new mid-term plan: ccp300 (fy2006 fy2008) - pilkington.com/media/nsg/site content/ir/ir...

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Copyright (C) Nippon Sheet Glass Co., Ltd. All Rights Reserved.

New MidNew Mid--Term Plan: CCP300 Term Plan: CCP300 (FY2006(FY2006--FY2008)FY2008)

November 24, 2004Nippon Sheet Glass Co., Ltd.

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ContentsContents

• Review of Current Mid-Term Plan: ACT21• Outline of New Mid-Term Plan: CCP300• Summary of Strategy by Business Area

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Review of ACT21 Review of ACT21 (FY02(FY02--FY05)FY05)

FY2001

FY2003

FY2002

FY2004

FY2005 Implementation of the Second Stage of ACT21

Setting guidelines for ACT21• Re-start from zero

(Information/Electronics)• Restructuring of unprofitable business• Selection and concentration

Revision of ACT21

Launch of New Vision (10 year plan to 2010) and ACT2 (mid-term plan from FY02 to FY05)

Recorded highest profit in history

Plunged into the red after collapse of IT bubble

Recovered to make profits

4



Consolidated Finacial Results

15

74

13 4 4

-3

31

-2

8

1213

-1

25 5

2

8

5 4

10

13

65

1-1 -1

1 1 1

14

32

-2 -3

3

7

13

24

1

7

13

24

-3

285298 287

259 259 256 263 270250

271

307287 280

269 260

-5

0

5

10

15

20

25

30

35

FY91 FY92 FY93 FY04 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05

(¥ b

illio

n)

0

50

100

150

200

250

300

350

400

Income before extra-ordinary items Operating income Net income Net sales

Recovered to the level of ’90s (excl. IT bubble period)

5



1. Generate stable revenue from well-developed businesses

2. Expand businesses with potential for growth

3. Withdraw from unprofitable businesses

4. Focus resources on core businesses

5. Augment R&D and create new businesses

6. Reassess overseas businesses

7. Reinforce management fundamentals

8. Use assets effectively

9. Promote corporate governance

10. Create new corporate culture

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Groundwork for Growth

•Southeast Asia Business•Automotive Business in China

•PDP Glass•SLED Joint Development

Growth

•LCD Glass•Printer Lenses

•Metashine

Earning Improvement, Selection & Concentration, Focus on Core Businesses

* Optical Telecommunication: restructuring & reduction in fixed costs* Building Glass: shutdown of unprofitable facilities & rationalization of production * Automotive Glass: closedown of Aichi plant & drastic cost reduction* Sale of shares in Isolite, Pelnox, etc.

Exit from unprofitable businesses

•Continuous Glass Fiber

•Glass Disk•Tianjin NSG Float

Glass

7


Outline of CCP300Outline of CCP300

New MidNew Mid--Term Plan: CCP300 (FY2006Term Plan: CCP300 (FY2006--FY2008)FY2008)

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Sales: ¥500 billionPre-tax Profit: ¥50 billROA & ROE >10%

Goals in FY2011- To survive as winner -

ＷＩＮ２１

ＷＩＮ２１ACT 21FY2002- FY2005

FY2006 - FY2008“CCP300”

FY2009 - FY2011

First StageFY2002 - FY2003

Second StageFY2004 - FY2005

Position of CCP300 in New VisionA milestone toward the attainment of the targets of “New Vision”

Growth and expansion after the phase of restructuring

What does CCP300 stand for?

New principles of conduct: Challenge, Courage, Passion

Sales target: ¥300 billion

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Nippon Sheet GlassNippon Sheet GlassNippon Sheet Glass

Business EnvironmentBusiness EnvironmentDevelopment

of IT Technology

Growth of Biotechnology

and Energy Industries

Digital Home Appliances

Global Warming,

Reduction of CO2

Oil Price Hike

Increased CSR Requirements Globalization

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Outline of CCP300Outline of CCP300Target Direction

• New Vision– Advanced and globally-recognized corporation – Improvement of corporate value as a group

(for all the stakeholders including shareholders, customers, communities and employees)

Target Direction

• CCP300– Reinforcement of existing businesses– Further development of new technologies, new

products and new business fields

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Strength in manufacturing;with focus on frontline operations

– 1. Excellence in craftsmanship and quality– 2. Insatiable challenge toward technical superiority

• In short term, intensive allocation of management resources to manufacturing operations

• In longer term, emphasis on competitive engineers, basic R&D and succession of manufacturing skills

Groundwork for CCP300Groundwork for CCP300

New Principles of ConductChallenge, Courage, Passion

CCP300

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Outline of CCP300Outline of CCP300Shift in PriorityShift in Priority

ACT21 CCP300

Groundwork for Growth

Exit from Unprofitable businesses

Creation of New Businesses

Selection & Concentration

Expansion of New Businesses

Reinforcement of Overseas Businesses

Expansion and Growth

Improvement of Profitability by Reinforcing Frontline Operations

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Outline of CCP300Outline of CCP300Basic StrategyBasic Strategy

Realize High Profitability and Efficiency by Allocating

Resources to Growth Areas

Generate Stable Income through Cost Reduction and Efficiency

Improvement

Flat Glass Business(Building and Automotive Glass)

Flat Glass Business(Building and Automotive Glass)

Information/Electronics BusinessInformation/Electronics Business

Glass Fiber BusinessGlass Fiber Business

New BusinessNew Business

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Outline of CCP300Outline of CCP300Business Portfolio by AreaBusiness Portfolio by Area

Glass (’04)Glass (’07)

182

Information/Electronics (’04)

Information/Electr

onics (’07)

72Glass Fiber (’04)

Glass Fiber (’07)

40

<Operating Income>

15%

10%

5%

0% 5% 10% 15%

<CAPEX/Asset>Others: 12 (‘04)

6 (‘07)

164

47

37Size of circles shows amount of sales.

Figures are sales amount in ¥ billion.

Total CAPEX in this period is planned between ¥15-20 billion per annum and R&D expenditure is to be increased to more than ¥9 billion from ¥7.7 billion this year.

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Outline of CCP300Outline of CCP300Target Sales and IncomeTarget Sales and Income

5.01.1

-2.3

23

13

25

1216

7

287

260

300

-10.0

0.0

10.0

20.0

30.0

40.0

50.0

FY02 FY05(Forecast)

FY08 (Target)

（Income / ¥ bil）

0

50

100

150

200

250

300

350

（Sales / ¥ bil）

Operating income Income before extra-ordinary items Net income Net sales

16


Outline of CCP300Outline of CCP300Improvement in ROA and ROEImprovement in ROA and ROE

In order to achieve 10% targeted in New Vision, CCP300 aims at 6-7%.•Definition of ROA: (Income before extra-ordinary items + Interest) / Total Asset•Definition of ROE: Net income / Shareholders’ equity

10

1.6

10

2.3

-1

1

3

5

7

9

11

FY04Actual

FY08Target

FY11ＮＶ

(%)

ROAROE

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186

159174

160

134125

0

20

40

60

80

100

120

140

160

180

200

FY00 FY01 FY02 FY03 FY04 FY05 FY08

(¥ bil)

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Interest-bearing debtEBITDA multipleCF multiple

Further improvement, while coping with the growth strategy

InterestInterest--bearing Debtbearing Debt

•EBITDA: Operating income + Depreciation & Amortization•CF: Net income + Depreciation & Amortization

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Summary of Strategy by Business AreaSummary of Strategy by Business Area

Nippon Sheet Glass Co., Ltd.

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Flat Glass BusinessFlat Glass Business

Architectural glass(glass and materials for architectural use)

Architectural glass(glass and materials for architectural use)

Automotive glass(transportation vehicle

glass)

Automotive glass(transportation vehicle

glass)

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Flat Glass Flat Glass -- Summary of StrategySummary of Strategy

<Architectural Glass><Architectural Glass>• Japan:

– Becoming the leading functional glass supplier• Expansion in growth areas such as heat-insulation and burglary

prevention glass• Asia:

– Maintaining top market shares in Vietnam and Malaysia– Maximizing group synergy in the region including Japan

<Automotive Glass><Automotive Glass>• Expansion of high added-value products and cost

reduction by “production system innovation”• Maximization of synergy with Pilkington

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Flat Glass Flat Glass -- Architectural GlassArchitectural GlassNew Building Construcion

108 110 110 110

62 60 60 60

50

70

90

110

130

150

2004Forecast

2005Forecast

2006Forecast

2007Forecast

Residential housing starts (current year) (in10,000 units)Non-residential building construction(previous year) (in million m2)

Ratio of new houses with double glazing (in area)

55%

56%

57%

58%

52%

53%

54%

55%

56%

57%

58%

59%

60%

2004Forecast

2005Forecast

2006Forecast

2007Forecast

Single-family housings

Ratio of new houses with double glazing (in area)

30%

32%

34%35%

25%

30%

35%

40%

2004Forecast

2005Forecast

2006Forecast

2007Forecast

Condominiums

Business Business EnvironmentEnvironment

Demand for double glazing in Japan:

forecasted to be strong forecasted to be strong for both single family for both single family housings and housings and condominiums

Demand for double glazing New building New building construction market in construction market in Japan: Japan:

forecasted to stay forecasted to stay flat in medium term

in Japan:

flat in medium termcondominiums

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Flat Glass Flat Glass -- Architectural GlassArchitectural GlassArchitectural glass sales value in Japan by product typeArchitectural glass sales value in Japan by product type

0

20

40

60

80

100

120

140

160

180

FY01 FY05 FY08Target

ConventionalFunctional

FY01 = 100

Expansion of functional glass ratio from 63%

(current) to 70% in FY07

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Flat Glass Flat Glass -- Architectural GlassArchitectural GlassBusiness Environment Business Environment -- House Renovation Market in JapanHouse Renovation Market in Japan

5.1 5.6 6.0 6.4

6.8 8.0 9.2 10.5

8.09.1

10.010.7

27.625.2

22.619.9

0.0

5.0

10.0

15.0

20.0

25.0

30.0

1995 2000 2005 2010

(¥ tr

illio

n)

Maintenance Repair Renovation

(Ministry of Land, Infrastructure and Transport, Japan)

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Flat Glass Flat Glass -- Architectural GlassArchitectural GlassSocial Requirements for Architectural GlassSocial Requirements for Architectural Glass

Energy Saving

Pursuit of Comfort

•Functional Double Glazing•Vacuum Glass

•Self-cleaning Glass

Expansion of House Renovation Market

Crime Prevention

Increase in Glass Demand

Increase in Increase in Glass DemandGlass Demand

•Laminated GlassDisaster

Prevention

•Fire Prevention Glass

Glass Exteriors

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Flat Glass Flat Glass -- Automotive GlassAutomotive GlassBusiness Environment Business Environment -- Global Production Forecast of Global Production Forecast of Japanese Nameplate (JNP) VehiclesJapanese Nameplate (JNP) Vehicles

9.6 10.1 10.2 10.4

0.41.8 3.2 4.4

0.51.0

1.31.4

3.2

4.04.3

4.4

1.9

3.1

4.24.5

25.123.2

19.9

15.5

0

5

10

15

20

25

30

2001 2004 2007 2010

(mill

ion

unit)

Japan China Thailand North America ROW

(J.D. Power)

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117.0 133.0

47.049.0

182.0164.0

020406080

100120140160180200

FY05Forecast

FY08Target

（¥ billion) Sales - AutomotiveSales - Architectural

Operating Income

12.08.00.05.0

10.015.0

FY05Forecast

FY08Target

Flat Glass Flat Glass -- Expansion during CCP300Expansion during CCP300

<Architectural Glass>• Japan

– Growth in functional glass; shift to multi-functional glass

• Abroad– Capacity increase in Asia for

local markets• Re-start of a furnace in

Malaysia in 2005• Start-up of a new furnace in

Vietnam in 2007<Automotive Glass>• Improvement in productivity by

replacing old facilities and equipment

• Penetration into Chinese market– (Numerical target is not

included.)

Sales

Operating Income

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Flat Glass Flat Glass -- TopicsTopics

<Capacity Increase for Architectural Laminated Glass>• Timing: first half of FY06• Total investment: ¥1.3 billion• Added capacity: 700 K m2/year • Total capacity after expansion: 1,400 K m2/year

Domestic Demand for Laminated Glass

11501,500

2,1502,400

2,700

3,600

0500

1,0001,5002,0002,5003,0003,5004,000

2003 2004 2005 2006 2007 2010

K m

2/Y

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Information/Electronics BusinessInformation/Electronics Business

Information / Telecommunications DevicesSLA, SLED, chemically enhanced glass, components for office equipment such as printers, scanners and copiers, SELFOC micro lenses, telecommunication devices

Display GlassLCD substrates, PDP substrates

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Information/Electronics Information/Electronics -- Summary of StrategySummary of Strategy

<Information / Telecommunications Devices><Information / Telecommunications Devices>• Information Devices

– Establishment of leading position in lenses and light sources for home and office equipment such as printers, copiers and scanners

• Telecommunication Devices– Becoming key player in component markets, making

best use of SELFOC’s advantages– (As short-term goal, turning business into the black)

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Information/Electronics Information/Electronics -- Information / Information / Telecommunications DevicesTelecommunications Devices

Global Ink Jet Printer Market Forecast

90

63 66

8090

67 70

0

20

40

60

80

100

2001 2002 2003 2004Forecast

2005Forecast

2006Forecast

2007Forecast

0%10%20%30%40%50%60%70%80%90%100%

Multifunctional Printer Conventional PrinterMFP ratio Total

Rapid growth

(million units)Business EnvironmentBusiness Environment

Slow growth

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Information/Electronics Information/Electronics -- TopicsTopics

<Increase of SLA Production>• Timing: Spring 2005• Volume: from 3 million to 5 million units/month• Total investment: ¥1.5 billion

– Hot process (glass melting process): • Addition of melting capacity for 2 million units/month at

Yokkaichi plant

– Cold process (fabrication process): • Capacity expansion for 1 million units/month in China• (Further investment will be made in line with actual market

growth)

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Information/Electronics Information/Electronics -- Summary of StrategySummary of Strategy

<Display Glass><Display Glass>• Penetration into PDP substrate glass market• Expansion of TFT substrate glass production• Expansion of active display related businesses• Increase in volume and market share of UFF (ultra

fine flat glass)– Growth in STN substrates based on increase in mobile

phone usage in BRICS area– Introduction of new applications such as e-book

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Information/Electronics Information/Electronics -- Display GlassDisplay Glass

Global Passive Matrix LCD Market Forecast by Type

0

2

4

6

8

10

12

14

2001 2002 2003 2004 2005 2006 2007

(million m2)

TN Monochrome STN Color STN

Gradual 2% growth after 2003

Business EnvironmentBusiness Environment

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Information/Electronics Information/Electronics -- Display GlassDisplay GlassBusiness EnvironmentBusiness Environment

Global Mobile Phone Growth Forecast

28.7 46.6136.3

185.0 204.3 219.0 214.4

324.2 304.0

227.0179.5 118.0 85.4 71.5

19.3 48.2111.7

148.3 214.2 262.6 306.1

0.90.2

0.00.2

0.52.0

4.0

0

100

200

300

400

500

600

700

2001 2002 2003 2004 2005 2006 2007

mil

units

/yea

r

C-STN BW-STN TFD/TFT OLED Forecast 2003 (TSR)

13% 24% 52% 65% 78% 85% 88%

Ratio of color display

10% increase over 2003 forecast (after 2004)

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Information/Electronics Information/Electronics -- Display GlassDisplay GlassGlobal PDP Market and NSG Share TargetGlobal PDP Market and NSG Share Target

0

2

4

6

8

10

12

14

2003 2004 2005 2006 2007 20100

20

40

60

80

100

120

140

Market size (NSG assumption）

NSG share target

Panel Unit Number (42' conversion) (million unites/year)

Market share target: 20%

Share (%)

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Information/Electronics Information/Electronics -- Expansion during CCP300Expansion during CCP300

22.034.0

25.0

38.047.0

72.0

01020304050607080

FY05Forecast

FY08Target

(¥ b

illio

n)

Information/Telecommunications Display

1.2

7.0

0.0

5.0

10.0

FY05Forecast

FY08Target

<Information/Telecommunications Devices>

• Production increase of SLA for MFP– 5 million units/month

• Focus on communication equipment components

<Display Glass>• Penetration into PDP substrate

market• Stable increase in C-STN sales• Expansion of TFT assembly

operation (Nanox)• Focus on active matrix display

fabrication operations

Sales

Operating Income

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Glass Fiber BusinessGlass Fiber Business

Glass Cord

Glass Flake Air Filter

Battery SeparatorFor automotive timing belts

Plastic reinforcement and anticorrosion fillerHighly glittering metallic pigment

For clean-rooms

For lead-acid batteries for automobiles, uninterrupted power supply equipment

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Glass Fiber Glass Fiber --Business Environment and StrategyBusiness Environment and Strategy

Glass CordGlass Cord Glass Flake, MetashineGlass Flake, Metashine

Battery SeparatorBattery Separator

85%

15%

NSGOthers

Global market share: 85%

100%

NSGOthers

Only one in the world

• Cosmetics applications• Development of new applications

35%

65%

NSGOthers

Domestic market share: 90%Asia market share: 35%

• Market share expansion through growth in China

25%

75%

NSGOthers

Top market share in Japan: 25%

• To meet demand increase from semi conductor and LCD plants

• Development of new products and new markets

Air FilterAir Filter

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Glass Fiber Glass Fiber -- Expansion during CCP300Expansion during CCP300

Sales37.0 40.0

05

1015202530354045

FY05Forecast

FY08Target

(¥ b

illio

n)

4.65.0

4

5

6

FY05Forecast

FY08Target

<Glass Cord>• Increase in automobile

production<Battery Separator>• Share increase in Asia<Air Filter>• Expansion into medical

market<Glass Flake>• Development of new

applications

Sales

Operating Income

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CCP300 CCP300 -- Performance TargetsPerformance Targets

(¥ billion) FY05 FY08Sales 260.0 300.0 Flat Glass 164.0 182.0

Information/Electronics 47.0 72.0Glass Fiber 37.0 40.0Others 12.0 6.0

Operating income 13.0 23.0Flat Glass 8.0 12.0Information/Electronics 1.2 7.0Glass Fiber 4.6 5.0Others -0.8 -1.0

Income before extra-ordinary items 12.0 25.0Net income 7.0 16.0

5.01.1

-2.3

13

23

12

25

7

16

287260

300

-10.0

0.0

10.0

20.0

30.0

40.0

50.0

FY02 FY05(Forecast)

FY08 (Target)

（Income/¥bil）

0

50

100

150

200

250

300

350（Sales / ¥ bil）

Operating incomeIncome before extra-ordinary itemsNet incomeNet sales

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• New VisionImprovement of corporate value as a group

(for all the stakeholders including shareholders, customers and employees)

CSR Management System is to be launched

in 2005

Employees Social Contribution

ShareholdersCustomer Satisfaction

Highest rating awarded by Development Bank of Japan for

environmental activities (August ’04)

Included in “Corporate Governance Fund” of Pension Fund Association

in Japan (August ’04)

Environment Compliance

CCP300 CCP300 -- CSR ActivitiesCSR Activities

• Management Principle: – Focus on social responsibilities of company and serve the community and the nation

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NoticeNotice

The projections contained in this document are based on information currently available to us and certain assumptions that we consider to be reasonable, so the actual results may differ. Among the major factors that may affect the results are the economic environment in major markets (such as Japan, Europe, the US, and Asia), product supply/demand shifts, and currency exchange fluctuations.

Nippon Sheet Glass Co., Ltd.

new mid-term plan: ccp300 (fy2006 fy2008) - pilkington.com/media/nsg/site content/ir/ir...

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