(84,892)
6,631
578,270
1,447,126
(1,242,613)
204,514
5,597,892
319,898
210,080
529,978
252,724
161,898
414,621
2,881,964
1,892,613
4,774,577
Investment securities (Notes 4 (a), (b), 10 and 11)
296,330
314,830
2,669,640
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.
19,993
27,508
29,052
(418)
27,793
17,775
31,406
(266)
372,465
1,523,810
391,538
1,368,207
180,117
247,820
261,730
(3,766)
3,355,541
13,728,018
¥ 2,575,203
¥ 2,307,154
$ 23,200,027
46
Asahi Kasei Report 2019 LIABILITIES AND NET ASSETS
Liabilities:
Current liabilities:
Notes and accounts payable—trade (Notes 4 (e) and 10)
Short-term loans payable (Notes 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 grant of shares
Provision for periodic repairs
Provision for product warranties
Provision for removal cost of property, plant and equipment
Other
Total current liabilities
Noncurrent liabilities:
Bonds payable (Notes 10 and 20)
Long-term loans payable (Notes 10 and 20)
Lease obligations (Notes 9, 10 and 20)
Deferred tax liabilities (Note 14)
Provision for grant of shares
Provision for periodic repairs
Provision for removal cost of property, plant and equipment
Net defined benefit liability (Note 13)
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
(2019—6,491,383 shares, 2018—6,491,617 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)
2019
2018
2019
¥ 180,429
97,579
77,000
20,000
164
113,221
24,971
75,836
82
5,342
3,102
2,251
81,877
681,853
20,000
209,878
253
48,299
289
2,929
3,018
168,685
21,143
16,145
490,639
1,172,493
¥ 171,413
118,018
20,000
—
199
105,787
29,714
70,142
28
3,185
2,730
2,425
65,505
589,146
20,000
143,176
352
36,639
172
3,263
2,699
170,634
20,658
15,198
412,793
1,001,939
$ 1,625,486
879,090
693,694
180,180
1,477
1,020,009
224,964
683,207
739
48,126
27,946
20,279
737,631
6,142,820
180,180
1,890,793
2,279
435,126
2,604
26,387
27,189
1,519,685
190,477
145,450
4,420,171
10,563,000
103,389
79,708
1,077,586
(3,936)
103,389
79,440
981,934
(3,930)
931,432
718,090
9,707,982
(35,459)
1,256,747
1,160,833
11,322,045
101,971
(40)
42,020
(19,213)
124,738
21,225
1,402,710
121,128
92
28,676
(23,343)
126,553
17,827
1,305,214
918,658
(360)
378,559
(173,090)
1,123,766
191,216
12,637,027
¥2,575,203
¥2,307,154
$23,200,027
47
Asahi Kasei Report 2019 Consolidated Statements of Income
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2019 and 2018
Net sales (Note 16)
Cost of sales (Note 5 (b))
Gross profit
Selling, general and administrative expenses (Note 5 (a))
Operating income (Note 16)
Non-operating income:
Interest income
Dividends income
Equity in earnings of affiliates
Other
Total non-operating income
Non-operating expenses:
Interest expense
Foreign exchange loss
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))
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
2019
¥2,170,403
1,481,855
688,548
478,960
209,587
2018
¥2,042,216
1,393,111
649,105
450,630
198,475
Thousands of
U.S. dollars (Note 1)
2019
$19,553,180
13,350,045
6,203,135
4,314,955
1,888,171
3,094
6,060
12,112
4,238
25,504
4,371
2,686
8,058
15,115
219,976
11,580
655
12,235
173
6,630
11,090
3,921
21,814
210,397
63,730
(3,148)
60,582
149,815
2,303
2,078
6,626
13,137
5,961
27,802
4,594
2,971
6,169
13,733
212,544
15,164
534
15,698
31
6,261
2,158
1,460
9,908
218,333
63,239
(17,095)
46,143
172,190
1,941
27,874
54,595
109,117
38,180
229,766
39,378
24,198
72,595
136,171
1,981,766
104,324
5,901
110,225
1,559
59,730
99,910
35,324
196,523
1,895,468
574,144
(28,360)
545,784
1,349,685
20,748
¥ 147,512
¥ 170,248
$ 1,328,937
48
Asahi Kasei Report 2019 Consolidated Statements of Comprehensive Income
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2019 and 2018
Net income
Other comprehensive income:
Net (decrease) increase 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
2019
¥149,815
2018
¥172,190
Thousands of
U.S. dollars (Note 1)
2019
$1,349,685
(19,058)
(132)
12,464
4,311
1,297
(1,119)
7,651
37
(12,252)
9,735
356
5,528
(171,694)
(1,189)
112,288
38,838
11,685
(10,081)
¥148,696
¥177,717
$1,339,604
¥146,339
2,357
¥175,557
2,160
$1,318,369
21,234
49
Asahi Kasei Report 2019 Consolidated Statements of Changes in Net Assets
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2019 and 2018
Shareholders’ equity
Accumulated other comprehensive income
Millions of yen
Capital
stock
¥103,389
Capital
surplus
¥79,440
Retained
earnings
(Note 7 (b))
¥ 981,934
Total
shareholders’
equity
Treasury
stock
¥(3,930) ¥1,160,833
Net
unrealized
gain on
other securities
¥121,128
Deferred
gains or
losses on
hedges
¥ 92
Foreign
currency
translation
adjustment
¥28,676
Remeasure-
ments of
defined
benefit plans
¥(23,343)
Total
accumulated
other
comprehensive
income
¥126,553
Non-
controlling
interests
¥17,827
Total
net assets
¥1,305,214
(51,674)
147,512
(187)
6
262
(40)
34
(51,674)
147,512
(40)
40
(187)
262
(51,674)
147,512
(40)
40
(187)
262
(19,157)
(132)
13,344
4,130
(1,815)
3,398
1,582
—
¥103,389
268
¥79,708
95,652
¥1,077,586
(6)
95,914
¥(3,936) ¥1,256,747
(19,157)
¥101,971
(132)
¥ (40)
13,344
¥42,020
4,130
¥(19,213)
(1,815)
¥124,738
3,398
¥21,225
97,496
¥1,402,710
Shareholders’ equity
Accumulated other comprehensive income
Millions of yen
Capital
stock
¥103,389
Capital
surplus
¥79,443
Retained
earnings
(Note 7 (b))
¥850,532
Total
shareholders’
equity
Treasury
stock
¥(3,242) ¥1,030,122
Net
unrealized
gain on
other securities
¥113,475
Deferred
gains or
losses on
hedges
¥55
Foreign
currency
translation
adjustment
¥ 40,831
Remeasure-
ments of
defined
benefit plans
¥(33,140)
Total
accumulated
other
comprehensive
income
¥121,222
Non-
controlling
interests
¥16,771
Total
net assets
¥1,168,115
(39,106)
170,248
259
1
(4)
(688)
1
(39,106)
170,248
(688)
2
259
(4)
(39,106)
170,248
(688)
2
259
(4)
7,653
37
(12,155)
9,797
5,331
1,057
6,388
—
¥103,389
(3)
¥79,440
131,402
¥981,934
(687)
130,712
¥(3,930) ¥1,160,833
7,653
¥121,128
37
¥92
(12,155)
¥ 28,676
9,797
¥(23,343)
5,331
¥126,553
1,057
¥17,827
137,100
¥1,305,214
Shareholders’ equity
Accumulated other comprehensive income
Thousands of U.S. dollars (Note 1)
Capital
stock
$931,432
Capital
surplus
$715,676
Retained
earnings
(Note 7 (b))
$8,846,252
Total
shareholders’
equity
Treasury
stock
$(35,405) $10,457,955
Net
unrealized
gain on
other securities
$1,091,243
Deferred
gains or
losses on
hedges
$ 829
Foreign
currency
translation
adjustment
$258,342
Remeasure-
ments of
defined
benefit plans
$(210,297)
Total
accumulated
other
comprehensive
income
$1,140,117
Non-
controlling
interests
$160,604 $11,758,685
Total
net assets
(465,532)
1,328,937
(1,685)
54
2,360
(360)
306
(465,532)
1,328,937
(360)
360
(1,685)
2,360
(465,532)
1,328,937
(360)
360
(1,685)
2,360
—
$931,432
2,414
$718,090
861,730
$9,707,982
(54)
864,090
$(35,459) $11,322,045
(172,586)
$ 918,658
(1,189)
$ (360)
120,216
$378,559
37,207
$(173,090)
(16,351)
$1,123,766
30,613
878,342
$191,216 $12,637,027
(172,586)
(1,189)
120,216
37,207
(16,351)
30,613
14,252
Balance at March 31, 2018
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
Net changes of items other than
shareholders’ equity
Total changes of items
during the period
Balance at March 31, 2019
Balance at March 31, 2017
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
Net changes of items other than
shareholders’ equity
Total changes of items
during the period
Balance at March 31, 2018
Balance at March 31, 2018
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
Net changes of items other than
shareholders’ equity
Total changes of items
during the period
Balance at March 31, 2019
The accompanying notes are an integral part of these statements.
50
Asahi Kasei Report 2019 Consolidated Statements of Cash Flows
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2019 and 2018
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 grant of shares
Increase in provision for periodic repairs
Increase in provision for product warranties
Increase (decrease) in provision for removal cost of property, plant and equipment
Decrease in provision for loss on litigation
Decrease in net defined benefit liability
Interest and dividend income
Interest expense
Equity in earnings 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
Decrease (increase) in notes and accounts receivable—trade
Increase in inventories
(Decrease) increase in notes and accounts payable—trade
Increase in accrued expenses
Increase (decrease) 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:
Net decrease in short-term loans payable
Increase (decrease) in commercial paper
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds payable
Redemption of bonds
Repayments of lease obligations
Purchase of treasury stock
Proceeds from disposal of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling interests
Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net 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)
2019
2018
2019
¥ 210,397
84,556
11,090
19,490
(159)
170
1,823
364
145
—
(4,287)
(9,154)
4,371
(12,112)
(11,580)
173
(655)
6,630
3,942
(57,968)
(776)
5,859
5,266
15,328
272,914
11,247
(4,412)
(67,687)
212,062
(13,812)
7,880
(114,718)
652
(10,136)
(2,624)
17,030
(93,487)
(2,764)
(5,092)
18,813
(659)
(198,917)
(36,840)
57,000
85,492
(53,833)
20,000
—
(237)
(40)
40
(51,674)
(1,155)
(1,148)
(217)
17,388
543
31,077
148,596
846
¥ 180,520
¥ 218,333
95,415
2,158
18,048
(159)
200
1,280
280
(1,066)
(2,137)
(4,875)
(8,704)
4,594
(13,137)
(15,164)
31
(534)
6,261
(38,986)
(11,815)
23,020
6,014
(2,463)
17,259
293,851
10,267
(4,736)
(49,492)
249,891
(9,508)
3,012
(82,909)
1,601
(13,363)
(11,564)
17,774
—
—
(45,261)
30,568
(645)
(110,294)
(28,935)
(36,000)
15,395
(23,532)
—
(20,000)
(389)
(688)
2
(39,106)
(1,141)
—
(18)
(134,412)
(937)
4,247
144,077
272
¥ 148,596
$ 1,895,468
761,766
99,910
175,586
(1,432)
1,532
16,423
3,279
1,306
—
(38,622)
(82,468)
39,378
(109,117)
(104,324)
1,559
(5,901)
59,730
35,514
(522,234)
(6,991)
52,784
47,441
138,090
2,458,685
101,324
(39,748)
(609,793)
1,910,468
(124,432)
70,991
(1,033,495)
5,874
(91,315)
(23,640)
153,423
(842,225)
(24,901)
(45,874)
169,486
(5,937)
(1,792,045)
(331,892)
513,514
770,198
(484,982)
180,180
—
(2,135)
(360)
360
(465,532)
(10,405)
(10,342)
(1,955)
156,649
4,892
279,973
1,338,703
7,622
$ 1,626,306
51
Asahi Kasei Report 2019 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 account-
ing 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 statements are a translation of those filed with
the prime minister of Japan and incorporate certain modifications to
enhance foreign readers’ understanding 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 ¥111.00 = US$1 prevailing on
March 31, 2019, has been used.
Consolidation and investments in affiliated companies
The consolidated financial statements consist of the accounts of the
parent company and 203 subsidiaries (171 subsidiaries at March 31,
2018, hereinafter collectively referred to as the “Company”) which,
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 dwell-
ings 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 straight-line method, at rates
based on estimated useful lives of the assets, principally ranging from
7 to 60 years for buildings and from 2 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.
(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 recog-
nized as allowance for doubtful accounts.
ii) Provision for periodic repairs
The portion of foreseeable periodic repair expenses deemed to
correspond to normal wear and tear of plant and equipment as of the
with minor exceptions due to immateriality, are all majority or wholly
owned 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). 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 immaterial-
ity, using the equity method of accounting. There were 53 such
unconsolidated subsidiaries and 20% to 50% owned companies to
which the equity method is applied at March 31, 2019 (54 at March
31, 2018), 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 combina-
tions 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.
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 grant of shares
To record the grant of shares to Directors, etc., in accordance
with Share Grant Regulations, the provision for grant of shares is
recorded based on an estimate of grant of shares liabilities as of the
closing date of the fiscal year.
(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 remaining 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
simplified 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.
52
Asahi Kasei Report 2019 (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 esti-
mated 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, 2019
and 2018, 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,
3. Changes in significant accounting policies
except for 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 dif-
ferences 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 recognized 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.
(a) Accounting Standards issued but not yet applied
(b) Changes in accounting policy difficult to distinguish from
i) Accounting Standard for Business Combinations
and Guidance on Accounting Standard for Business
Combinations and Accounting Standard for Business
Divestitures
The Accounting Standards Board of Japan (ASBJ) issued ASBJ
Guidance 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.” The accounting treatment of contingent returnable
considerations was clarified. The Company will apply the standard
and guidance for business combinations performed after the begin-
ning of the fiscal year ending March 31, 2020. The effects on the
consolidated financial statements are currently being assessed.
ii) Accounting Standard for Revenue Recognition and
Implementation Guidance on Accounting Standard for
Revenue Recognition
The ASBJ issued ASBJ Statement No. 29 “Accounting Standard for
Revenue Recognition” and ASBJ Guidance No. 30 “Implementation
Guidance on Accounting Standard for Revenue Recognition.” This is
a comprehensive standard related to revenue recognition, with the
following five steps to be applied for recognition of revenue:
Step 1: Identify the contract with customers
Step 2: Identify the separate performance obligations
Step 3: Determine the transaction price of the contract
Step 4: Allocate the transaction price to each of the separate
performance obligations
Step 5: Recognize the revenue as each performance obligation is
satisfied
The Company will apply the standard and guidance from the
beginning of the fiscal year ending March 31, 2022. At the time of the
preparation of the consolidated financial statements, the effects are
being assessed.
changes in accounting estimates
Change in method of depreciation of property, plant and equipment
Where Asahi Kasei and its subsidiaries in Japan previously had primar-
ily applied the declining-balance method for depreciation of property,
plant and equipment (except for lease assets), this was changed to
the straight-line method from the fiscal year ended March 31, 2019.
The Asahi Kasei Group has continued to acquire overseas
companies in recent years, and since overseas subsidiaries apply the
straight-line method for depreciation of property, plant and equip-
ment, there is an increase in the proportion of property, plant and
equipment depreciated by the straight-line method.
Furthermore, the Asahi Kasei Group is currently advancing
investments to expand businesses with competitive superiority, as
well as investments for modification and rationalization, based on the
“Cs for Tomorrow 2018” three-year strategic management initiative.
Large-scale investments in domestic manufacturing plants were
implemented, especially in the Material sector, during the fiscal year
ended March 31, 2019, the final fiscal year of the three-year period.
As such expansions of manufacturing plants are successively starting
operations beginning from the fiscal year ended March 31, 2019, the
situation of domestic capital expenditure is changing.
This changing situation surrounding property, plant and equipment
presented an opportunity to reconsider the method of depreciation.
Long-term and stable operation of the property, plant and
equipment of Asahi Kasei and its subsidiaries in Japan is expected
to contribute to the achievement of stable earnings for Asahi Kasei
and its subsidiaries in Japan. Therefore, it was determined that
adoption of the straight-line method of depreciation of property, plant
and equipment in Japan as well would not only be a cost allocation
method more accurately reflecting the state of use of property, plant
and equipment, but also more appropriate for performance manage-
ment of the Asahi Kasei Group.
53
Asahi Kasei Report 2019 As a result, operating income increased by ¥9,727 million
(US$87,631 thousand), and ordinary income and income before
income taxes increased respectively by ¥9,760 million (US$87,928
thousand) in the fiscal year ended March 31, 2019.
assets and deferred tax liabilities of ¥8,983 million under noncurrent
liabilities are included in the ¥17,775 million shown as deferred
tax assets under investments and other assets, while deferred tax
liabilities are shown as ¥36,639 million.
(c) Changes in presentation
i) Application of Partial Amendments to Accounting Standard
for Tax Effect Accounting
“Partial Amendments to Accounting Standard for Tax Effect
Accounting” (ASBJ Statement No. 28) issued by the Accounting
Standards Board of Japan is applied from the fiscal year ended
March 31, 2019. Accordingly, all deferred tax assets are shown
under investments and other assets, and all deferred tax liabilities are
shown under noncurrent liabilities.
For the consolidated balance sheets for the fiscal year ended
March 31, 2018, deferred tax assets of ¥20,032 million under current
ii) Consolidated balance sheets
Asset retirement obligations, which were reported separately under
current liabilities and noncurrent liabilities for the fiscal year ended
March 31, 2018, are included in other from the fiscal year ended
March 31, 2019, due to diminished materiality. Consolidated balance
sheets for the fiscal year ended March 31, 2018, are restated to
reflect this change. The consolidated balance sheets for the fiscal
year ended March 31, 2018 have been reclassified accordingly,
resulting in asset retirement obligations of ¥557 million under current
liabilities being included in other under current liabilities, and asset
retirement obligations of ¥3,282 million under noncurrent liabilities
being included in other under noncurrent liabilities.
4. Notes to Consolidated Balance Sheets
(a) Investment securities
Among investment securities, shares of unconsolidated subsidiaries and affiliates as of March 31, 2019 and 2018, amounted to ¥98,357
million (US$886,099 thousand) and ¥83,487 million, respectively. Included in those amounts are investments in joint ventures of ¥52,095 million
(US$469,324 thousand) and ¥43,168 million, respectively.
(b) Pledged assets and secured debt
Investment securities pledged to suppliers as transaction guarantees at March 31, 2019 and 2018, were ¥65 million (US$586 thousand) and
¥72 million, respectively.
(c) Contingent liabilities
Contingent liabilities at March 31, 2019 and 2018, arising in the ordinary course of business were as follows:
Loans guaranteed
Total
Millions of yen
Thousands of U.S. dollars
2019
¥38,736
¥38,736
2018
¥39,457
¥39,457
2019
$348,973
$348,973
(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, 2019 and 2018, were
¥9,792 million (US$88,216 thousand) and ¥9,999 million, respectively. The breakdown of reduced-value entries as of March 31, 2019 and 2018,
was as follows:
Buildings and structures
Machinery, equipment and vehicles
Land
Other
Total
Millions of yen
Thousands of U.S. dollars
2019
¥3,324
6,156
167
145
¥9,792
2018
¥3,320
6,366
167
146
¥9,999
2019
$29,946
55,459
1,505
1,306
$88,216
(e) Notes maturing on March 31, 2019
Although financial institutions in Japan were closed on March 31, 2019, and notes maturing on that date were actually settled on the following
business day, April 1, 2019, those were accounted for as if settled on March 31, 2019.
The breakdown of those notes at March 31, 2019 was as follows:
Notes and accounts receivable—trade
Notes and accounts payable—trade
Millions of yen
Thousands of U.S. dollars
2019
¥2,799
1,273
2018
¥2,501
1,301
2019
$25,216
11,468
54
Asahi Kasei Report 2019 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, 2019 and 2018, were as follows:
Salaries and benefits
Research and development*
Freight and storage
Millions of yen
Thousands of U.S. dollars
2019
¥186,552
62,924
41,353
2018
¥174,659
61,998
38,568
2019
$1,680,649
566,883
372,550
* The aggregate amounts of research and development expenses included in manufacturing costs and selling, general and administrative expenses for the years ended March 31, 2019 and
2018, were ¥90,124 million (US$811,928 thousand) and ¥85,695 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, 2019 and 2018, were as follows:
Millions of yen
Thousands of U.S. dollars
2019
¥535
2018
¥(224)
2019
$4,820
(c) Gain on sales of noncurrent assets
Major components of gain on sales of noncurrent assets for the years ended March 31, 2019 and 2018, were as follows:
Land
Machinery
Other
Millions of yen
Thousands of U.S. dollars
2019
¥497
8
150
2018
¥466
48
20
2019
$4,477
72
1,351
(d) Loss on disposal of noncurrent assets
Loss on disposal of noncurrent assets for the years ended March 31, 2019 and 2018, was primarily loss on abandonment and sale of buildings,
machinery and equipment, etc. The abandonment and sale of buildings, machinery and equipment, etc. were performed under a single, all-
inclusive contract for each facility.
(e) Impairment loss
Major components of impairment losses for the years ended March 31, 2019 and 2018, were as follows:
Use
Goodwill related to
new electronic device business
Asset class
Location
2019
2018
2019
Item on the Consolidated
Statements of Income
Goodwill
—
¥ —
¥997
$ — Impairment loss
Millions of yen
Thousands of
U.S. dollars
Facility for storage of waste
Buildings, etc.
Equipment for dry-heat treatment
of nonwovens
Buildings, etc.
Kawasaki Ward
Kawasaki,
Kanagawa, etc.
Nobeoka, Miyazaki,
etc.
Others
Buildings, etc.
Moriyama, Shiga, etc.
—
—
—
Production facility
for pharmaceuticals business
Production facility
for battery materials
Production facility
for synthetic fibers
Production facility
for synthetic resin
Production facility for
artificial kidneys and
therapeutic apheresis devices
Others
Goodwill and
Other Intangible
assets
Machinery and
equipment, etc.
Machinery and
equipment, etc.
Buildings, etc.
Machinery and
equipment, etc.
Construction in
progress, etc.
—
6,657
Cheongju, Korea
2,966
Nordrhein-Westfalen,
Federal Republic of
Germany
Kawasaki Ward
Kawasaki, Kanagawa
Nobeoka, Miyazaki
Fuji, Shizuoka, etc.
947
468
170
381
557
284
381
—
—
—
—
—
—
— Impairment loss
— Impairment loss
—
Impairment loss and business
structure improvement expenses
59,973 Impairment loss
26,721 Impairment loss
8,532 Impairment loss
4,216
Business structure improvement
expenses
1,532 Impairment loss
3,432
Impairment loss and business
structure improvement expenses
55
Asahi Kasei Report 2019 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.
The book value of goodwill and other intangible assets related to production facility for pharmaceuticals business was reduced to the recov-
erable amount due to a delay in development. The book value of production facility for synthetic fibers and production facility for synthetic resin
was reduced to the recoverable amount due to diminished profitability. The recoverable amount is stated as the value for future usage, which is
calculated based on discounted future cash flows within the applicable discount rate of 6% as of March 31, 2019 and 2018.
The book value of production facility for battery materials was reduced to zero due to a decision to dispose of certain facilities for productivity
improvement. The book value of production facility for artificial kidneys and therapeutic apheresis devices was also reduced to zero due to the
disappearance of prospects for future use.
Among the extraordinary losses under Others, ¥31 million (US$279 thousand) and ¥62 million were recorded under business structure
improvement expenses for the years ended March 2019 and 2018, respectively.
(f) Business structure improvement expenses
Major components of business structure improvement expenses for the years ended March 31, 2019 and 2018, 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
2019
¥ 499
692
2,730
¥3,921
2018
¥ 62
—
1,398
¥1,460
2019
$ 4,495
6,234
24,595
$35,324
6. Notes to Consolidated Statements of Comprehensive Income
Recycling adjustment and tax effects on other comprehensive income for the years ended March 31, 2019 and 2018, were as follows:
Millions of yen
Thousands of U.S. dollars
2019
2018
2019
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
Pre-tax effect
Tax effect
Deferred gains or losses on hedges
Foreign currency translation adjustment:
Changes during the fiscal year
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
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
56
¥(15,870)
(11,554)
(27,423)
8,365
(19,058)
¥ 26,084
(15,068)
11,016
(3,364)
7,651
(343)
218
(125)
(7)
(132)
12,464
12,464
—
12,464
(2,214)
8,453
6,238
(1,927)
4,311
1,297
0
1,297
¥ (1,119)
71
(74)
(3)
40
37
(12,088)
(12,088)
(164)
(12,252)
2,844
11,302
14,145
(4,410)
9,735
356
—
356
¥ 5,528
$(142,973)
(104,090)
(247,054)
75,360
(171,694)
(3,090)
1,964
(1,126)
(63)
(1,189)
112,288
112,288
—
112,288
(19,946)
76,153
56,198
(17,360)
38,838
11,685
0
11,685
$ (10,081)
Asahi Kasei Report 2019 7. Notes to Consolidated Statements of Changes in Net Assets
For the year ended March 31, 2019
(a) Class and total number of issued and outstanding shares and treasury stock
Number of shares
as of March 31, 2018
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, 2019
Thousands of shares
Issued and outstanding shares
Common stock
Total
Treasury stock
Common stock (Notes 1, 2 and 3)
Total
1,402,616
1,402,616
6,492
6,492
—
—
31
31
—
—
32
32
1,402,616
1,402,616
6,491
6,491
Notes: 1. The increase of 31 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 32 thousand shares in common stock of treasury stock was primarily attributable to the disposal of 22 thousand shares by the trust for granting shares to Directors,
etc., and the sale of 10 thousand shares in quantities of less than one share unit.
3. The number of shares of treasury stock as of March 31, 2019, includes 442 thousand shares held by the trust for granting shares to Directors, etc.
(b) Dividends
i) Cash dividends paid
1) The following was resolved by the Board of Directors on May 11, 2018.
Dividends for common stock
Total dividends
Dividend per share
Date of record
Payment date
¥27,932 million (US$251,640 thousand)
¥20.00 (US$0.18)
March 31, 2018
June 5, 2018
Note: Total dividends includes ¥9 million (US$81 thousand) for shares held by the trust for granting shares to Directors, etc.
2) The following was resolved by the Board of Directors on November 2, 2018.
Dividends for common stock
Total dividends
Dividend per share
Date of record
Payment date
¥23,742 million (US$213,892 thousand)
¥17.00 (US$0.15)
September 30, 2018
December 3, 2018
Note: Total dividends includes ¥8 million (US$72 thousand) for shares held by the trust for granting shares to Directors, etc.
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 10, 2019.
Dividends for common stock
Total dividends
Source of dividends
Dividend per share
Date of record
Payment date
¥23,742 million (US$213,892 thousand)
Retained earnings
¥17.00 (US$0.15)
March 31, 2019
June 4, 2019
Note: Total dividends includes ¥8 million (US$72 thousand) for shares held by the trust for granting shares to Directors, etc.
57
Asahi Kasei Report 2019
For the year ended March 31, 2018
(a) Class and total number of issued and outstanding shares and treasury stock
Number of shares
as of March 31, 2017
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, 2018
Thousands of shares
Issued and outstanding shares
Common stock
Total
Treasury stock
Common stock (Notes 1, 2 and 3)
Total
1,402,616
1,402,616
5,959
5,959
—
—
534
534
—
—
1
1
1,402,616
1,402,616
6,492
6,492
Notes: 1. The increase of 534 thousand shares in common stock of treasury stock was primarily attributable to the purchase of 464 thousand shares by the trust for granting shares to
Directors, etc., and the purchase of 70 thousand shares in quantities of less than one share unit.
2. The decrease of 1 thousand shares in common stock of treasury stock was due to the sale of shares in quantities of less than one share unit.
3. The number of shares of treasury stock as of March 31, 2018, includes 464 thousand shares held by the trust for granting shares to Directors, etc.
(b) Dividends
i) Cash dividends paid
1) The following was resolved by the Board of Directors on May 11, 2017.
Dividends for common stock
Total dividends
Dividend per share
Date of record
Payment date
¥19,553 million
¥14.00
March 31, 2017
June 6, 2017
2) The following was resolved by the Board of Directors on November 7, 2017.
Dividends for common stock
Total dividends
Dividend per share
Date of record
Payment date
¥19,552 million
¥14.00
September 30, 2017
December 1, 2017
Note: Total dividends includes ¥6 million for shares held by the trust for granting shares to Directors, etc.
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, 2018.
Dividends for common stock
Total dividends
Source of dividends
Dividend per share
Date of record
Payment date
¥27,932 million
Retained earnings
¥20.00
March 31, 2018
June 5, 2018
Note: Total dividends includes ¥9 million for shares held by the trust for granting shares to Directors, etc.
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 bal-
ance sheets at March 31, 2019 and 2018, was as follows:
Cash and deposits
Time deposits with deposit term of over 3 months
Cash and cash equivalents
Millions of yen
Thousands of U.S. dollars
2019
¥193,893
(13,374)
¥180,520
2018
¥156,318
(7,722)
¥148,596
2019
$1,746,784
(120,486)
$1,626,306
58
Asahi Kasei Report 2019
(b) Assets and liabilities of newly consolidated subsidiaries through acquisition of shares
Assets and liabilities of acquired companies (Senseair AB and 4 consolidated subsidiaries) and net cash outflow for such acquisition is as follows:
Thousands of U.S. dollars
Millions of yen
Current assets
Noncurrent assets
Goodwill
Current liabilities
Noncurrent liabilities
Acquisition cost of shares
Gain on step acquisitions
Carrying value of previously held equity interest
Cash and cash equivalents
Net cash used for acquisition
¥1,296
1,544
4,171
(580)
(352)
6,079
(173)
(322)
(351)
5,233
$11,676
13,910
37,577
(5,225)
(3,171)
54,766
(1,559)
(2,901)
(3,162)
47,144
Assets and liabilities of acquired companies (Sage Automotive Interiors, Inc. and 13 consolidated subsidiaries) and net cash outflow for such
acquisition is as follows:
Current assets
Noncurrent assets
Goodwill
Current liabilities
Noncurrent liabilities
Non-controlling interests
Acquisition cost of shares
Cash and cash equivalents
Net cash used for acquisition
Millions of yen
Thousands of U.S. dollars
¥23,467
59,076
68,171
(55,254)
(11,193)
(4,363)
79,904
(6,916)
72,988
$211,414
532,216
614,153
(497,784)
(100,838)
(39,306)
719,856
(62,306)
657,550
Assets and liabilities of acquired companies (Erickson Framing Operations LLC and 4 consolidated subsidiaries) and net cash outflow for
such acquisition is as follows:
Current assets
Noncurrent assets
Goodwill
Current liabilities
Noncurrent liabilities
Foreign currency translation adjustment
Acquisition cost of shares
Cash and cash equivalents
Net cash used for acquisition
9. Leases
(a) Financing lease transactions
Financing lease transactions without title transfer
Millions of yen
Thousands of U.S. dollars
¥ 3,728
9,137
1,230
(4,240)
(38)
233
10,050
(90)
9,959
$ 33,586
82,315
11,081
(38,198)
(342)
2,099
90,541
(811)
89,721
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.”
(b) Operating lease transactions
Future lease payments for the non-cancelable portion of the Company’s operating leases at March 31, 2019 and 2018, were as follows:
Due within one year
Due after one year
Total
Millions of yen
Thousands of U.S. dollars
2019
¥ 9,442
38,949
¥48,391
2018
¥ 8,677
25,987
¥34,664
2019
$ 85,063
350,892
$435,955
59
Asahi Kasei Report 2019 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 insur-
ance 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 regula-
tions 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, conditions, 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, 2019 and 2018, 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).
Millions of yen
2019
Fair value
¥193,893
350,716
14,015
188,070
20,658
767,353
180,429
75,484
77,000
24,971
40,198
230,677
417
9,300
638,475
¥ 162
Carrying amount
¥193,893
350,716
15,373
188,070
20,650
768,702
180,429
75,484
77,000
24,971
40,000
231,973
417
9,246
639,520
¥ 162
Difference
¥ —
—
(1,358)
—
8
(1,349)
—
—
—
—
(198)
1,296
1
(54)
1,045
¥ —
Cash and deposits
Notes and accounts receivable—trade
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 (*)
60
Asahi Kasei Report 2019 Cash and deposits
Notes and accounts receivable—trade
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 (*)
Cash and deposits
Notes and accounts receivable—trade
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 (*)
Millions of yen
2018
Fair value
¥156,318
341,396
16,471
221,708
28,445
764,338
171,413
58,898
20,000
29,714
20,420
199,485
551
8,726
509,207
¥ 1,257
Thousands of U.S. dollars
2019
Fair value
$1,746,784
3,159,604
126,261
1,694,324
186,108
6,913,090
1,625,486
680,036
693,694
224,964
362,144
2,078,171
3,757
83,784
5,752,027
$ 1,459
Carrying amount
¥156,318
341,396
15,353
221,708
28,442
763,217
171,413
58,898
20,000
29,714
20,000
202,296
551
8,696
511,568
¥ 1,257
Carrying amount
$1,746,784
3,159,604
138,495
1,694,324
186,036
6,925,243
1,625,486
680,036
693,694
224,964
360,360
2,089,847
3,757
83,297
5,761,441
$ 1,459
Difference
¥ —
—
1,118
—
3
1,121
—
—
—
—
(420)
2,811
(0)
(30)
2,361
¥ —
Difference
$ —
—
(12,234)
—
72
(12,153)
—
—
—
—
(1,784)
11,676
0
(486)
9,414
$ —
(*) The amounts represent net amount of assets and liabilities resulting from derivative
2) Bonds payable
transactions. 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
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. 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 receiv-
able. 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.
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.
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 spe-
cial 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, 2019 and 2018, amounting to ¥22,095 million
(US$199,054 thousand) and ¥59,120 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.
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.
61
Asahi Kasei Report 2019 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, 2019 and 2018, amounting to ¥89,661 million (US$807,757 thousand) and
¥74,668 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, 2019 and 2018,
amounting to ¥3,226 million (US$29,063 thousand) and ¥3,101 million, respectively,
fair value is not included in short-term investment securities and investment securi-
ties, 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, 2019 and 2018, amounting to ¥11,897 million (US$107,180
thousand) and ¥11,962 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
2019
Due within one year
¥193,893
350,716
4,542
¥549,151
Due after one year,
within five years
¥ —
—
15,848
¥15,848
Due after five years,
within ten years
¥ —
—
260
¥260
Due after more than
ten years
¥—
—
—
¥—
Millions of yen
2018
Due within one year
¥156,318
341,396
5,431
¥503,145
Due after one year,
within five years
¥ —
—
22,676
¥22,676
Due after five years,
within ten years
¥ —
—
335
¥335
Due after more than
ten years
¥—
—
—
¥—
Thousands of U.S. dollars
2019
Due within one year
$1,746,784
3,159,604
40,919
$4,947,306
Due after one year,
within five years
$ —
—
142,775
$142,775
Due after five years,
within ten years
$ —
—
2,342
$2,342
Due after more than
ten years
$—
—
—
$—
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:
Millions of yen
2019
Short-term loans
payable
¥75,484
—
—
—
—
—
Commercial paper
¥77,000
—
—
—
—
—
Bonds payable
¥20,000
—
—
—
20,000
—
Long-term loans
payable
¥22,095
24,951
55,334
70,668
25,785
33,140
Lease obligations
¥164
141
71
30
10
—
Millions of yen
2018
Short-term loans
payable
¥58,898
—
—
—
—
—
Commercial paper
¥20,000
—
—
—
—
—
Bonds payable
¥ —
20,000
—
—
—
—
Long-term loans
payable
¥59,120
21,794
23,371
28,981
28,043
40,988
Lease obligations
¥199
162
128
54
8
—
Total
¥194,743
25,092
55,405
70,698
45,795
33,140
Total
¥138,217
41,956
23,499
29,034
28,051
40,988
Year ending March 31
2020
2021
2022
2023
2024
2025 and thereafter
Year ending March 31
2019
2020
2021
2022
2023
2024 and thereafter
62
Asahi Kasei Report 2019 Thousands of U.S. dollars
2019
Year ending March 31
2020
2021
2022
2023
2024
2025 and thereafter
Short-term loans
payable
$680,036
—
—
—
—
—
Commercial paper
$693,694
—
—
—
—
—
Bonds payable
$180,180
—
—
—
180,180
—
Long-term loans
payable
$199,054
224,784
498,505
636,649
232,297
298,559
Lease obligations
$1,477
1,270
640
270
90
—
Total
$1,754,441
226,054
499,144
636,919
412,568
298,559
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 clas-
sified as other securities for which fair values were available at March 31, 2019 and 2018, were as follows:
Securities with unrealized gains:
Equity securities
Subtotal
Securities with unrealized losses:
Equity securities
Subtotal
Total
Securities with unrealized gains:
Equity securities
Subtotal
Securities with unrealized losses:
Equity securities
Subtotal
Total
Securities with unrealized gains:
Equity securities
Subtotal
Securities with unrealized losses:
Equity securities
Subtotal
Total
Millions of yen
2019
Cost
¥29,367
29,367
12,563
12,563
¥41,930
Millions of yen
2018
Cost
¥35,703
35,703
13,240
13,240
¥48,943
Unrealized gains
(losses)
¥148,097
148,097
(1,956)
(1,956)
¥146,140
Unrealized gains
(losses)
¥173,872
173,872
(1,108)
(1,108)
¥172,765
Thousands of U.S. dollars
2019
Cost
Unrealized gains
(losses)
Carrying
amount
¥177,464
177,464
10,607
10,607
¥188,070
Carrying
amount
¥209,576
209,576
12,133
12,133
¥221,708
Carrying
amount
$1,598,775
1,598,775
$264,568
264,568
$1,334,207
1,334,207
95,559
95,559
$1,694,324
113,180
113,180
$377,748
(17,622)
(17,622)
$1,316,577
63
Asahi Kasei Report 2019 (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, 2019 and 2018, were as follows:
Selling amount
Gain on sales of securities
Loss on sales of securities
Millions of yen
Thousands of U.S. dollars
2019
¥16,176
11,580
—
2018
¥18,088
15,164
—
2019
$145,730
104,324
—
(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, 2019, was ¥173
million (US$1,559 thousand), which is for other securities, and for the year ended March 31, 2018, ¥31 million, which is the sum of ¥28 million
for equity securities of unconsolidated subsidiaries and affiliates and ¥3 million for other securities.
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
2019
Amount of contract
over 1 year
Fair value (*)
Profit (loss) from
valuation
Selling:
U.S. dollar
Euro
Thai baht
British pound
Chinese yuan
Australian dollar
Buying:
U.S. dollar
Euro
Thai baht
Total
¥40,157
11,379
2,306
45
5
8
4,373
14
4
¥58,291
¥—
—
—
—
—
—
—
—
—
¥—
¥ (9)
88
39
0
(0)
0
(20)
(0)
0
¥ 98
¥ (9)
88
39
0
(0)
0
(20)
(0)
0
¥ 98
Classification
Items
Amount of contract
Off-market transactions
Foreign exchange forward contracts:
Millions of yen
2018
Amount of contract
over 1 year
Fair value (*)
Profit (loss) from
valuation
Selling:
U.S. dollar
Euro
Thai baht
British pound
Chinese yuan
Australian dollar
Buying:
U.S. dollar
Euro
Thai baht
Total
¥ 52,155
9,720
1,867
27
—
—
5,438
50,269
5
¥119,481
¥—
—
—
—
—
—
—
—
—
¥—
¥1,514
158
4
0
—
—
(84)
(335)
(0)
¥1,257
¥1,514
158
4
0
—
—
(84)
(335)
(0)
¥1,257
64
Asahi Kasei Report 2019 Classification
Items
Amount of contract
Off-market transactions
Foreign exchange forward contracts:
Thousands of U.S. dollars
2019
Amount of contract
over 1 year
Fair value (*)
Profit (loss) from
valuation
Selling:
U.S. dollar
Euro
Thai baht
British pound
Chinese yuan
Australian dollar
Buying:
U.S. dollar
Euro
Thai baht
Total
$361,775
102,514
20,775
405
45
72
39,396
126
36
$525,144
$—
—
—
—
—
—
—
—
—
$—
$ (81)
793
351
0
(0)
0
(180)
(0)
0
$ 883
$ (81)
793
351
0
(0)
0
(180)
(0)
0
$ 883
(*) The fair value is provided by counterparty financial institutions.
(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:
Selling:
Millions of yen
2019
Amount of contract
over 1 year
Fair value (*)
U.S. dollar
Euro
Buying:
U.S. dollar
Euro
Thai baht
Swedish krona
Total
Accounts receivable—trade
Accounts receivable—trade
Accounts payable—trade
Accounts payable—trade
Accounts payable—trade
Investment securities
¥4,601
687
382
23
—
—
¥5,694
¥44
—
—
—
—
—
¥44
¥56
10
(1)
(1)
—
—
¥64
Classification
Items
Hedged assets/liabilities
Amount of contract
Principle-based
accounting
Foreign exchange forward
contracts:
Selling:
Millions of yen
2018
Amount of contract
over 1 year
Fair value (*)
U.S. dollar
Euro
Buying:
U.S. dollar
Euro
Thai baht
Swedish krona
Total
Accounts receivable—trade
Accounts receivable—trade
¥ 5,966
721
Accounts payable—trade
Accounts payable—trade
Accounts payable—trade
Investment securities
359
—
3
5,198
¥12,246
¥—
—
—
—
—
—
¥—
¥ 180
17
(10)
—
0
(186)
¥ 0
65
Asahi Kasei Report 2019 Classification
Principle-based
accounting
Items
Foreign exchange
forward contracts:
Hedged assets/liabilities
Amount of contract
Thousands of U.S. dollars
2019
Amount of contract
over 1 year
Fair value (*)
$505
90
(9)
(9)
—
—
$577
Fair value
(*)
(*)
¥—
Selling:
U.S. dollar
Euro
Buying:
U.S. dollar
Euro
Thai baht
Swedish krona
Total
Accounts receivable—trade
Accounts receivable—trade
$41,450
6,189
Accounts payable—trade
Accounts payable—trade
Accounts payable—trade
Investment securities
3,441
207
—
—
$51,297
$396
—
—
—
—
—
$396
(*) The fair value is provided by counterparty financial institutions.
ii) Interest-rate swaps, and interest-rate and currency swaps
Classification
Special treatment
for interest-rate swaps
Special treatment
for interest-rate
and currency swaps
Items
Interest-rate swaps
Pay fixed/receive floating
Interest-rate and currency swaps
U.S. dollar receive floating/
Thai baht pay fixed
Total
Classification
Special treatment
for interest-rate swaps
Special treatment
for interest-rate
and currency swaps
Items
Interest-rate swaps
Pay fixed/receive floating
Interest-rate and currency swaps
U.S. dollar receive floating/
Thai baht pay fixed
Total
Classification
Special treatment
for interest-rate swaps
Special treatment
for interest-rate
and currency swaps
Items
Interest-rate swaps
Pay fixed/receive floating
Interest-rate and currency swaps
U.S. dollar receive floating/
Thai baht pay fixed
Total
Hedged assets/liabilities
Amount of contract
Millions of yen
2019
Amount of contract
over 1 year
Long-term loans payable
¥98,712
¥78,605
Long-term loans payable
—
¥98,712
—
¥78,605
Millions of yen
Hedged assets/liabilities
Amount of contract
2018
Amount of contract
over 1 year
Fair value
Long-term loans payable
¥139,261
¥93,633
Long-term loans payable
170
¥139,431
—
¥93,633
(*)
(*)
¥—
Hedged assets/liabilities
Amount of contract
Thousands of U.S. dollars
2019
Amount of contract
over 1 year
Fair value
Long-term loans payable
$889,297
$708,153
(*)
Long-term loans payable
—
$889,297
—
$708,153
(*)
$—
(*) 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 accounting is applied.
66
Asahi Kasei Report 2019 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 contribution plans. Additional benefits may be granted to employees depending on the conditions under which termination of employ-
ment 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, 2019 and 2018, 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
2019
¥400,855
15,466
728
2,061
(16,451)
(198)
¥402,461
2018
¥398,132
14,922
695
1,213
(14,620)
513
¥400,855
2019
$3,611,306
139,333
6,559
18,568
(148,207)
(1,784)
$3,625,775
Reconciliations of beginning and ending balances of plan assets for the fiscal years ended March 31, 2019 and 2018, 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
2019
¥230,220
5,737
(387)
7,408
(9,206)
4
¥233,776
2018
¥219,765
5,461
4,064
9,513
(8,571)
(11)
¥230,220
2019
$2,074,054
51,685
(3,486)
66,739
(82,937)
36
$2,106,090
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, 2019 and 2018, 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
Millions of yen
Thousands of U.S. dollars
2019
¥ 258,381
(233,776)
24,605
144,080
¥ 168,685
2018
¥ 257,710
(230,220)
27,489
143,145
¥ 170,634
2019
$ 2,327,757
(2,106,090)
221,667
1,298,018
$ 1,519,685
Net defined benefit liability
Net of liability and asset that have been recorded in the consolidated balance sheets
¥ 168,685
¥ 168,685
¥ 170,634
¥ 170,634
$ 1,519,685
$ 1,519,685
Periodic retirement benefit expenses for employees and the breakdown of items for the years ended March 31, 2019 and 2018, were as follows:
Thousands of U.S. dollars
Millions of yen
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
2019
¥13,829
728
(5,737)
8,407
82
1,327
¥18,636
2018
¥13,301
695
(5,461)
11,196
141
636
¥20,509
2019
$124,586
6,559
(51,685)
75,739
739
11,955
$167,892
67
Asahi Kasei Report 2019 The components of other comprehensive income on defined benefit plans for the fiscal years ended March 31, 2019 and 2018, were as follows:
Thousands of U.S. dollars
Millions of yen
Prior service costs
Actuarial gains/losses
Total
2019
¥ 82
6,156
¥6,238
2018
¥ 141
14,004
¥14,145
2019
$ 739
55,459
$56,198
Accumulated other comprehensive income on defined benefit plans at March 31, 2019 and 2018, was as follows:
Unrecognized prior service costs
Unrecognized actuarial gains/losses
Total
Millions of yen
Thousands of U.S. dollars
2019
¥ (4)
27,623
¥27,619
2018
¥ 78
33,779
¥33,857
2019
$ (36)
248,856
$248,820
Share by major classifications for plan assets at March 31, 2019 and 2018, was as follows:
Bonds
Stock
Alternative investments
Life insurance
Cash and deposits
Other
Total
2019
38%
25
17
13
5
2
100%
2018
37%
25
16
13
8
2
100%
Note: Alternative investments include mainly investments in real estate, private equity 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, 2019 and 2018, were as follows:
Discount rate
The long-term rate of expected return on plan assets
Expected rate of increase in salary
2019
Mainly 0.1%
Mainly 2.5%
2.0–6.5%
2018
Mainly 0.1%
Mainly 2.5%
2.0–6.5%
Required payments to defined contribution plans at March 31, 2019, amounted to ¥2,738 million (US$24,667 thousand), and at March 31,
2018, amounted to ¥1,807 million.
68
Asahi Kasei Report 2019 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, 2019 and 2018, were as follows:
Deferred tax assets:
Net defined benefit liability
Accrued bonuses
Foreign tax credit carry forwards
Unrealized gain on noncurrent assets and others
Impairment losses
Loss on disposal of noncurrent assets
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
Deferred gain on property, plant and equipment
Depreciation—overseas subsidiaries
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)
Millions of yen
Thousands of U.S. dollars
2019
2018
2019
¥ 51,489
7,857
6,990
4,368
3,171
3,143
25,371
102,390
(13,218)
89,172
(44,241)
(37,071)
(8,305)
(8,958)
(11,387)
(109,963)
¥ (20,791)
¥ 52,147
7,734
6,069
3,931
3,414
3,268
22,951
99,515
(10,865)
88,651
(54,229)
(29,925)
(8,383)
(8,077)
(6,899)
(107,514)
¥ (18,864)
$ 463,865
70,784
62,973
39,351
28,568
28,315
228,568
922,432
(119,081)
803,351
(398,568)
(333,973)
(74,820)
(80,703)
(102,586)
(990,658)
$(187,306)
Reconciliation of the differences between the statutory tax rate and the effective income tax rate for the years ended March 31, 2019 and
2018, was as follows:
Statutory tax rate
Increase (reduction) in taxes resulting from:
Non-deductible expenses and non-taxable income
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
Items related to U.S. tax reform
Other
Effective income tax rate
15. Business combinations
2019
30.6%
1.0
(2.8)
2.8
(1.8)
0.6
(1.7)
—
(0.0)
28.8%
2018
30.9%
0.3
(2.9)
2.5
(1.9)
0.4
(0.4)
(7.9)
0.1
21.1%
Business combinations accounted for by the purchase method were as follows:
(a) Acquisition of Senseair AB
i) Outline of business combination
1) Name and nature of the businesses of counterparty
Name of counterparty: Senseair AB
Nature of the businesses: Manufacture and sale of NDIR gas sensor modules
2) Main reasons for the acquisition
In addition to joint development through which Senseair’s optical path design technology and manufacturing know-how for gas sensors is
combined with the small, high-quality IR light emitting elements and detectors based on the core technology for compound semiconductors of
consolidated subsidiary Asahi Kasei Microdevices Corp., the acquisition will make it possible for the two companies to more deeply integrate
their technological knowledge and market networks, enabling an expansion of business activities in the market for air, gas, and alcohol sensors,
where rapid growth is forecasted.
3) The acquisition date
April 4, 2018
4) Statutory form of business combination
Stock purchase for cash as consideration
5) Name of company after transaction
Senseair AB
69
Asahi Kasei Report 2019 6) Acquired voting right
Voting right before the acquisition: 8.1%
Additional voting right acquired as of the acquisition date: 91.9%
Voting right after the acquisition: 100%
7) Basic means of materializing the acquisition
Stock purchase for cash as consideration by a consolidated subsidiary
ii) The period of acquiree’s results included in the consolidated financial statements
From April 4, 2018, to March 31, 2019
iii) Cost of acquisition and details
Stock purchase price
Purchase price
Millions of yen
Thousands of U.S. dollars
¥6,079
¥6,079
$54,766
$54,766
All stocks held as of the acquisition date are remeasured to their fair value at acquisition date.
iv) Major acquisition related costs
Advisory fees and others: ¥295 million (US$2,658 thousand)
v) Difference between cost of acquisition and total of individual transactions leading to the acquisition
¥173 million (US$1,559 thousand)
vi) Amount of goodwill, measurement principle, amortization method, and useful life
1) Amount of goodwill
¥4,171 million (US$37,577 thousand)
2) Measurement principle
Goodwill is measured as the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed.
3) Amortization method and useful life
Straight-line method over 20 years
vii) Details of assets acquired and liabilities assumed as of the acquisition date
Current assets
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities
Millions of yen
Thousands of U.S. dollars
¥1,296
1,544
¥2,840
¥ 580
352
¥ 932
$11,676
13,910
$25,586
$ 5,225
3,171
$ 8,396
viii) Amount of identifiable intangible assets other than goodwill, its details and major weighted average useful life
1) Purchase price allocated to intangible assets and its major items
Customer-related assets
Technology-related assets
2) Major weighted average useful life
Customer-related assets
Technology-related assets
Total
Millions of yen
Thousands of U.S. dollars
$6,243
6,135
¥693
681
20 years
10 years
15 years
ix) Pro forma effects on the consolidated statements of income assuming the business combination had occurred at the beginning
of the fiscal year, and its measurement
Information is omitted due to immateriality. This note is not audited.
(b) Acquisition of Sage Automotive Interiors, Inc.
i) Outline of business combination
1) Name and nature of the businesses of counterparty
Name of counterparty: Sage Automotive Interiors, Inc.
Nature of the businesses: Development, manufacture, and sale of fabrics as automotive interior material
2) Main reasons for the acquisition
• Enhanced access to vehicle manufacturers and Tier-1 suppliers in order to swiftly and accurately ascertain trends and needs in the automotive
industry
• Proposal and provision of comprehensive vehicle interior designs and solutions leveraging Sage’s design and marketing capabilities in combi-
nation with various Asahi Kasei products and technologies such as fibers, plastics, and sensors
• Utilizing Sage’s sales, manufacturing, and marketing bases as management infrastructure and resources for the global expansion of Asahi
Kasei’s operations
3) The acquisition date
September 27, 2018
4) Statutory form of business combination
Stock purchase for cash as consideration
70
Asahi Kasei Report 2019 5) Name of company after transaction
Sage Automotive Interiors, Inc.
6) Acquired voting right
Voting right before the acquisition: 0%
Voting right after the acquisition: 100%
7) Basic means of materializing the acquisition
Stock purchase for cash as consideration by a special purpose subsidiary of the Company
ii) The period of acquiree’s results included in the consolidated financial statements
From October 1, 2018, to March 31, 2019
iii) Cost of acquisition and details
Stock purchase price
Purchase price
iv) Major acquisition related costs
Advisory fees and others: ¥1,430 million (US$12,883 thousand)
Millions of yen
Thousands of U.S. dollars
¥79,904
¥79,904
$719,856
$719,856
v) Amount of goodwill, measurement principle, amortization method, and useful life
1) Amount of goodwill
¥68,171 million (US$614,153 thousand)
2) Measurement principle
Goodwill is measured as the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed.
3) Amortization method and useful life
Straight-line method over 20 years
vi) Details of assets acquired and liabilities assumed as of the acquisition date
Current assets
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities
Millions of yen
Thousands of U.S. dollars
¥23,467
59,076
¥82,543
¥55,254
11,193
¥66,447
$211,414
532,216
$743,631
$497,784
100,838
$598,622
vii) Amount of identifiable intangible assets other than goodwill, its details and major weighted average useful life
1) Purchase price allocated to intangible assets and its major items
Millions of yen
Thousands of U.S. dollars
Customer-related assets
Trademarks
2) Major weighted average useful life
Customer-related assets
Trademarks
Total
$413,387
26,604
¥45,886
2,953
19 years
20 years
19 years
viii) Pro forma effects on the consolidated statements of income assuming the business combination had occurred at the
beginning of the fiscal year, and its measurement
Information is omitted due to immateriality. This note is not audited.
(c) Acquisition of Erickson Framing Operations LLC
i) Outline of business combination
1) Name and nature of the businesses of counterparty
Name of counterparty: Erickson Framing Operations LLC
Nature of the businesses: Manufacture, sales, and installation of panelized walls and trusses, along with doors and trim in Arizona, California,
and Nevada
2) Main reasons for the acquisition
A leading US provider of building components including panelized walls and roof trusses for wooden houses, Erickson serves homebuilders
by supplying and installing the building components for more than 3,000 houses per year. Whereas houses in the US are generally built by
fabricating and assembling at the construction site, Erickson’s panelized framing systems streamline the construction process by pre-fabricating
components at a factory to be shipped and erected at the building site. As construction costs in the US continue to climb due to a persistent
manpower shortage and rising material prices, there is growing demand for pre-fabricated building systems which enable cost reduction with
less labor and shorter construction time. Consolidated subsidiary Asahi Kasei Homes believes that this presents an opportunity to leverage the
systemization know-how gained through its business of providing high quality and high value-added Hebel Haus™ order-built unit homes in
Japan, leading to further enhancement of Erickson’s pre-fabricated building system in order to create new value for the US housing market.
3) The acquisition date
November 30, 2018
4) Statutory form of business combination
Membership interests purchase for cash as consideration
71
Asahi Kasei Report 2019 5) Name of company after transaction
Erickson Framing Operations LLC
6) Acquired voting right
Voting right before the acquisition: 0%
Voting right after the acquisition: 100%
7) Basic means of materializing the acquisition
Membership interests purchase for cash as consideration by a consolidated subsidiary
ii) The period of acquiree’s results included in the consolidated financial statements
From January 1, 2019, to March 31, 2019
iii) Cost of acquisition and details
Membership interests purchase price
Purchase price
iv) Major acquisition related costs
Advisory fees and others: ¥281 million (US$2,532 thousand)
Millions of yen
Thousands of U.S. dollars
¥10,050
¥10,050
$90,541
$90,541
v) Amount of goodwill, measurement principle, amortization method, and useful life
1) Amount of goodwill
¥1,230 million (US$11,081 thousand)
2) Measurement principle
Goodwill is measured as the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed.
3) Amortization method and useful life
Straight-line method over 20 years
vi) Details of assets acquired and liabilities assumed as of the acquisition date
Current assets
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities
Millions of yen
Thousands of U.S. dollars
¥ 3,728
9,137
¥12,864
¥ 4,240
38
¥ 4,278
$ 33,586
82,315
$115,892
$ 38,198
342
$ 38,541
vii) Amount of identifiable intangible assets other than goodwill, its details and major weighted average useful life
1) Purchase price allocated to intangible assets and its major items
Customer-related assets
Order backlog
2) Major weighted average useful life
Customer-related assets
Order backlog
Total
Millions of yen
Thousands of U.S. dollars
$61,072
10,252
¥6,779
1,138
19 years
4 years
17 years
viii) Pro forma effects on the consolidated statements of income assuming the business combination had occurred at the
beginning of the fiscal year, and its measurement
Information is omitted due to immateriality. This note is not audited.
16. 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 manage-
ment 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.
Main products of the three reportable segments are as follows:
Material segment
Fibers business
The Company manufactures, processes, and sells elastic polyure-
thane filament, cupro fiber, nonwoven fabrics, and nylon 66 filament.
72
Chemicals business
The Company manufactures, processes, and sells petrochemical
products (such as styrene, acrylonitrile, polyethylene, and polysty-
rene), performance polymer products (such as synthetic rubber and
engineering plastics), and performance material and consumable
products (such as coating materials, 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).
Electronics business
The Company manufactures, processes, and sells battery separator
products (such as lithium-ion battery separator and lead-acid battery
separator) and electronic devices (such as mixed-signal LSIs and Hall
elements).
Asahi Kasei Report 2019 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 diagnos-
tic 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.
Others
The Company performs plant and environmental engineering,
research and analysis, employment agency/staffing operations, etc.
(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 (Note 2)
Assets
Other items:
Millions of yen
2019
Material
Homes
Health Care
Subtotal
Others (Note 1)
Total
¥1,176,217
5,066
1,181,283
129,565
1,492,277
¥659,754
207
659,961
68,161
523,692
¥316,166
34
316,201
41,825
472,846
¥2,152,138
5,307
2,157,445
239,551
2,488,815
¥18,265
31,359
49,624
2,411
84,873
¥2,170,403
36,666
2,207,069
241,962
2,573,688
Depreciation and amortization (Note 3)
Amortization of goodwill
Investments in affiliates accounted for
using equity method
Increase in property, plant and equipment,
and intangible assets
50,471
10,700
9,069
15
18,042
8,774
77,582
19,490
1,375
—
78,957
19,490
55,424
11,671
226
67,321
19,424
86,745
86,640
17,613
17,306
121,558
1,624
123,182
Notes: 1. The “Others” category includes plant engineering and environmental engineering, research and analysis, and employment agency/staffing operations.
2. As stated in Note 3. (b) “Changes in accounting policy difficult to distinguish from changes in accounting estimates” where Asahi Kasei and its subsidiaries in Japan had previously
primarily applied the declining-balance method for depreciation of property, plant and equipment (except for lease assets), this was changed to the straight-line method from the year
ended March 31, 2019.
Due to this change, operating income was ¥7,111 million (US$64,063 thousand) higher in Material, ¥1,005 million (US$9,054 thousand) higher in Homes, ¥674 million (US$6,072
thousand) higher in Health Care and ¥937 million (US$8,441 thousand) higher in Others segment.
3. Amortization of goodwill is not included.
Sales:
External customers
Intersegment
Total
Operating income
Assets
Other items:
Millions of yen
2018
Material
Homes
Health Care
Subtotal
Others (Note 1)
Total
¥1,087,720
5,014
1,092,734
121,925
1,332,202
¥640,988
39
641,026
64,357
483,342
¥296,258
34
296,292
39,464
450,846
¥2,024,966
5,086
2,030,052
225,746
2,266,390
¥17,251
27,557
44,807
1,870
78,427
¥2,042,216
32,643
2,074,860
227,616
2,344,817
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
56,002
8,961
9,506
—
19,340
8,821
84,848
17,782
1,665
266
86,513
18,048
45,020
12,318
450
57,788
17,172
74,961
59,814
18,431
12,186
90,431
1,226
91,657
Notes: 1. The “Others” category includes plant engineering and environmental engineering, research and analysis, and employment agency/staffing operations.
2. Amortization of goodwill is not included.
73
Asahi Kasei Report 2019
Sales:
External customers
Intersegment
Total
Operating income (Note 2)
Assets
Other items:
Thousands of U.S. dollars
2019
Material
Homes
Health Care
Subtotal
Others (Note 1)
Total
$10,596,550 $5,943,730
1,865
5,945,595
614,063
4,717,946
45,640
10,642,189
1,167,252
13,443,937
$2,848,342 $19,388,631
47,811
19,436,441
2,158,117
22,421,757
306
2,848,658
376,802
4,259,874
$164,550
282,514
447,063
21,721
764,622
$19,553,180
330,324
19,883,505
2,179,838
23,186,378
Depreciation and amortization (Note 3)
Amortization of goodwill
Investments in affiliates accounted for
using equity method
Increase in property, plant and equipment,
and intangible assets
454,694
96,396
81,703
135
162,541
79,045
698,937
175,586
12,387
—
711,324
175,586
499,315
105,144
2,036
606,495
174,991
781,486
780,541
158,676
155,910
1,095,117
14,631
1,109,748
Notes: 1. The “Others” category includes plant engineering and environmental engineering, research and analysis, and employment agency/staffing operations.
2. As stated in Note 3. (b) “Changes in accounting policy difficult to distinguish from changes in accounting estimates” where Asahi Kasei and its subsidiaries in Japan had previously
primarily applied the declining-balance method for depreciation of property, plant and equipment (except for lease assets), this was changed to the straight-line method from the year
ended March 31, 2019.
Due to this change, operating income was ¥7,111 million (US$64,063 thousand) higher in Material, ¥1,005 million (US$9,054 thousand) higher in Homes, ¥674 million (US$6,072
thousand) higher in Health Care and ¥937 million (US$8,441 thousand) higher in Others segment.
3. Amortization of goodwill is not included.
(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
2019
¥2,157,445
49,624
(36,666)
¥2,170,403
2018
¥2,030,052
44,807
(32,643)
¥2,042,216
2019
$19,436,441
447,063
(330,324)
$19,553,180
Millions of yen
Thousands of U.S. dollars
2019
¥239,551
2,411
(133)
(32,241)
¥209,587
2018
¥225,746
1,870
381
(29,522)
¥198,475
2019
$2,158,117
21,721
(1,198)
(290,459)
$1,888,171
* 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
2019
¥2,488,815
84,873
(425,141)
426,656
¥2,575,203
2018
¥2,266,390
78,427
(512,163)
474,499
¥2,307,154
2019
$22,421,757
764,622
(3,830,099)
3,843,748
$23,200,027
* 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
2019
2018
2019
2019
2018
2019
2019
2018
2019
2019
2018
2019
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
¥ 77,582
19,490
¥84,848
17,782
$ 698,937
175,586
¥ 1,375
—
¥ 1,665
266
$ 12,387
—
¥ 5,599
—
¥8,901
—
$ 50,441
—
¥ 84,556
19,490
¥ 95,415
18,048
$ 761,766
175,586
67,321
57,788
606,495
19,424
17,172
174,991
—
—
—
86,745
74,961
781,486
121,558
90,431
1,095,117
1,624
1,226
14,631
13,024
9,673
117,333
136,206
101,331
1,227,081
Notes: 1. Adjustments include elimination of intersegment transactions and corporate expenses, etc.
2. Amortization of goodwill is not included.
74
Asahi Kasei Report 2019
(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
2019
2018
Thousands of U.S. dollars
2019
United
States
Other
regions
United
States
Other
regions
Japan
China
¥1,311,136 ¥227,993 ¥211,504 ¥419,770 ¥2,170,403 ¥1,274,548 ¥191,765 ¥183,425 ¥392,477 ¥2,042,216 $11,812,036 $2,053,991 $1,905,441 $3,781,712 $19,553,180
Japan
Japan
China
China
Total
Total
Total
United
States
Other
regions
2) Property, plant and equipment
Millions of yen
2019
2018
Thousands of U.S. dollars
2019
Japan
¥428,900
United
States
¥104,413
Other
regions
¥88,053
Total
¥621,366
Japan
¥384,076
United
States
¥85,003
Other
regions
¥92,969
Total
¥562,048
Japan
United
States
$3,863,964 $940,658
Other
regions
$793,270 $5,597,892
Total
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.
17. Information on related parties
For the year ended March 31, 2019: None
For the year ended March 31, 2018: None
18. Per share information
Basic and diluted net assets per share and net income per share for the years ended March 31, 2019 and 2018, were as follows:
Basic net assets per share
Basic net income per share
Yen
2019
¥989.51
105.66
2018
¥922.11
121.93
U.S. dollars
2019
$8.91
0.95
Note: As the Company had no dilutive securities at March 31, 2019 and 2018, the Company does not disclose diluted net income per share for the years ended March 31, 2019 and 2018.
(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)
Millions of yen
Thousands of U.S. dollars
2019
¥1,402,710
21,225
(21,225)
¥1,381,485
2018
¥1,305,214
17,827
(17,827)
¥1,287,387
2019
$12,637,027
191,216
(191,216)
$12,445,811
1,396,125
1,396,125
1,396,125
Note: Shares held by the trust for granting shares to Directors, etc., numbering 442 thousand at March 31, 2019, and 464 thousand at March 31, 2018, are excluded from the number of
shares of capital stock outstanding at fiscal year end used in calculation of net assets per share.
(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)
Millions of yen
Thousands of U.S. dollars
2019
¥ 147,512
—
¥ 147,512
1,396,130
2018
¥ 170,248
—
¥ 170,248
1,396,322
2019
$1,328,937
—
$1,328,937
1,396,130
Note: Shares held by the trust for granting shares to Directors, etc., numbering 450 thousand during the year ended March 31, 2019, and 290 thousand during the year ended March 31, 2018,
are excluded from the weighted-average number of shares of capital stock used in calculation of net income per share.
75
Asahi Kasei Report 2019 19. Subsequent events
(a) Repurchase of shares
On May 10, 2019, the Board of Directors of Asahi Kasei adopted
a resolution for a repurchase of the company’s shares pursuant to
Article 459, Paragraph 1, of the Companies Act of Japan as well as
Article 37 of the company’s Articles of Incorporation.
i) Reason for repurchasing shares
To enhance shareholder returns and improve capital efficiency
ii) Details of the repurchase
1) Type of shares to be repurchased:
Common stock of Asahi Kasei Corporation
2) Number of shares to be repurchased: 12 million shares (maximum)
(0.86% of the number of issued shares excluding treasury stock)
3) Total value of shares to be repurchased: ¥10.0 billion (maximum)
4) Repurchase period: From May 30, 2019 to September 30, 2019
5) Methods of repurchase:
• Purchase through the Tokyo Stock Exchange Trading Network
System ToSTNeT-3
• Purchase on the Tokyo Stock Exchange based on discretionary
trading contracts
6) Other: In accordance with the above resolution of the Board of
Directors, Asahi Kasei implemented and completed the repurchase of
8,684,300 shares of common stock for ¥10.0 billion on May 31, 2019.
(b) Cancellation of shares of treasury stock
On May 10, 2019, the Board of Directors of Asahi Kasei adopted a
resolution for the cancellation of shares of treasury stock pursuant
to Article 178 of the Companies Act, to be implemented as follows.
On October 11, 2019, the company implemented and completed the
cancellation in accordance with the resolution.
i) Reason for cancellation
To enhance shareholder returns and improve capital efficiency
ii) Details of the cancellation
1) Type of shares to be cancelled:
Common stock of Asahi Kasei Corporation
2) Number of shares to be canceled:
8,684,300 shares (0.62% of issued shares prior to cancellation)
3) Date of cancellation:
October 11, 2019
(c) Acquisition of Cardiac Science Corporation
i) Outline of business combination
1) Name and nature of businesses of counterparty
Name of counterparty: Cardiac Science Corporation
Nature of businesses: Manufacturing, sale, and development of
automated external defibrillators (AEDs)
2) Main reasons for the acquisition
This acquisition would allow ZOLL Medical Corporation to broaden
its lineup of AED products offering customers more choices and a
stronger AED program management infrastructure.
3) The acquisition date
August 26, 2019
4) Statutory form of business combination
Stock purchase for cash as consideration
5) Name of company after transaction
Cardiac Science Corporation
6) Acquired voting right
Voting right before the acquisition: 0%
Voting right after the acquisition: 100%
7) Basic means of materializing the acquisition
Stock purchase for cash as consideration by a consolidated subsidiary
ii) Cost of acquisition and details
Stock purchase price
Purchase price
Millions of yen
Thousands of U.S. dollars
¥29,063
¥29,063
$261,829
$261,829
iii) Amount of goodwill, measurement principle, amortization
method, and useful life
1) Amount of goodwill
¥17,366 million (US$156,450 thousand)*
* Based on provisional calculation
2) Measurement principle
Goodwill is measured as the excess of the purchase price over the
fair value of identifiable assets acquired and liabilities assumed.
3) Amortization method and useful life
Not determined at present
(d) Issuance of unsecured straight bonds
i) On August 30, 2019, Asahi Kasei determined the terms of
the eleventh series unsecured straight bonds (with inter-
bond pari passu clause) as follows.
1. Total amount of issue: ¥20 billion
2. Interest rate: 0.070% per annum
3. Issue price: ¥100 per face value of ¥100
4. Redemption price: ¥100 per face value of ¥100
5. Maturity date: September 6, 2024
6. Redemption: Bullet
7. Retirement by purchase: The bonds may be repurchased at
any time from the day following the payment date except as
otherwise specified by the book-entry transfer institution.
8. Interest payment dates: March 6 and September 6 of each year
9. Offering period: August 30, 2019
10. Payment date: September 6, 2019
11. Collateral and guarantee: The bonds are not secured by any col-
lateral or guarantee, and there are no particular assets reserved
for the payment of these bonds.
12. Fiscal covenants: Negative pledge clause is attached.
ii) On August 30, 2019, Asahi Kasei determined the terms of
the twelfth series unsecured straight bonds (with inter-bond
pari passu clause) as follows.
1. Total amount of issue: ¥20 billion
2. Interest rate: 0.210% per annum
3. Issue price: ¥100 per face value of ¥100
4. Redemption price: ¥100 per face value of ¥100
5. Maturity date: September 6, 2029
6. Redemption: Bullet
7. Retirement by purchase: The bonds may be repurchased at
any time from the day following the payment date except as
otherwise specified by the book-entry transfer institution.
8. Interest payment dates: March 6 and September 6 of each year
9. Offering period: August 30, 2019
10. Payment date: September 6, 2019
11. Collateral and guarantee: The bonds are not secured by any col-
lateral or guarantee, and there are no particular assets reserved
for the payment of these bonds.
12. Fiscal covenants: Negative pledge clause is attached.
76
Asahi Kasei Report 2019 20. Borrowings
(a) Bonds payable at March 31, 2019 and 2018, comprised the following:
Unsecured 1.46% yen bonds due in 2019
Unsecured 0.10% yen bonds due in 2023
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, 2019, are as follows:
Year ending March 31
2020
2021
2022
2023
2024
2025 and thereafter
Total
Millions of yen
Thousands of U.S. dollars
2019
¥20,000
20,000
¥40,000
2018
¥20,000
—
¥20,000
2019
$180,180
180,180
$360,360
Millions of yen
Thousands of U.S. dollars
¥20,000
—
—
—
20,000
—
¥40,000
$180,180
—
—
—
180,180
—
$360,360
(b) Loans payable at March 31, 2019 and 2018, comprised the following:
Short-term loans payable with an interest rate of 0.32%
Current portion of long-term loans payable with an interest rate of 2.06%
Current portion of lease obligations with an interest rate of 1.36%
Long-term loans payable (except portion due within one year) with an interest rate of 1.41%
Lease obligations (except portion due within one year) with an interest rate of 0.98%
Commercial paper (portion due within one year) with an interest rate of (0.00)%
Total
Notes: 1. Interest rates shown are weighted average interest rates for the balance outstanding at March 31, 2019.
Millions of yen
Thousands of U.S. dollars
2019
¥ 75,484
22,095
164
209,878
253
77,000
¥384,874
2018
¥ 58,898
59,120
199
143,176
352
20,000
¥281,746
2019
$ 680,036
199,054
1,477
1,890,793
2,279
693,694
$3,467,333
2. The aggregate annual maturities of long-term loans payable and lease obligations (except portion due within one year) after March 31, 2019, are as follows:
Year ending March 31
2021
2022
2023
2024
2025 and thereafter
Long-term loans payable
Lease obligations
Millions of yen
Thousands of U.S. dollars
Millions of yen
Thousands of U.S. dollars
¥24,951
55,334
70,668
25,785
33,140
$224,784
498,505
636,649
232,297
298,559
¥141
71
30
10
—
$1,270
640
270
90
—
21. Supplementary schedule of asset retirement obligations
Because the amounts of asset retirement obligations on April 1, 2018, and March 31, 2019, were not more than 1% of the combined totals of
liabilities and net assets on the respective dates, preparation of a supplementary schedule of asset retirement obligations is omitted in accor-
dance with Article 92-2 of the Ordinance on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements.
22. Others
Litigation
Litigation related to pile installation
On November 28, 2017, Mitsui Fudosan Residential Co., Ltd. filed suit (hereinafter “First Lawsuit”) in the Tokyo District Court against the
three companies of Sumitomo Mitsui Construction Co., Ltd., Hitachi High-Technologies Corporation, and Asahi Kasei Construction Materials
Corporation, a subsidiary of the Company, seeking compensation for damages of approximately ¥45.9 billion (subsequently changed to approxi-
mately ¥51.0 billion) related to the cost of rebuilding a condominium complex in Yokohama City due to concerns of unsound installation of a
portion of foundation piles; Sumitomo Mitsui Construction being the prime contractor for construction of said condominium complex, Hitachi
High-Technologies the primary subcontractor for pile installation, and Asahi Kasei Construction Materials the secondary subcontractor for pile
installation. Asahi Kasei Construction Materials holds that there is no basis for Mitsui Fudosan Residential’s claim, and will make this argument
during the proceedings of the First Lawsuit.
Related to the First Lawsuit, on April 27, 2018, Sumitomo Mitsui Construction filed suit (hereinafter “Second Lawsuit”) against Hitachi High-
Technologies and Asahi Kasei Construction Materials seeking compensation for any damages it may incur in the First Lawsuit. Regarding this
Second Lawsuit, the date of service of complaint to Asahi Kasei Construction Materials was May 14, 2018. Asahi Kasei Construction Materials
holds that there is no basis for Sumitomo Mitsui Construction’s claim, and will make this argument during the proceedings of the Second Lawsuit.
Related to the First Lawsuit and Second Lawsuit, on May 25, 2018, Hitachi High-Technologies filed suit (hereinafter “Third Lawsuit”) against Asahi
Kasei Construction Materials seeking compensation for any damages it may incur in the First Lawsuit or Second Lawsuit. Asahi Kasei Construction
Materials holds that there is no basis for Hitachi High-Technologies’s claim, and will make this argument during the proceedings of the Third Lawsuit.
77
Asahi Kasei Report 2019
78
Asahi Kasei Report 2019 Company Information/Investors Information
(as of March 31, 2019)
■ Corporate Profile
Asahi Kasei IR Website
Company Name
Asahi Kasei Corporation
Date of Establishment May 21, 1931
Paid-in Capital
¥103,389 million
Employees
39,283 (consolidated)
7,864 (non-consolidated)
Asahi Kasei’s financial results and other materials
for investors are available in our IR website.
www.asahi-kasei.co.jp/asahi/en/ir
■ Asahi Kasei Group Offices (as of March 31, 2019)
Asahi Kasei Corporation
Tokyo Head Office
Core Operating Companies
Asahi Kasei Microdevices
Hibiya Mitsui Tower
1-1-2 Yurakucho, Chiyoda-ku, Tokyo 100-0006 Japan
Phone: +81-(0)3-6699-3000 Fax: +81-(0)3-6699-3161
Hibiya Mitsui Tower
1-1-2 Yurakucho, Chiyoda-ku, Tokyo 100-0006 Japan
Phone: +81-(0)3-6699-3933
Asahi Kasei (China) Co., Ltd.
Asahi Kasei Homes
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 1502B, Plot C-70, G-Block,
Bandra Kurla Complex, Bandra (East), Mumbai 400051 India
Phone: +91-22-6710-3962
1-105 Kanda Jinbocho, Chiyoda-ku, Tokyo 101-8101 Japan
Phone: +81-(0)3-6899-3000
Asahi Kasei Construction Materials
1-105 Kanda Jinbocho, Chiyoda-ku, Tokyo 101-8101 Japan
Phone: +81-(0)3-3296-3500
Asahi Kasei Pharma
Hibiya Mitsui Tower
1-1-2 Yurakucho, Chiyoda-ku, Tokyo 100-0006 Japan
Phone: +81-(0)3-6699-3600
Asahi Kasei Medical
Hibiya Mitsui Tower
1-1-2 Yurakucho, Chiyoda-ku, Tokyo 100-0006 Japan
Phone: +81-(0)3-6699-3750
ZOLL Medical Corporation
269 Mill Rd., Chelmsford, MA 01824-4105 USA
Phone: +1-978-421-9655
■ Investors Information
Stock Listing
Stock Code
Authorized Shares
Outstanding Shares
Transfer Agent
Independent Auditors
Number of Shareholders 88,768
Tokyo
3407
4,000,000,000
1,402,616,332
Sumitomo Mitsui Trust Bank, Ltd.
PricewaterhouseCoopers Aarata LLC
Largest Shareholders
JP Morgan Chase Bank 380055
% of equity*
10.32
The Master Trust Bank of Japan, Ltd. (trust account)
Japan Trustee Services Bank, Ltd. (trust account)
Nippon Life Insurance Company
Sumitomo Mitsui Banking Corp.
Asahi Kasei Group Employee Stockholding Assn.
SSBTC Client Omnibus Account
Japan Trustee Services Bank, Ltd. (trust account 5)
Japan Trustee Services Bank, Ltd. (trust account 7)
State Street Bank West Client – Treaty 505234
* Percentage of equity ownership after exclusion of treasury stock.
6.88
4.81
4.18
2.54
2.32
2.07
1.96
1.62
1.50
Asahi Kasei Report 2019
79
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Hibiya Mitsui Tower
1-1-2 Yurakucho, Chiyoda-ku, Tokyo 100-0006 Japan
www.asahi-kasei.co.jp/asahi/en/
Corporate Communications
Tel: +81-(0)3-6699-3008, Fax: +81-(0)3-6699-3187
Printed in Japan
2019.11