SHIN-ETSU CHEMICAL CO., LTD. ANNUAL REPORT 2023
Contents
02 | Value Creation Story | 44 | Management Foundation | |||
45 | ||||||
02 | At a Glance | Corporate Governance Approach and Initiatives | ||||
04 | Milestones in Establishing and | 46 | Assessment of Board of Directors Effectiveness | |||
06 | Strengthening Business Foundations | 47 | Management | |||
Our Competitive Advantage | 48 | Messages from Outside Directors | ||||
08 | Value Creation Process | 50 | Activity Status of Outside Directors and | |||
10 | Financial Highlights | Outside Audit & Supervisory Board Members | ||||
11 | Non-Financial Highlights | 51 | Risk Management | |||
12 | Management Message | 52 | Sustainability | |||
53 | ||||||
12 | President's Message | Basic Sustainability Policy | ||||
14 Sources of Our Competitiveness | 53 | Structure of Sustainability Initiatives | ||||
54 | Identifying Key Issues (Materiality) | |||||
55 | Risks and Opportunities Related to the Key Issues | |||||
15 | Financial Capital | |||||
56 | Main Sustainability Initiatives | |||||
16 | Manufacturing Capital | |||||
18 | Human Capital | 58 | Data Section | |||
22 | Intellectual Capital | |||||
58 | ||||||
25 | Social and Relationship Capital | Ten-Year Summary | ||||
26 | Natural Capital | 60 | Shin-Etsu Group Major Companies | |||
31 | Business Activity | 62 | Investor Information | |||
63 | Corporate Information | |||||
- Technologies, Materials and Products of the Shin-Etsu Group
- Business Overview
- Infrastructure Materials
- Electronics Materials
- Functional Materials
- Processing & Specialized Services
Editorial Policy
This report is compiled and published annually for the purpose of providing shareholders, investors, and other stakeholders with an overview of the Shin-Etsu Group's corporate activities. The organizations covered by this report are Shin-Etsu Chemical Co., Ltd. (Shin-Etsu Chemical) and its consolidated subsidiaries in Japan and overseas. In editing this report, we consulted the International Integrated Reporting Framework published by the Value Reporting Foundation (VRF) and Guidance for Collaborative Value Creation published by Japan's Ministry of Economy, Trade and Industry.
In the 2023 edition, we have expanded the sections on each of the six forms of capital that constitute the source of the Group's competitive advantage, focusing on human capital, intellectual capital, and natural capital. We also added a new section, "Messages from Outside Directors."
For more detailed information, follow the links below:
IR Information | Sustainability Information |
https://www.shinetsu.co.jp/en/ir/ | https://www.shinetsu.co.jp/en/sustainability/ |
Shin-Etsu Chemical has committed to carbon neutrality by 2050
At the end of May 2023, the Company committed to becoming carbon neutral by 2050 and formulated a plan to reduce greenhouse gas emissions generated in the course of Shin-Etsu Group's business activities (Scope 1*1 and 2*2) to net zero. We will also further focus on reducing greenhouse gas emissions through the Shin-Etsu Group's products and technologies to help achieve carbon neutrality around the world.
*1 Scope 1: Direct emissions from facilities owned and controlled by the Company (e.g., emissions generated during the combustion of substances such as heavy oil and natural gas)
*2 Scope 2: Emissions generated when producing energy purchased by the Company (e.g., emissions triggered when generating purchased electricity)
For more information on our commitment to carbon neutrality by 2050, please see "Sources of Our Competitiveness:
Natural Capital" (page 26) in this report.
Business Principle
The Group strictly complies with all laws and regulations, conducts fair business practices and creates unrivaled value for society and industry through the provision of key materials and technologies.
Vision
Contribution to the Earth's future
Five areas for sustainable growth
Smart | Productivity | Health | Energy/ | |
Connectivity | Resource | |||
infrastructure | enhancement | enhancement | ||
efficiency | ||||
ANNUAL REPORT 2023 | 1 |
Value Creation Story
At a Glance
Our Business Portfolio
PVC
Infrastructure Materials
In addition to polyvinyl chloride (PVC) resin, which is widely used in categories that are essential to our lives, from water supply and sewerage systems and other infrastructure (social infrastructure) to housing, agriculture, and everyday prod- ucts, we also supply caustic soda, polyvinyl alcohol (POVAL), and other products. For PVC in particular, we have a combined annual production capacity of 4.44 million tons at our three bases in the United States, Europe, and Japan, providing a stable supply worldwide.
Silicon Wafers | Photoresist | Rare Earth Magnets |
Electronics Materials
We produce silicon wafers, a key semiconductor material, as well as photoresists, photomask blanks, and encapsulant materials used in the semiconductor manufacturing process. We also supply rare earth magnets, which are essential for power-saving motors used in eco-friendly vehicles and electrical appliances, and high-purity synthetic quartz, which is used as a raw material for optical fibers and for other applications.
Profile (Fiscal year ended March 31, 2023)
In business | Market capitalization | Operating income | Number of employees |
ratio | (consolidated) | ||
97 years | ¥8,653.1billion | 36% | 25,717 |
Overseas bases | Composition ratio of | Ratio of employees |
overseas sales | outside Japan | |
22 countries | 81% | 63% |
Net sales and number of employees by region (Fiscal year ended March 31, 2023)
5%
¥131.6 billion
17%
¥493.3 billion
31%
¥875.6 billion
47% | 3% | 54% |
¥1,308.0 billion | ¥26.3 billion | ¥541.3 billion |
13% | ||
¥130.6 billion | ||
Net sales | Operating income | |
¥2,808.8 billion | ¥998.2 billion | |
30% | ||
¥301.4 billion |
Infrastructure Materials | Electronics Materials | Functional Materials | Processing & Specialized Services | |||
(Fiscal year ended March 31, 2023)
Net sales | Net sales | |||||||||||||||
Japan | ¥538.7 billion (19%) | U.S. | ¥979.8 billion (35%) | |||||||||||||
Employees | Employees | |||||||||||||||
9,401 | 3,745 | |||||||||||||||
Silicones | Cellulose Derivatives | Silicon Metal |
Functional Materials
In 1953, we were the first Japanese company to commercialize silicone, which is used in a wide range of industries, and since then we have continued to develop our product lineup, which now includes more than 5,000 varieties. We also supply a wide variety of materials that deliver superior functionality, including cellulose derivatives, which are widely used in pharmaceuticals, food products and industrial applications, as well as synthetic pheromones, silicon metal, liquid fluoroelastomers, pellicles, and anode material for lithium ion batteries.
Input Devices | Wafer Cases | Wrapping Films |
Processing & Specialized Services
As a processing manufacturer of various resins such as PVC and silicone, Shin-Etsu Polymer Co., Ltd. meets the diverse needs of customers in a wide range of fields including the automotive, information equipment, semiconductor, packaging material, and construction material industries. Shin-Etsu Engineering Co., Ltd. is involved mainly in the design and construction of the Group's manufacturing plants.
Net sales | |||
Asia and | ¥805.1 billion (29%) | ||
Oceania | Employees | ||
10,935 | |||
Net sales | |||
Europe | ¥277.7 billion (10%) | ||
Employees | |||
1,636 | |||
Other Regions | Net sales | ||
¥207.2 billion (7%) | |||
2 Shin-Etsu Chemical Co., Ltd.
ANNUAL REPORT 2023 | 3 |
(¥ billion)
1,200.0
800.0
400.0
0
Value Creation Story
Milestones in Establishing and Strengthening Business Foundations
Since its establishment in 1926 as Shin-Etsu Nitrogen Fertilizer Co., Ltd., the Shin-Etsu Group has continually transformed its business with an eye to the future, and today holds the top share of the global market for many products, including PVC and semiconductor silicon.
Net sales (RHS) | FY2005 | ||||
Operating income (LHS) | |||||
FY1997 | Net sales exceeded ¥1.0 trillion | ||||
Capital expenditures (LHS) | |||||
Conducted capital investment | |||||
worth ¥136.3 billion | |||||
FY1994 | |||||
Net sales exceeded ¥500.0 billion | |||||
FY2021 | |||||||
Net sales exceeded | |||||||
¥2.0 trillion | |||||||
FY2019 | |||||||
Conducted capital investment | |||||||
worth ¥265.0 billion | |||||||
FY2018 | |||||||
FY2007 | Net sales exceeded ¥1.5 trillion | ||||||
Conducted capital investment | |||||||
worth ¥268.4 billion | |||||||
FY2022 | (¥ billion) |
3,000.0 | |
Net sales
¥2,808.8 billion
Operating income ¥998.2 billion
2,000.0
1,000.0
Capital expenditures ¥318.0 billion
0
1990 | 1991 | 1992 | 1993 | 1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | (FY) |
Composition ratio | 28% | |
of overseas sales |
55%
64%
81%
History of major capital investment and commercialization
Formation of business foundation
Silicone products when production first started
1950s-1960s
- Launched PVC production
- Began production of silicon wafers
- Started production of silicones
- Launched production of cellulose derivatives
Enhancement of existing businesses and global expansion
Former Chairman Kanagawa (front row, second from right) when he was appointed president of Shintech
Shintech Freeport Plant (Texas, USA)
1970s-1980s
- Started production of PVC in Texas, USA
- Overseas expansion of semiconductor silicon business (Malaysia, U.S., U.K.)
- Overseas expansion of silicones business (U.S., Korea, Taiwan, Netherlands)
- Began production of rare earth magnets
- Launched production of optical fiber preform
Corporate structure reform/Enhancement of international competitiveness
Shin-Etsu Handotai's Shirakawa Plant
1990s-2000s
- Acquired PVC and cellulose businesses in Europe
- Built two PVC plants in Louisiana, USA
- Started mass production of 300 mm silicon wafers
- Began production of silicone monomers and polymers in Thailand
- Commercialized photoresists and photomask blanks businesses
New growth strategy development
Shintech's ethylene plant that started operations in 2020 (Louisiana, USA)
2010s-2020s
- Started production of ethylene in the US (ensured stable and flexible product supply by establishing an integrated production system for PVC from raw materials)
- Began integrated production of rare earth magnets in Vietnam
- Started mass production of low-dielectric resins (5G-related products)
- Commercialized anode materials for lithium-ion batteries
4 | Shin-Etsu Chemical Co., Ltd. | ANNUAL REPORT 2023 | 5 |
Value Creation Story
Our Competitive Advantage
The Shin-Etsu Group has built solid financial foundations by supplying product lines with high market shares around the world and improving profitability.
Strength1 Leading Market Share
We hold the leading market share of key materials essential to society, including PVC and semiconductor silicon.
Strength3 Triangular Link Manufacturing
Our manufacturing is based on a triangular link of customer-focused sales, development, and production, with the latter two located in the same site, to speedily respond to customer needs.
Polyvinyl chloride | Semiconductor | Silicones | Cellulose derivatives |
(PVC) resins | silicon (Silicon wafers) | No.1 in Japan | (Methylcellulose) |
No.1 globally | No.1 globally | No.4 globally | No.2 globally |
Customer-focused sales
Rapid prototyping | Sales |
Development |
Coordination |
Production |
Same site
All our R&D facilities are located on the same premises as our plants, allowing for smooth coordination between development and production in response to customer needs obtained from sales. In addition to rapidly developing products that meet customer needs, coordinating with production departments allows us to make use of plant facilities to carry out hands-on development and prototyping for quality stabilization and mass production.
Photoresists | Advanced | Synthetic quartz | Synthetic |
photomask blanks | (for photomask substrates for LCD) | pheromones | |
No.2 globally | No.2 globally | No.1 globally | No.1 globally |
(Based on Shin-Etsu Chemical research) |
Strength2 High Profitability and
Solid Financial Foundations
Our high level of profitability is driven by tireless efforts aimed at enhancing productivity and our lineup of competitive products.
Operating income | ROIC | ROE | Net assets | Equity ratio | ||||
to net sales ratio | ||||||||
35.5% | 33.6% | 19.7% | ¥4,026.2 billion | 81.8% |
(Fiscal year ended March 31, 2023) For details, see "Financial Capital" on page 15.
Faster time-to-market
For details, see "Manufacturing Capital" on page 16 and "Intellectual Capital" on page 22.
Strength4 High Productivity
High productivity is achieved through an optimal staffing and capital investment in pursuit of efficient processes.
By appropriately assigning personnel with deep expertise, the Group has built a lean organizational structure that maximizes the capabilities of its employees. We also strive to improve productivity by thoroughly pursuing efficient methods when updating or improving existing facilities or building new ones.
For details, see "Manufacturing Capital" on page 16 and "Human Capital" on page 18.
6 | Shin-Etsu Chemical Co., Ltd. | ANNUAL REPORT 2023 | 7 |
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
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 26 July 2023 23:43:22 UTC.
