SHIN-ETSU CHEMICAL CO., LTD. Shin-Etsu Chemical Co., Ltd.
Annual Report 2023
Financial Section
Ten-Year Summary
SHIN-ETSU CHEMICAL CO., LTD. AND SUBSIDIARIES
For the fiscal years ended March 31, 2014 through 2023
Millions of yen | ||||
2014 | 2015 | 2016 | 2017 | |
For the year: | ||||
Net sales | ¥1,165,819 | ¥1,255,543 | ¥1,279,807 | ¥1,237,405 |
Cost of sales | 873,879 | 940,399 | 930,019 | 868,404 |
Selling, general and administrative expenses | 118,130 | 129,814 | 141,262 | 130,383 |
Operating income | 173,809 | 185,329 | 208,525 | 238,617 |
Ordinary income | 180,605 | 198,025 | 220,005 | 242,133 |
Net income attributable to owners of parent | 113,617 | 128,606 | 148,840 | 175,912 |
Capital expenditures | 83,155 | 109,903 | 134,753 | 145,647 |
R&D costs | 43,546 | 47,165 | 53,165 | 49,020 |
Depreciation and amortization | 91,445 | 96,918 | 100,466 | 93,087 |
At year-end: | ||||
Total assets | ¥2,198,912 | ¥2,452,306 | ¥2,510,085 | ¥2,655,636 |
Working capital (Current assets - Current liabilities) | 981,667 | 1,100,999 | 1,170,679 | 1,232,607 |
Common stock | 119,419 | 119,419 | 119,419 | 119,419 |
Net assets | 1,822,135 | 2,012,711 | 2,080,465 | 2,190,082 |
Interest-bearing debt | 15,638 | 14,328 | 13,470 | 14,642 |
Per share (Yen and U.S. dollars): | ||||
Net income per share-basic | ¥53.44 | ¥60.41 | ¥69.89 | ¥82.57 |
Net income per share-fully diluted (Note 2) | 53.41 | 60.40 | 69.88 | 82.57 |
Cash dividends | 100.00 | 100.00 | 110.00 | 120.00 |
Payout ratio (%) | 37.4 | 33.1 | 31.5 | 29.1 |
Net assets | 833.06 | 920.56 | 952.30 | 1,000.43 |
General: | ||||
Operating income to net sales ratio (%) | 14.9 | 14.8 | 16.3 | 19.3 |
Net income attributable to owners of parent | 9.7 | 10.2 | 11.6 | 14.2 |
to net sales ratio (%) | ||||
ROIC (%) | 9.4 | 9.9 | 11.4 | 14.0 |
ROE (%) | 6.8 | 6.9 | 7.5 | 8.5 |
ROA (%) | 8.8 | 8.5 | 8.9 | 9.4 |
Equity ratio (%) | 80.6 | 79.9 | 80.8 | 80.3 |
PBR (times) | 1.4 | 1.7 | 1.2 | 1.9 |
PER (times) | 22.1 | 26.0 | 16.7 | 23.4 |
Number of employees | 17,892 | 18,276 | 18,407 | 19,206 |
Number of shares issued (Thousands) | 432,106 | 432,106 | 432,106 | 432,106 |
Notes: 1. The U.S. dollar amounts represent conversion of yen, for convenience only, at the rate of ¥134 = US$1, the approximate rate of exchange on March 31, 2023.
- The "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and other standards were applied from the beginning of the fiscal year ended March 31, 2022. Accordingly, the main management indicators, etc., from the fiscal year ended March 31, 2022 are those after application of said Accounting Standard, etc.
- The Company enacted a five-for-one stock split of its common stock with an effective date of April 1, 2023. "Number of shares issued" shows the number of shares before the stock split, while "Net income per share-basic", "Net income per share-fully diluted" and "Net assets per share" are calculated based on the assumption that the stock split was implemented at the beginning of the fiscal year ended March 31, 2014, based on "Accounting Standard for Earnings Per Share".
- As the record date was prior to the stock split date (April 1, 2023), "Cash dividends per share" is based on the shares before the stock split.
1
Millions of yen | Thousands of U.S. | ||||||
dollars (Note 3) | |||||||
2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2023 | |
¥1,441,432 | ¥1,594,036 | ¥1,543,525 | ¥1,496,906 | ¥2,074,428 | ¥2,808,824 | $20,961,378 | |
963,008 | 1,039,979 | 987,782 | 953,203 | 1,206,425 | 1,594,717 | 11,900,873 | |
141,601 | 150,352 | 149,702 | 151,489 | 191,680 | 215,905 | 1,611,232 | |
336,822 | 403,705 | 406,041 | 392,213 | 676,322 | 998,202 | 7,449,272 | |
340,308 | 415,311 | 418,242 | 405,101 | 694,434 | 1,020,211 | 7,613,517 | |
266,235 | 309,125 | 314,027 | 293,732 | 500,117 | 708,238 | 5,285,359 | |
176,283 | 240,618 | 265,018 | 228,801 | 213,918 | 318,046 | 2,373,482 | |
51,768 | 56,436 | 48,536 | 51,264 | 62,455 | 67,201 | 501,500 | |
112,016 | 137,570 | 131,172 | 143,807 | 168,788 | 213,632 | 1,594,275 | |
¥2,903,137 | ¥3,038,717 | ¥3,230,485 | ¥3,380,615 | ¥4,053,412 | ¥4,730,394 | $35,301,451 | |
1,324,495 | 1,358,614 | 1,446,724 | 1,551,662 | 1,960,216 | 2,355,713 | 17,579,954 | |
119,419 | 119,419 | 119,419 | 119,419 | 119,419 | 119,419 | 891,191 | |
2,413,025 | 2,532,556 | 2,723,141 | 2,886,625 | 3,429,208 | 4,026,209 | 30,046,336 | |
15,814 | 14,920 | 30,383 | 34,456 | 38,957 | 47,097 | 351,474 | |
¥124.86 | ¥145.20 | ¥151.03 | ¥141.35 | ¥240.76 | ¥347.84 | $2.596 | |
124.82 | 145.18 | 151.00 | 141.25 | 240.55 | 347.61 | 2.594 | |
140.00 | 200.00 | 220.00 | 250.00 | 400.00 | 500.00 | 3.731 | |
22.4 | 27.5 | 29.1 | 35.4 | 33.2 | 28.7 | 28.7 | |
1,102.40 | 1,183.09 | 1,275.59 | 1,353.94 | 1,601.45 | 1,918.37 | 14.316 | |
23.4 | 25.3 | 26.3 | 26.2 | 32.6 | 35.5 | 35.5 | |
18.5 | 19.4 | 20.3 | 19.6 | 24.1 | 25.2 | 25.2 | |
18.2 | 21.5 | 19.4 | 17.2 | 27.2 | 33.6 | 33.6 | |
11.9 | 12.8 | 12.3 | 10.7 | 16.3 | 19.7 | 19.7 | |
12.2 | 14.0 | 13.3 | 12.3 | 18.7 | 23.2 | 23.2 | |
81.0 | 81.1 | 82.1 | 83.2 | 82.1 | 81.8 | 81.8 | |
2.0 | 1.6 | 1.7 | 2.7 | 2.3 | 2.2 | 2.2 | |
17.6 | 12.8 | 14.2 | 26.3 | 15.6 | 12.3 | 12.3 | |
20,155 | 21,735 | 22,783 | 24,069 | 24,954 | 25,717 | 25,717 | |
432,106 | 427,606 | 416,662 | 416,662 | 416,662 | 404,824 | 404,824 | |
2
Management's Discussion and Analysis
SHIN-ETSU CHEMICAL CO., LTD. AND SUBSIDIARIES
Overview of the Shin-Etsu Group
Net Sales (Billions of yen)
3,0002,808
Operating Income
(Billions of yen) 1,200
The Shin-Etsu Group (the "Group") comprises Shin-Etsu Chemical Co., Ltd. (the "Company"), 133 subsidiaries, and
2,500
2,074
1,000
998
12 affiliates (as of March 31, 2023). The Group is engaged in the manufacture and sales of PVC and caustic soda as
2,000
1,594 1,544 1,497
800676
the core of the Infrastructure Materials business, the
1,500
1,000
500
0
600
400
200
0
404 406 392
manufacture and sales of semiconductor silicon, rare earth magnets, photoresists, photomask blanks, and synthetic quartz products as the core of the Electronics Materials business, the manufacture and sales of silicones, cellulose derivatives, and silicon metals as the core of the Functional
2018 | 2019 | 2020 | 2021 | 2022 |
Net Income Attributable to Owners of Parent
(Billions of yen) 800
2018 2019 2020 2021 2022
Net Sales by Business Segment
(Billions of yen) | |
3,000 | 2,808 |
Materials business, and the Processing & Specialized Services business which conducts Shin-Etsu Polymer Group business and provides engineering and various other services. The Group conducts business activities including
700
600
500
708
500
2,500
2,000
2,074
1,497
manufacturing and sales through mutual cooperation among all Group companies.
400
300
200
100
0
309 314 294
1,500
1,000
500
0
Consolidated Operating Performance
During the FY2022 (from April 1, 2022, to March 31, 2023), the economic situation took a very different turn in the first and second half of the fiscal year. While the monetary policies aimed at calming inflation put downward pressure
2018 | 2019 | 2020 | 2021 | 2022 |
Total Net Assets (Billions of yen)
5,000
2020 2021 2022 Infrastructure Materials
Electronics Materials
Functional Materials Processing & Specialized Services
Total Assets (Billions of yen)
5,000 | 4,730 |
on the economy, the situation developed into a banking crisis in Europe and the United States in March. It has also been pointed out that the banking crisis in Europe and the United States could harm the economy through restrictive lending. Geopolitical issues also continue to cause turbulence in the global economy. Although the economies of emerging countries, mainly in Asia, are being revived, the
4,026
4,000
4,053
headwinds facing the industries and companies are, if
4,000 | 2,723 2,887 | 3,429 | |||||||||||||
3,000 | 2,533 | ||||||||||||||
2,000 | |||||||||||||||
1,000 | |||||||||||||||
0 | |||||||||||||||
2018 | 2019 | 2020 | 2021 | 2022 | |||||||||||
3,039 3,230 3,381
3,000
2,000
1,000
0
2018 2019 2020 2021 2022
anything, likely to become stronger, not weaker. Under these circumstances, we will maintain close communication with our customers, expedite the development of products that are valuable to them, and continue to provide a reliable supply of products of unwavering quality. We will skillfully overcome headwinds and focus on growing our business performance. We will continue capital investments and R&D activities so as to meet the needs and demands of customers and markets in a timely manner.
Capital Expenditures (Billions of yen)
350 | |||||||||||||||
318 | |||||||||||||||
300 | |||||||||||||||
241 | 265 | ||||||||||||||
250 | |||||||||||||||
229 | 214 | ||||||||||||||
200 | |||||||||||||||
150 | |||||||||||||||
100 | |||||||||||||||
50 | |||||||||||||||
0 | |||||||||||||||
2018 | 2019 | 2020 | 2021 | 2022 | |||||||||||
Net Cash Flow* (Billions of yen)
1,000 | |||
922 | |||
800 | |||
669 | |||
600
447 445 438
400
200
0
2018 2019 2020 2021 2022
* Net cash flow =
Net income attributable to owners of parent + Depreciation and amortization
As a result, net sales in FY2022 increased 35.4% (¥734,396 million) compared to the previous fiscal year, amounting to ¥2,808,824 million. Operating income was ¥998,202 million, an increase of 47.6% (¥321,880 million) from the previous fiscal year. Ordinary income increased 46.9% (¥325,777 million) to ¥1,020,211 million over the previous fiscal year. Net income attributable to owners of parent was ¥708,238 million, an increase of 41.6% (¥208,121 million) compared with the previous fiscal year.
3
Business Segment Overview
Infrastructure Materials
As for PVC, the signs of a global economic recession appeared in the market but bottomed out at the end of 2022. On the other hand, the caustic soda market remained firm but began to weaken after the turn of the year.
Consequently, segment sales rose 52.6% (¥450,910 million) compared to the previous fiscal year, amounting to ¥1,308,099 million. Segment operating income was ¥541,344 million, up 70.3% (¥223,552 million) year on year.
Electronics Materials
The semiconductor market had entered an adjustment phase since the autumn of last year, and a similar situation remained at the end of the year, but the semiconductor materials as a whole were supported by the performance in the first half of the year. Rare earth magnets were also affected by the semiconductor shortages in customer production and the adjustments in data center investment, but the shipments to other markets made up for it.
Consequently, segment sales increased to ¥875,646 million, up 23.5% (¥166,667 million) compared to the previous fiscal year. Segment operating income amounted to ¥301,400 million, up 23.1% (¥56,622 million) year on year.
Functional Materials
Although some product groups were affected by the inventory adjustment and slowdown in the market, we made up for it with the shipment of highly functional product groups and worked to maintain profitability.
Segment sales consequently increased to ¥493,386 million, up 24.7% (¥97,760 million) compared to the previous fiscal year. Segment operating income was ¥130,608 million, grew 37.8% (¥35,834 million) year on year.
Processing & Specialized Services
The sales of semiconductor wafer-related containers were strong mainly for 300 mm wafer use, and the sales of input devices for automobiles increased. The sales of PVC-related products such as PVC wrapping films for food packaging and construction materials increased due to the permeation of revised prices.
As a result, segment sales increased to ¥131,691 million, up 16.9% (¥19,059 million) compared to the previous fiscal year. Segment operating income amounted to ¥26,365 million, up 26.1% (¥5,455 million) year on year.
Analysis of Financial Position
At the end of FY2022 (March 31, 2023), total assets increased by ¥676,982 million compared with that at the end of the previous fiscal year to ¥4,730,394 million. It was mainly due to increases in cash and time deposits, inventories, and property, plant and equipment.
Total liabilities increased by ¥79,981 million from that at the end of the previous fiscal year to ¥704,185 million.
Total net assets amounted to ¥4,026,209 million. This was mainly due to net income attributable to owners of parent that reached a record of ¥708,238 million and foreign currency translation adjustments that increased by ¥222,480 million due to yen depreciation, offset by ¥206,788 million for purchases of treasury stock (¥195,497 million was cancelled in FY2022) and a cash dividend payment of ¥195,365 million.
As a result, the equity ratio came to 81.8%, down 0.3 percentage points from its previous level of 82.1%, and net assets per share, calculated after the stock split in accordance with "Accounting Standard for Earnings Per Share," increased by ¥316.92 compared with the previous fiscal year, to ¥1,918.37.
Return on invested capital (ROIC) was 33.6%, up 6.4 percentage points from its previous level of 27.2%, and return on equity (ROE) was 19.7%, rose 3.4 percentage points from its previous level of 16.3%. The full-year dividend per share was increased by ¥100 compared to the previous fiscal year, to ¥500 per share.
Cash Flows
The balance of cash and cash equivalents (net cash) at the end of FY2022 increased by 23.6% (¥238,419 million) compared with the end of the previous fiscal year to ¥1,247,344 million.
Cash Flows from Operating Activities
Net cash provided by operating activities amounted to
¥788,013 million, an increase of ¥234,485 million from the previous fiscal year. This consisted mainly of ¥1,020,211 million in income before income taxes and non-controlling interests, ¥213,632 million in depreciation and amortization, and ¥210,959 million for increase in inventories, ¥266,937 million for the payment of income taxes.
Cash Flows from Investing Activities
Net cash used in investing activities decreased by ¥67,235 million from the previous fiscal year to ¥186,488 million. This was mainly due to ¥295,517 million for purchases of property, plant and equipment and ¥111,394 million for net increase in proceeds from redemption of securities.
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Shin-Etsu Chemical Co. Ltd. published this content on 26 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 July 2023 08:15:01 UTC.
