Formulation of New Management Policy “Forging the future”

December 1, 2021

Updated on December 1, 2021

Company name: Mitsubishi Chemical Holdings Corporation
Representative: Jean-Marc Gilson
Representative Corporate Executive Officer, 
President & Chief Executive Officer
Listed on the 1st section of the TSE (stock code: 4188)
Contact: Osamu Shimizu 
General Manager, 
Corporate Communications Office
Tel: [+81] (0)3-6748-7120

 

Formulation of New Management Policy “Forging the future”

 
Mitsubishi Chemical Holdings Corporation (MCHC) has formulated a new management policy “Forging the future”, covering the period up to the end of FY 2025.
In February 2021, MCHC announced its medium-term management plan, “APTSIS 25 Step 1”, which covers the two years from FY 2021. “Forging the future" is a new management policy based on the assumptions made at the time the plan was formulated and on a review of the measures needed to maximize corporate value.
We aim to sustainably increase value for our stakeholders with a clearer strategy to drive operational excellence and unlock the growth potential of our businesses.

Ⅰ.Strategic Priorities

 
  1.Growth, Performance, and Sustainability
  2.Business to Exit
  3.Strategic Cost Transformation
  4.Leaner Structure to Execute Strategy
  5.Strategic Capital Allocation
 
 1. Growth, Performance, and Sustainability
 
(1)  Our Portfolio Assessment Criteria
 We will focus on businesses in attractive markets where MCHC is positioned to win.
 
 i. Market Attractiveness
  ・Market growth
  ・Potential Risk Factors
  ・ROS / ROIC / EBITDA Margin
 
 ii. Strength
  ・No.1 / 2 Market Position Potential
  ・Technological Innovation
  ・Competitive Advantage
 
 iii. Carbon Neutrality
  ・CO2 Emissions Level
  ・CO2 Reduction Potential
  ・Values to Customers / Society

(2)  Our Strategic Focus
 Based on the above evaluation criteria, Electronics and Health Care & Life Science will be positioned as our strategic focus.
 
  [Our strategic focus]
 
 
  [Electronics]

   We will aim to achieve further growth in target domains by using MCHC’s key technologies.
 

  [Health Care & Life Science]

   We will lead innovation in targeted areas in the food sector, and in healthcare we will realize the value of late-stage development assets such as a potential coronavirus vaccine.
 
 
  [Markets where we are strong: Solid performance materials businesses]

   We will aim to further increase competitiveness in each of the domains including chemicals, polymers, films, and molding materials

  [Markets where we are strong: Industrial gas]

   We will take strategic initiatives to capture growth, reduce costs and improve profitability.
 
(3)  Digitalization

 By bolstering our digital strategy, we will enable customer experience and end-to-end business process transformations.

 
(4)  Carbon Neutrality by 2050

  We will take a practical path towards carbon neutrality by 2050 while achieving sustainable growth.
 
2.Business to Exit
 
  We will lead the consolidation of domestic basic chemical industries towards carbon neutrality by 2050 via restructuring, including through the carving out and future exit of our petrochemicals and coal chemicals.
 
  
  

 
3.Strategic Cost Transformation
 
We will reduce costs by more than 100 Billion yen per year by fiscal 2025 through the following measures for each item.
 
Major Item Margin Impact Value Levers
Logistics / Supply Chain Management ++ ・Pursue efficiency through digitalization across entire process from manufacturing to sales
Engineering repair and procurement ++ ・Optimization of investment through digital preventative maintenance
・Procurement process reformation and digitalization
General and Administrative + ・Business reorganization
 - Integrate subsidiaries and offices
 - Introduction of new personnel system

Process excellence and digitalization
R&D ++ Clear prioritization
Value impact
 - More selective R&D at Mitsubishi Tanabe Pharma
・Open innovation and Materials Informatics
Price structure improvement ++ Price structure improvement of low-profit businesses


 

 
4.Leaner Structure to Execute Strategy
 

From April 1, 2022 onward, we will reform our organizational structure to create a flat organization with a "One Company, One Team" culture. In addition, we will shift from a legal entity-based to a business unit and corporate function-based operation to clarify where responsibility lies.
     
 
5.Strategic capital allocation
 

 We will strategically reallocate available capital from operational efficiency and divestures.
 
 

Ⅱ.Performance Targets for 2025

 
Improved operational efficiency and financial strength create solid foundation for accelerated growth.
 
(1)  Group target
  FY2020
Actual
FY2021
Forecast
  FY2025
Base Target
Group Revenues JPY 3,258 Bil JPY 3,886 Bil JPY 3,000 Bil
Core Operating Income JPY 175 Bil JPY 300 Bil JPY 350~370 Bil
EBITDA JPY 406 Bil JPY 530 Bil JPY 540~560 Bil
EBITDA margin 12.5% 13.6% 18~20%
EPS JPY (-5.3) JPY 108.6 JPY 125-145
Financial Leverage
(Net Debt / EBITDA)
5.3x 3.8x 2.0-3.0x
ROE -0.6% 11.0% ≧10%
ROIC 3.3% 5.4% > 7%
 
(2)  Targets by main segment
  Performance Products MMA Healthcare Industrial Gas
(Request-based)
EBITDA ≈ JPY 180 Bil ≈ JPY 70 Bil ≈ JPY 70 Bil ≈ JPY 220 Bil
EBITDA margin ≈ 15% ≈ 26% ≈ 15% ≈ 25%
 

Ⅲ.Road Map

 

We will implement a firm strategy to increase shareholder value in accordance with the following road map.
 

 
Forward-Looking Statements 
Forward-looking statements are based largely on the Company’s expectations and information available as of the date hereof, and are subject to risks and uncertainties which may be beyond the Company’s control. Actual results could differ materially due to numerous factors, including but not limited to market conditions and the impact of competition within the industry.