Medium-Term Management Plan APTSIS 25 Step 1
APTSIS 25 Formulated in 2 Steps in relation to COVID-19
The COVID-19 pandemic has been seriously impacting the global economy and the current situation is still full of uncertainty. Based on this awareness, APTSIS 25 has been divided into two phases: Step 1 (During COVID-19) and Step 2 (After COVID-19)
US-China friction and COVID-19 have transformed landscape
Politics and diplomacy
- Conflict between totalitarianism and democracy
- Nationalism rising and international cooperation fraying
- Growing geopolitical risks from fragmentation
- Swifter setting of carbon neutral targets and tighter regulations
Economy and business
- Diversifying supply networks to hedge risks
- Switching to remote interactions through e-commerce
- Mass progress in reforming work styles and boosting operational efficiency
- Accelerating GX and DX
- Pandemic impact and global trends
- Global economic recovery scenario based on COVID-19 impact
- Impact by business area
- Reinforce business foundations (streamline operations and overhaul human resources system reforms)
- Business strategies
-Accelerate reorganization and restructuring of atrisk businesses
-Growth strategies in light of the impact of COVID-19
- Healthcare business growth strategies
Divided into 2 steps during and after COVID-19
focusing on implementing measures to restore business profitability, strengthen
business foundations, and enable future growth with strategic planning
the next 3 years will be covered by ‘Step 2’,which is expected to be a period of fast advancement toward KV30
by focusing on accelerating growth while responding to the changing social needs caused by the pandemic.
In light of the uncertain economic situation due to COVID-19, we will strive to achieve a core operating income of 250.0 billion yen, a net income attributable to shareholders of the parent of 120.0 billion yen, and an ROE of 10%.
Key financial metrics
- Core operating income
- Net income attributable
to owners of the parent
Core operating income
*Based on publication at the time of planning
Under APTSIS 25, Step 1 we will strengthen our management foundations through autonomously achievable rationalizations and asset reduction measures, given the uncertainty in relation to profitability restoration.
Save 22 billion yen by rationalizing and 180 billion yen overall by paring assets.
Rationalize and pare assets
- Save 22 billion yen by rationalizing business infrastructure
- Pare assets by 180 billion yen through asset efficiency measures Rationalize and pare assets
- Lower cross-shareholdings: 65 billion yen
- Improve CCC*: 40 billion yen
- Reduce assets: 75 billion yen
*Cash Convesion Cycle
Reduce office space
- Consolidate decentralized offices around Nihombashi and Osaki at Palace Building (saving around 15 billion yen over 10 years)
- Design office layout for maximum attendance rate of 60% (in fiscal 2021)
- Eliminate approval seals and paper from business processes so employees do not need to go to office
- Expand satellite offices so employees can work where and when they want
Digitize to improve work efficiency
Enhance productivity and overhaul operations
- Reform business model by emphasizing customer-centric digital supply chain
- Automate production, deploy robots, and digitize facilities management to create smart factories
- Accelerate R&D with materials informatics, optimization prediction, and other digital technologies
Business Model Reforms
Enhance added value to our businesses, reform business models to contribute to the optimization of clients’ business and social systems in their entirety and expand growth businesses.
Example case of strengthen solution
Establish component supplying system to further expand carbon fiber and composite material business in the field of mobility and build up an integrated business model from raw material to recycling.
Strengthen carbon fiber composite material business (Step 1)
- Strengthen business centered on prepreg compression and CF- SMC*
- Set up CF-SMC site adjacent to Italian subsidiary C.P.C. to build structure for providing integrated solutions for parts design, molding, painting, and assembly
*Carbon Fiber Sheet- Molding Compound
Toyota’s GR Yaris employs CF-SMC
*photo credit: Toyota Motor Corporation
Build recycling business model (Step 2)
- Cultivate technologies of Shinryo, CFK Valley Stade Recycling, carboNXT, and Minger Group, all now part of Group, to build recycling business model for carbon fiber composite materials and engineering plastics that help lower CO2 emissions
R&D Initiatives for Next-generation Businesses
Set R&D themes expected to contribute to issue resolution for next-generation businesses in the growing business areas: further promotion of open innovation through material design using MI, raise R&D efficiency using quantum computing and proactive utilization of start-ups via CVC (Corporate Venture Capital).
|Growth Business Areas||Solutions||Examples of R&D Themes||Technologies and products (Images)|
lightweight materials for mobility
Carbon-free hydrogen station
High-performance packaging materials
Business Portfolio Strategies
Throughout the duration of APTSIS 25, Step 1 and Step 2 we will be identifying businesses that contribute to the medium-to-longterm growth through comprehensive evaluation from three perspectives: whether the business contributes to the resolution of social issues (MOS),
whether it has room for technology innovation and if the technologies can also be used for innovations in other fields (MOT), and its profitability and potential for market growth (MOE). In addition, based on the lessons learnt from APTSIS 20, we will build up a stable profitability structure which is less likely to be impacted by the external environment. In order to do so, we will be examining each business’s risks in the future such as possible changes in demand structure and growth opportunities based on changing social needs.
Basic Portfolio Reform Policies
Implement portfolio management based on changes in social needs and future business risks through the quadrant portfolio management based on the three-axis evaluation of MOS, MOT and MOE*.
Example case of Business structure reform in response to changing (tightening) environmental regulations
- Carbon chemicals (Strengthen Petroleum Refinery Alliances)
- We are strengthening competitiveness by optimizing Kashima Oil and MCC’s Ibaraki operations in an integrated manner and achieve chemical recycling of waste plastics using refinery and petrochemical facilities.
Business areas expected to grow
Accelerate innovation and business model reform to respond to growing demands due to COVID-19.
Business areas expected to grow
Example case of acceleration of commercialization process in response to social needs
- Progress in Vaccine Business
- We are developing VLP vaccines at Medicago Canada with the aim of launching in the North American market within the year 2021. In Japan, we are collaborating with BIKEN Group to promote stable supply of vaccines to help protect adults and children from infections. We are aiming to generate more than 100 billion yen from the vaccine business sales by fiscal 2025.
Specific measures in each of above areas
- GHG reduction
- Further expand carbon fiber composite materials business in mobility field and provide total solutions including in chemical materials recycling (refer to P8)
- Evolve LIB materials and develop next-generation battery materials to help popularize EVs and expand adoption of renewable energy.
- Carbon Cycle
- Help materialize low-environmental impact cycles through biomass and biodegradable polymers
- Help reach beyond-zero emissions targets by developing artificial photosynthesis technology that harnesses CO₂
- Provide hydrogen stations as key social infrastructure
- Food and water supply
- Help cut food losses by creating highly functional food packaging materials
- Contribute to circular economy through biomass and recycling and reduction technologies.
- Digital society infrastructures
- Expand the semiconductor-related solutions business by combining advanced materials development and environmental impact reduction services.
- Provide high-performance materials for 5G and advanced communications
- Human interface
- Enhance comfort with materials that improve safety and convenience
- Medical advances
- Expand portfolio by combining central nervous system and immuno-inflammation research infrastructure and modalities.
- Increase precision medicine R&D spending and launch more products after fiscal 2025
- Advance development and commercialization of Muse cell- based regenerative medicine products, aiming to file in fiscal 2021 and obtain approval in fiscal 2022.
- Help prevent infectious diseases by developing VLP vaccines and adjuvants (refer to P7)
The DX promotion measures being formulated since Fiscal 2017 have now entered a new phase. We will formulate the DX grand design to achieve KV30 and utilize DX across all aspects of business activities including production, supply chain, management and work style reform.
As for MCHC Group, we are envisioning Carbon Neutral (CN) by 2050 and making solid progress in terms of constructing infrastructures to achieve neutral environmental impact and reduce GHG in line with the target standards set by the government in each country / region. For this purpose, we have completed the LCA calculation system which enables subjective evaluation of total CO2 emissions throughout the entire value chain and are currently working on the introduction of internal carbon licensing scheme.
In order to achieve CN, we need to not only reduce emissions but also develop new technology and establish business models to utilize CO2. We must take this challenge as a great opportunity for growth and accelerate innovation to utilize CO2 as a resource. I believe this is a mission for MCHC Group from our society.
Promotion of Circular Economy
Promote circular economy via themes of circulation of carbon, plastics, and water resources.
- Reduce emissions and
- -Reduce emissions from manufacturing
- -Rationalize processes
- -Switch fuels on in-house generators and shift to purchased electricity
- -Use renewable energy and credits
- -Mull expanding avoided emissions
- -Accelerate CO₂ usage R&D
- -Develop artificial photosynthesis technology
- -Produce photocatalytic hydrogen -Recycle CO2
- -Recycle CO₂
- Chemical and material recycling
- Environmentally friendly product design
Water Resource Circulation
- Advanced recycling
- Reduce intake water
to advanced levels in
chemical industry by 2025
Develop evaluation method and deployment structure
GHG Reduction Initiatives
Initiatives to Cut GHG EmissionsSeek to lower emissions in line with national and regional government targets
Domestic reduction efforts
- Emissions reductions from manufacturing
- Switch fuels on in-house generators and boiler facilities
- Rationalize processes, including by DX and conserving energy
- Use renewable energy and credits
- Improvement CO2 emissions factor for purchased electricity
- Accelerate R&D to recycle CO₂
Develop artificial photosynthesis technology:
Large-scale verification tests in 2030 and social implementation in 2040
*MCC participates in NEDO’s Artificial Photosynthesis Project and is member of ARPChem
- Develop artificial photosynthesis technology:
- Emissions reduction contributions across entire value chain
- Implement chemical recycling
- Expand deployment of biomass plastics