Nippon Paint Holdings Co., Ltd. · TSE:4612

Nippon Paint — Investor Presentation (February 2017)

38 slides from Nippon Paint's investor presentation, Feb 27, 2017

1. Slide 1: Presentation for Institutional Investors

   Presentation for Institutional Investors February 27, 2017 Tetsushi Tado, President & CEO

2. Slide 2: Table of Contents

   Table of Contents 1. Business Environment ・・・・・・・・ 1 2. Progress of Medium-Term Management Plan ・・・・・・・・ 4 3. For Sustainable Growth ・・・・・・・・ 6 4. FY2017 Plan ・・・・・・・・ 7 5. DE Acquisition ・・・・・・・・ 9 6. China & CRF ・・・・・・・・ 11 7. ESG ・・・・・・・・ 14

3. Slide 3: Business Environment [1]

   Business Environment [1] Age of low growth * Slowdown of the Chinese economy’s growth rate * Stagnation of the economy’s growth rate in emerging countries due to a decline in resource prices * Low growth because of decreasing birthrate & aging society in Japan Rising uncertainties * Brexit * Increas

4. Slide 4: Business Environment [2]: Market becoming an oligopoly

   Business Environment [2] Market has been becoming an oligopoly by competing global manufacturers Recent moves Sherwin-Williams+Valsper 13%  Sherwin-Williams acquired Valspar in 2016.  BASF acquired Chemetall in 2016. PPG 12%  Akzo Nobel obtained BASF’s industrial coatings business in 2015 to 2016

5. Slide 5: Business Environment [3]: Global paint and coatings market growing

   Business Environment [3] The global paint and coatings market has been growing. * Source: IPPIC Trillion yen USD=JPY105 30 25 20 20 18 15.4 15 13.6 12.2 10.5 10 9.4 9.1 5 0 2006 2006年 2008 2008年 2009 2009年 2011 2011年 2013 2013年 2015 2015年 2018年 2018 2020年 2020 Future 将来 (estimate) (予) (estimate) (予)

6. Slide 6: Progress of Medium-Term Management Plan

   Progress of Medium-Term Management Plan Direction of strategy remains unchanged. To be a major player in the global paint market (1) Maximize sales and profit in main businesses (2) Establish a well-balanced business foundation in the global market Creation of a solid management system - Establish a

7. Slide 7: Progress of Medium-Term Management Plan

   Progress of Medium-Term Management Plan  Net sales of 700,000 million yen: Net sales have been growing steadily, excluding the impact of FX .  Operating income ratio: The target was achieved one year earlier the goal, will strive to maintain more than “15%”.  Plans to enhance its capital efficien

8. Slide 8: For Sustainable Growth

   For Sustainable Growth Growth strategy = Establish a competitive advantage structure. Operate whole group integrally FY2017’s project Steering committee of reformulating 1. Integrally operate the group. management philosophy Establish a management philosophy that can be shared among 2. Establish str

9. Slide 9: FY2017 Plan (Positioning): Future Pull

   FY2017 Plan(Positioning) Accelerate the expansion of business for the future goal Future Goal = “Big Picture” “Future Pull” Goal in three years from now, based on the Big Picture 2017 = Certain fulfillment of KPI Achieve positive results toward the next medium-term management plan. 2016 Gain a footi

10. Slide 10: FY2017 Plan (P/L)

    FY2017 Plan（P/L) (億円) 2014年度実績 2015年度実績 通期 通期 前年比 売上高 2605. 9 営業利益 337. 5 営業利益率 当期純利益 1814. 8 為替レート （ＵＳ $） 国産ナ フサ価格 Keep increasing net sales and profits (100 million yen) FY2016 results FY 2017 YOY Actual (Jan-Dec, for reference) Full year H1 H2 change growth rate* Net sales 5,141 5,400 2,650 2,750

11. Slide 11: Acquisition of Dunn-Edwards

    Acquisition of Dunn-Edwards Overview Sales breakdown Name: Dunn-Edwards Corporation 8 4 Location: (Head office) California, U.S.; (Plants) California and Arizona 88 Name and Position of Representative: Karl Altergoot, President & CEO Main line of business: Manufacture and sales of paint for decorati

12. Slide 12: Acquisition of Dunn-Edwards: purpose

    Acquisition of Dunn-Edwards Purpose of acquisition: to complement both regional and business portfolios Deco 26  Establish a platform to develop business (for decorative) in the U.S. Paint Auto OEM  Focus on professional-use decorative in the western U.S., demand 49 GIU where there is higher marke

13. Slide 13: China & CRF: Towards China Dominance

    China & CRF Towards “China Dominance” Entire business Net sales by business segment Unit: RMB  Both net sales and PBT (profit before  Each business segment has recorded 100 million income taxes) have been growing steadily. a high growth rate. Breakdown of net sales by business segment (%) Sales PB

14. Slide 14: China & CRF: DIY and wood coatings

    China & CRF Towards “China Dominance” Growth rate of net sales in DIY Market share of wood coatings  Sales of housing interior finish have expanded,  Focus shift of from DIY to IWC* while sales of wood coating have decreased. Entire DIY +2% +9% +6% DIY CAGR -10% IWC CAGR 7% Wood coating Housing in

15. Slide 15: China & CRF: Acquisition of shares in CRF

    China & CRF Acquisition of shares in CRF Outline and purpose : The Group obtained the IWC business to compensate for the decrease in the size of the wood coating (DIY) market due to changes in lifestyle. [Outline of CRF Shenzhen] Name: CRF Shenzhen Co., Ltd. Establishment: 1999 Location: Huizhou Cit

16. Slide 16: E Topic (1): AQUATERRAS antifouling-free coatings

    E Topic (1) The world’s first antifouling-agent-free ship bottom coatings, “AQUATERRAS” * Achieved reduction in the burden on marine organisms and improvement of fuel efficiency The world’s first antifouling-agent-free self-smoothing coating Hydrophilic and hydrophobic microdomain structure * World’

17. Slide 17: E Topic (2): Thermal barrier paints

    E Topic (2) Thermal barrier paints Trade use & Industrial Automotive coatings (Yoyogi National Gymnasium) (Toyota Motor Corporation) 15

18. Slide 18: E Topic (3): Toughguard Clear method

    E Topic (3) Trade-use : Apply a “transparent protective coating” for concrete structures Toughguard Clear method The Group and PUBLIC WORKS RESEARCH INSTITUTE jointly developed a transparent protective coating that enables cracks to be seen in concrete structures. Cracks can be spotted easily when a

19. Slide 19: S Topic: Establishment of women's table tennis club

    S Topic<Establishment of women's table tennis club>  A symbol to create a “sense of togetherness” in the Group  The Group is going to join the Japan Table Tennis League and aims to produce global players.  The Group will contribute to development of community through promotion of sport and cultiv

20. Slide 20: Nippon Paint Holdings Co., Ltd.

    ((@)) NIPPON PAINT HOLDINGS CO.LTD. Basic & New

21. Slide 21: (Supplement)

    (Supplement)

22. Slide 22: Periods in the Supplement

    Periods in the Supplement 1 FY2015 FY2016※ FY2017 Japan Apr.-Mar. Jan.-Dec. The Supplyment Overseas Jan.-Dec. Jan.-Dec. Jan.-Dec. Japan Apr.-Mar. Apr.-Dec.(9 month) Timely Disclosure Overseas Jan.-Dec. Jan.-Dec. * “Not” audited performance <for reference> sup.1

23. Slide 23: Summary

    Summary ✓ Absorbed currency effects and achieved “profit increase(YOY) ” ✓ Operating profit margin achieved 15.6% Achieved medium-term target, a year ahead of schedule by mean of cost reduction initiatives. ✓ Net income achieved “record high” (net income margin : 7.0%) ✓ Dividend of FY2017 is going

24. Slide 24: Net sales & Operating profit by region

    Net sales & Operating profit by region (100 million yen) FY2016 FY2014 FY2015 FY2017(Plan) Jan-Dec 1H Full year 1H Full year 1H Full year 1H Full year Japan Sales 916.3 1,872.0 862.7 1,742.8 848.6 1,716.1 895 1,810 ※1 Operating Profit 122.1 264.1 134.8 291.6 152.1 321.6 155 328 Asia Sales 216.4 438.

25. Slide 25: Net sales by business segment

    Net sales by business segment （100 million yen） FY2015 FY2016 FY2017 Plan Full year Full year(Jan-Dec) 1H Full year Automotive coatings 1,387.6 1,393.8 747 1,491 Decorative paints 2,533.5 2,368.8 1,183 2,481 (Including heavy duty) Industrial coatings 682.8 682.9 344 695 Others(Marine & Auto refinish

26. Slide 26: B/S

    B/S (100 million yen) <Assets> <Liability and equity> As of 31, As of 31, As of 31, As of 31, As of 31, As of 31, Mar,2015 Mar,2016 Dec,2016 Mar,2015 Mar,2016 Dec,2016 Current assets 3,417 3,596 4,129 Current liabilities 1,670 1,736 1,879 Property,plant 1,009 1,043 1,077 Non-current liabilities 538

27. Slide 27: C/F

    C/F (100 million yen） FY2014 FY2015 FY2016※ 1H Full year 1H Full year 1H Full year Cash flows from 145.8 344.2 137.1 631.0 351.7 779.2 operating activities Cash flows from -20.7 -869.7 -72.6 -53.1 -36.9 -427.0 investing activities Free cash flow 125.1 -525.5 64.5 577.9 314.8 352.2 Cash flows from -1

28. Slide 28: Capital expenditures, Depreciation, R&D expenses, and Interest-bearing debts

    Capital expenditures, Depreciation, R&D expenses, and Interest-bearing debts (100 million yen) ※2 FY2017 FY2014 FY2015 FY2016 (Plan） 1H Full year 1H Full year 1H Full year Full Year Property, plant and equipement 21.7 46.4 89.5 169.8 91.1 172.9 - Capital expenditures Intangible assets 1.6 4.9 8.2 20

29. Slide 29: Key Indicators

    Key Indicators ※2 FY2014 FY2015 FY2016 1H Full year 1H Full year 1H Full year ※1 ROE (%) - 9.7 - 6.3 - 7.4 Capital equity ratio (%) 63.3 59.2 58.2 59.3 58.8 57.2 Ratio of ordinary income - 8.7 - 9.3 - 9.5 to total assets(%) Comprehesive income ※1 ※1 ※3 154.6 449.7 251.0 242.8 -366.4 315.2 (100 milli

30. Slide 30: Key Indicators for shareholders' return

    Key Indicators for shareholders’ return <Dividens & Payout ratio> ※3 FY2014 FY2015 FY2016 FY2017 plan 1H Full year 1H Full year 1H Full year 1H Full year Dividends(yen/share)※1 10 22 15 35 20 40 20 42 ※2 Payout ratio（%） - 18.8 - 27.8 - 29.1 - 29.2 ※1 Dividends is calculated using net income on IFRS

31. Slide 31: Foreign Exchange rate and Japan-produced naphtha price

    Foreign Exchange rate and Japan-produced naphtha price <Exchange rate for P/L(term average rate)> FY2017 FY2014 FY2015 FY2016 (premise) 1H Full year 1H Full year 1H Full year Full year Yen-US dollor rate 102.2 106.4 120.5 121.0 111.8 109.4 110.0 Yen-RMB rate 16.6 17.2 19.4 19.2 17.0 16.4 15.5 <Excha

32. Slide 32: Market Environments

    Market Environments <Paint shipment and Production> (10,000t) FY2014 FY2015 FY2016（Jan-Dec) 1H Full year 1H Full year 1H Full year Shipment in Japan※1 84.6 171.4 86.6 175.6 86.2 ※3 148.6 Production in China ※2 771 1,648 779 1,710 836 ※3 1,684 ※1 Source : Japan paint manufacturers association ※2 Sour

33. Slide 33: P/L

    P/L (100 million yen) FY 2014 FY 2015 FY 2016 FY2017 (plan) H1 Full year H1 Full year H1 Full year H1 Full year Net sales 1,272.5 2,605.9 2,632.7 5,357.5 2,548.9 5,140.8 2,650 5,400 Gross income 456.2 925.5 1,073.7 2,233.4 1,096.0 2,229.0 － － Operating income 156.9 337.5 320.5 713.5 377.3 800.0 375

34. Slide 34: Net Sales by Region and Business Segment (1)

    Net Sales by Region and Business Segment (1) (100 million yen) FY2017 <Consolidated> FY2014 FY2015 FY2016 (plan) H1 Full year H1 Full year H1 Full year Full year Automotive coatings 450.9 933.5 657.5 1,387.6 693.2 1,393.8 1,491 Trade-use paints (decorative and heavy duty) 236.0 457.9 1,257.3 2,533.5

35. Slide 35: Net Sales by Region and Business Segment (2)

    Net Sales by Region and Business Segment (2) (100 million yen) FY2017 <Asia> FY2014 FY2015 FY2016 (plan) H1 Full year H1 Full year H1 Full year Full year Automotive coatings 102.6 212.6 286.3 599.5 289.7 584.2 636 Trade-use paints (decorative and heavy duty) 24.1 30.9 1,043.8 2,096.1 955.6 1,940.5 2

36. Slide 36: Number of Employees

    Number of Employees (persons) End of FY2014 End of FY2015 End of FY2016 Nippon Paint 232 241 224 Subsidiaries in Japan 2,654 2,694 2,781 Subtotal in Japan 2,886 2,935 3,005 Overseas subsidiaries 12,894 13,563 13,867 Total 15,780 16,498 16,872 sup.15

37. Slide 37: Forward-looking statements notice

    The forward-looking statements in this document are based on information available at the time of preparation and involve inherent risks and uncertainties. Accordingly, the actual results and performance of Nippon Paint Holdings Co., Ltd. and Nippon Paint Holdings Group may be significantly differen

38. Slide 38: Reference: IR Schedule of FY2017

    <Reference> IR Schedule of FY2017 Date & Time Contents Place February 27th, 2017 15:30 Business Briefing for Investors Marunouchi,Tokyo April 21th, 2017 ‐ Silent Period strarts ‐ 1st 's Financial Result May 12th, 2017 15:30 The company's website Announcement 1st quarter's Financial Result 18:00 ‐ Te

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