Chugoku Marine Paints,Ltd. · TSE:4617

Chugoku Marine Paints,Ltd — Q1 FY03/2022 Earnings Presentation

52 slides from Chugoku Marine Paints,Ltd's earnings presentation, Jul 30, 2021

  1. Slide 1: Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2022

    Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2022 July 30, 2021 Chugoku Marine Paints, Ltd. (TSE Code: 4617) Company mascot, “Pentaro”

  2. Slide 2: Outline

    Outline Page １. Consolidated Earnings Summary 3–11 ２. Summary by Product and Region 12–20 ３. Full-Year Outlook and Topics 21–25 ４. Medium-Term Management Plan 26–42 CMP New Century Plan 2 ５. Reference 43–52 Note: Figures presented in tables and graphs are expressed in millions of yen unless otherwis

  3. Slide 3: 1. Consolidated Earnings Summary

    1-1 1. Consolidated Earnings Summary Copyright © Chugoku Marine Paints, Ltd. All Rights Reserved. 3

  4. Slide 4: Consolidated Q1 earnings highlights

    Consolidated Q1 earnings highlights ✔ Despite significant growth in sales from container coatings and upward impact from exchange rates, net sales were roughly level YoY due to listless performance from coatings for new ships and heavy duty coatings stemming from sluggish demand. ✔ Profit declined s

  5. Slide 5: Consolidated income statement

    Consolidated income statement Net sales effectively declined when excluding upward impact from exchange rates. The gross margin decreased by 4.9pp due to a rise in procurement costs stemming from soaring raw material prices. The operating profit margin declined to 4.3% despite a downturn in SG&A exp

  6. Slide 6: Income statement supplemental information

    Income statement supplemental information Q1 FY03/21 Q1 FY03/22 Change % change Depreciation 472 504 ＋32 ＋6.8% R&D expenses 444 384 －59 －13.4% Domestic naphtha 25,000 47,700 ＋22,700 ＋90.8% price (JPY/kl) ◆Exchange rate (JPY) USD 108.92 105.90 －3.02 －2.8% EUR 120.11 127.69 ＋7.58 ＋6.3% CNY 15.60 16.36

  7. Slide 7: Major raw material prices

    Major raw material prices Domestic naphtha Epoxy resin （＄/t） 53,500 54,200 Up approx. 91% YoY 54,000 7,000 （JPY/kl） in April-June 50,000 45,400 47,700 （Forecast） 44,800 6,000 41,200 40,200 41,300 38,800 40,000 4,926 5,000 4,463 31,300 ◆ 30,200 (July average) 4,000 30,000 25,000 3,583 2,722 2,663 2,6

  8. Slide 8: Factors affecting consolidated operating profit (summary)

    Factors affecting consolidated operating 1-5 profit (summary) （Billions of yen） ＋0.57 20 15 10 ＋0.23 1.60 ＋0.09 5 －1.67 0.83 0 2020年度 Q1 販売価格 Selling 原材料コスト Material Exchange 為替影響 Others その他 Q1 2021年度 1Q FY03/21 Price costs rate impact 1Q FY03/22 (gross profit) Copyright © Chugoku Marine Paints, Ltd

  9. Slide 9: Shareholder returns

    Shareholder 1-6 returns Return The Company aims to achieve an average total return on consolidated shareholders’ equity standards (D&BOE) of at least 5% over the course of its medium-term management plan (FY03/22–FY03/26). Dividends Share buybacks Consolidated payout ratio: at least 40% We will flex

  10. Slide 10: Consolidated balance sheet summary

    Consolidated 1-6 balance sheet summary End-FY03/21 End-Q1 FY03/22 Change Main changes Cash and deposits -290 Current assets 72,132 73,070 ＋937 Notes and accounts receivable–trade -692 Merchandise and finished goods +1,070 Raw materials and supplies +984 Property, plant and 24,449 24,572 ＋123 equipme

  11. Slide 11: Consolidated cash flows statement summary

    1-7 Consolidated cash flows statement summary Q1 FY03/21 Q1 FY03/22 Change Main changes Profit before income taxes -366 112 1,034 ＋921 Cash flows from operating Change in trade receivables +1,807 Change in trade payables +1,260 activities Change in inventories -1,136 Income taxes paid -385 847 (297)

  12. Slide 12: 2. Summary by Product and Region

    1-1 2. Summary by Product and Region Copyright © Chugoku Marine Paints, Ltd. All Rights Reserved. 12

  13. Slide 13: Sales by product and region

    2-1 Sales by product and region South Southeast Europe and Japan China Total Korea Asia the US Q1 FY03/21 7,127 2,009 1,744 1,634 3,658 16,174 Marine Q1 FY03/22 6,386 2,255 1,771 1,606 3,605 15,625 coatings % change －10.4% ＋12.3% ＋1.5% －1.7% －1.5% －3.4% Q1 FY03/21 1,343 189 34 1,330 75 2,973 Industr

  14. Slide 14: Summary by product

    Summary by product 2-2 Sales by product Marine coatings Marine coatings Industrial coatings Container coatings 船舶 工業 コンテナ Sales of coatings for new ships declined due to demand shrinkage 19,405 19,506 caused by a decrease in ship construction. Profit decreased significantly due to the prohibitive di

  15. Slide 15: Performance by region

    2-3 Performance by region Sales fell in Japan due to a decline in new shipbuilding volume. At the same time, sales in China increased sharply due to a rebound effect generated by heavy downward impact incurred from the COVID-19 pandemic in Q1 FY03/21 and recovery in container demand. We observed rem

  16. Slide 16: Japan

    Japan 2-4 Sales Down 7.4% YoY Segment profit Down 477 YoY 8,554 614 7,920 －1.2% 729 606 Heavy duty coatings ＋15.3% 617 581 841 Construction materials －4.5% 555 PBs*1 139 2,358 ＋8.5% 0 2020年度 Q1 1Q FY03/21 2021年度 Q1 1Q FY03/22 Ship repair 2,558 Overview ✔ Sales of coatings for new ships declined subs

  17. Slide 17: China

    China 2-5 Sales Up 43.5% YoY Segment profit Up 59 YoY 3,237 702 Container △ 109 －109 +approx. 1,100% －169 △ 169 2,256 58 279 Heavy duty coatings ＋47.7% 189 -180 2020年度 Q1 1Q FY03/21 2021年度 Q1 1Q FY03/22 773 Ship repair －8.3% Overview 843 ✔ Sales of coatings for new ships recovered following a sharp

  18. Slide 18: South Korea

    South Korea 2-6 Sales Up 1.3% YoY Segment profit Down 278 YoY 1,779 1,803 34 31 Heavy duty coatings 156 180 ＋1.5% 183 Ship repair △ 121 －121 -150 Q1 FY03/21 Q1 FY03/22 Overview 1,564 ＋1.5% 1,588 New ships ✔ Despite a decline in ship construction across the overall market, sales of coatings for new s

  19. Slide 19: Southeast Asia

    Southeast Asia 2-7 Sales Down 7.2% YoY Segment profit Down 137 YoY 3,064 100 2,845 138 Container 594 457 1,299 －17.9% 1,066 Heavy duty coatings 0 2020年度 1Q 2021年度 1Q Q1 FY03/21 Q1 FY03/22 30 33 Construction materials 70 91 PBs* Overview ✔ Although performance in Thailand and Indonesia was strong, sa

  20. Slide 20: Europe and the US

    Europe and the US 2-8 Sales Down 1.3% YoY Segment profit Up 80 YoY 3,750 3,699 Container 75 64 Heavy duty coatings 283 ＋8.0% 306 PBs* 155 74 0 Q1 FY03/21 Q1 FY03/22 Overview 3,332 －2.1% 3,263 Ship repair ✔ Sales of coatings for ship repair were at the same high level as in Q1 FY03/21 thanks in part

  21. Slide 21: 3. Full Year Outlook and Topics

    1-1 ３. Full Year Outlook and Topics Copyright © Chugoku Marine Paints, Ltd. All Rights Reserved. 21

  22. Slide 22: FY03/22 full-year earnings forecasts

    3-1 FY03/22 full-year earnings forecasts The Company has made no changes to the prior forecast it announced on May 11, 2021. Generally, raw material prices currently remain high. Epoxy resin prices have fallen slightly since July, but future prices for this and other raw materials continue to be unp

  23. Slide 23: Sales forecasts by product and region

    3-2 Sales forecasts by product and region Q1 progress FY03/22 FY03/21 results % change YoY versus full Forecasts year forecast Marine 68,681 64,400 －6.2% 24.3% coatings Industrial 11,369 11,850 ＋4.2% 24.7％ Product coatings Container 2,049 3,400 ＋65.9% 25.6% coatings Other 342 350 ＋2.2% 24.6％ Total 8

  24. Slide 24: Formal decision reached on fuel economy regulations for existing ocean-going ships

    Topics: Formal decision reached on fuel economy 1-5 regulations for existing ocean-going ships Regulations adopted by the International Maritime Organization (IMO) in June 2021 Efforts to make ships environmentally compliant through the reduction of greenhouse gas emissions represent a business oppo

  25. Slide 25: www.cmp.co.jp

    www.cmp.co.jp www.cmp-chugoku.com Forecasts presented in these materials are based on judgments made in accordance with information available to CMP as of July 30, 2021. Actual results may differ materially from forecasts due to various risks and uncertainties. Copyright © Chugoku Marine Paints, Ltd

  26. Slide 26: 4. Medium-Term Management Plan

    1-1 (Reissue) ４. Medium-Term Management Plan CMP New Century Plan 2 （FY03/22–FY03/26） Copyright © Chugoku Marine Paints, Ltd. All Rights Reserved. 26

  27. Slide 27: System and management philosophy

    System and management philosophy We have redefined our management philosophy and revised our long-term vision in accordance with our newly formulated medium-term management plan. 1. Ensure customer trust and satisfaction with the highest possible quality 2. Strive from a global perspective to contin

  28. Slide 28: Long-term vision (conditions we aim to establish by 2030)

    Long-term vision (conditions we aim to establish by 2030) A leading global niche company distinguished by sustainability and high profitability ✔ Obtain a top share in the global marine coatings market ✔ Become the world’s leading coating manufacturer through efforts aimed at achieving a sustainable

  29. Slide 29: Orientation and composition of the new medium-term management plan

    Orientation and composition of the new medium-term management plan FY03/22 FY03/26 2030 Long-term vision Leading global niche company distinguished by sustainability and high profitability Subsequent medium-term CMP New Century Plan 2 management plans Medium-term management plan Promote managerial i

  30. Slide 30: Basic strategy (key themes)

    Basic strategy (key themes) Expand value provided through environmental and social 1 contributions Focus on businesses that lead to Expand both social and environmental and social solutions economic value ✔ Further expand reductions in greenhouse gases (GHGs) and volatile organic compounds (VOCs) No

  31. Slide 31: Basic strategy: Improve and stabilize profit structure

    Basic strategy (key themes) 2 Improve and stabilize profit structure Achieve sustainable improvement in Curtail profit level fluctuations profitability through a variety caused by changes of approaches in business environment (reconstruction of profit structure) Stable creation of high economic valu

  32. Slide 32: Basic strategy: Reinforce organizational foundations

    Basic strategy (key themes) 3 Reinforce organizational foundations Improve the performance Strengthen business of human resources management functions Reinforcing foundations for value creation that contributes to the achievement of lasting growth ✔ Create rewarding work environments ✔ Optimize syst

  33. Slide 33: Product category-specific strategies: Marine coatings

    Product category-specific strategies, measures, and targets (sales and products) FY03/26 sales target: 75 billion yen Marine coatings (+9% compared to FY03/21) FY03/21 FY03/26 Share results target Environmental awareness and basic policies Japan 63% 65% Demand will continue to be sluggish for the fo

  34. Slide 34: Product category-specific strategies: Marine coatings

    Product category-specific strategies, measures, and targets (sales and products) FY03/26 sales target: 75 billion yen Marine coatings (+9% compared to FY03/21) Sales ✔ Promote switch to high-performance antifoulings as a means of compliance with GHG emissions regulations ✔ Improve profitability by e

  35. Slide 35: Product category-specific strategies: Industrial coatings

    Product category-specific strategies, measures, and targets (sales and products) FY03/26 sales target: 15 billion yen Industrial coatings (+32% compared to FY03/21) Sales ✔ Capture infrastructure-related demand with environmentally friendly (solvent-free and water-based) coatings ✔ Move forward with

  36. Slide 36: Product category-specific strategies: Container coatings

    Product category-specific strategies, measures, and targets (sales and products) Container coatings FY03/26 sales target: 10 billion yen (+390% compared to FY03/21) ✔ Increase our market share by converting all products into items with next- generation water-based specs ✔ Establish a supply system c

  37. Slide 37: Function-specific strategies and measures

    Function-specific strategies and measures Technology Promote development of environmentally friendly products ✔ Implement measures related to GHG reduction and transboundary movement of marine life (expand supply of low-friction, high-performance antifoulings) ✔ Lower the volume of VOCs in products

  38. Slide 38: Function-specific strategies and measures

    Function-specific strategies and measures ✔ Improve efficiency by introducing labor-saving equipment ✔ Renovate factories in Japan Production ✔ Reconstruct production systems in China and South Korea ✔ Reduce CO2 emissions from production bases ✔ Stabilize earnings by hedging against risks associate

  39. Slide 39: Investment plan

    Investment plan Capital investment plan Details Five-year total This medium-term management plan assumes that Large-scale bases in Japan (Shiga Prefecture) and East Asia will investment at be renovated or relocated with the aim of optimizing about 12 billion yen production bases production systems a

  40. Slide 40: Shareholder return policy

    Shareholder 1-6 return policy Basic shareholder return policy We will make growth investment our top priority while actively returning surplus funds to our shareholders and properly managing shareholders’ equity. We will monitor total return on consolidated shareholders’ equity Shareholder (D&BOE*)

  41. Slide 41: Financial policy

    Financial policy While actively conducting growth investment and ensuring shareholder returns, we will set and manage the following targets with the goal of maintaining a stable financial base. Medium-term management FY03/21 results plan targets Equity ratio 55.3% 50–55% D/E ratio 32.9% 35–50% Cash

  42. Slide 42: Consolidated performance targets

    Consolidated performance targets We aim to achieve organic growth and add about 10 billion yen in sales through M&A and strategic alliances. (Millions of yen) FY03/21 results FY03/26 targets Change Existing businesses 82,442 100,000 +21％ M&A, etc. — 10,000 — Net sales 82,442 110,000 +33% Existing bu

  43. Slide 43: 5. Reference

    1-1 5. Reference Copyright © Chugoku Marine Paints, Ltd. All Rights Reserved. 43

  44. Slide 44: Company outline

    参考 Company outline Name Chugoku Marine Paints, Ltd. Establishment May 1917 (in business for 104 years) Main business Production and sales of functional coatings centered on marine coatings Capital 11,626 million yen Tokyo: 2-6, Kasumigaseki 3-chome, Chiyoda-ku, Tokyo Headquarter Hiroshima: 1-7, Meij

  45. Slide 45: Bases and Group companies

    参考 Bases and Group companies Our business encompasses approximately 60 locations belonging to 24 companies located in 20 countries around the world. Norway UK Holland Germany Japan Italy Turkey South Korea Tokyo (headquarters) Greece Cyprus Shanghai Shiga UAE Guangdong Hyogo USA Myanmar Taiwan India

  46. Slide 46: Products (Marine coatings)

    参考 Products (Marine coatings) Marine coatings 船舶用塗料 CMP provides antifoulings that protects ship bottoms from contamination and products for every part of the hull, including heavy duty coatings protecting a variety of tanks from corrosion. In addition to Japan, the company has manufacturing bases i

  47. Slide 47: Antifoulings (hydrolysis-type) mechanisms

    参考 Antifoulings (hydrolysis-type) mechanisms Hydrolysis type Hydrolysis-type coatings have a surface that dissolves like soap and is later renewed, maintaining a smooth surface and stable antifouling functionality. By controlling the thickness of its coating film, it is possible to produce high and

  48. Slide 48: Products (Industrial and Container coatings)

    参考 Products (Industrial and Container coatings) 船舶用塗料 Industrial coatings Container coatings Utilizing technologies cultivated in marine coatings, CMP CMP supplies container coatings mainly to China, the provides a variety of products including construction leading producer of containers. materials

  49. Slide 49: ESG information (E)

    参考 ESG information (E) E:環境 E: Environment Products contributing to the realization of a sustainable society Reducing CO2 and saving energy Renewable energy Antifoulings, the core product of marine coatings, improve CMP promotes joint research with ship mileage by reducing surface resistance due to

  50. Slide 50: ESG Information (S&G)

    ESG Information (S&G) 参考 S:Society G:Governance Regional contributions Structure CMP conducts various activities at its offices worldwide.  Organization: Company with auditors  Director’s term: One year  Officer composition: Two of six directors are outside directors. (1/3) Two of four auditors a

  51. Slide 51: Fact Sheet (FY03/2017-FY03/2021)

    参考 Fact Sheet（FY03/2017-FY03/2021） 【Consolidated Basis】 FY03/2017 FY03/2018 FY03/2019 FY03/2020 FY03/2021 Net sales (millions of yen) 82,368 82,980 88,452 87,729 82,442 Operating profit (millions of yen) 5,471 3,761 △588 3,498 6,560 Ordinary profit (millions of yen) 6,076 3,912 △170 4,065 6,430 Prof

  52. Slide 52: Fact Sheet (FY03/2012-FY03/2016)

    参考 Fact Sheet（FY03/2012-FY03/2016） 【Consolidated Basis】 FY03/2012 FY03/2013 FY03/2014 FY03/2015 FY03/2016 Net sales (millions of yen) 93,560 83,656 90,101 106,737 115,066 Operating profit (millions of yen) 5,474 4,715 4,058 7,442 10,012 Ordinary profit (millions of yen) 6,040 5,119 5,058 8,359 10,41

Chugoku Marine Paints — Q1 FY03/2022 Earnings Presentation on 6ix