Challenge of structural reform and sustainable growth

「The company will fundamentally review its approach to management and pursue management reform based on the following basic policies: pursuing sustainable growth through a shift from quantity to quality; rebuilding a distinctive model based on its core competencies; rigorously implementing internal controls and governance; and generating synergies by concentrating resources.」

「The company will hold an All-Company Business Strategy Meeting to review its core competencies. In addition to senior management and business heads, directors, including outside directors, will participate to redefine the company's core and non-core businesses and discuss and decide on its overall business strategy from both quantitative and qualitative perspectives.」

「We will hold a company-wide business strategy meeting as a forum to review our core competencies.」

「Under the new medium-term management plan, terrAWell30 2nd stage, starting in fiscal 2025, management will shift from expanding scale toward ¥1 trillion in revenue to pursuing profitability. We will thoroughly review existing businesses and efficiently invest the management resources generated in growth businesses, while implementing improvements and rationalization centered on low-growth, low-profitability businesses to transform our business portfolio.」

「The Group is focusing on its digital and semiconductor-related businesses, which it regards as growth areas, as well as its overseas businesses in India and North America. In Japan, it worked to strengthen profitability by acquiring new customers and expanding sales channels by leveraging the Group's comprehensive capabilities, reducing costs through streamlining and efficiency improvements, and implementing rigorous price management. In addition, it began selling liquefied biomethane derived from livestock manure as a new business in the carbon-neutral field.」

「In the existing domestic businesses, the company continued to integrate and reorganize group companies and worked to form core companies that can achieve autonomous growth within each business unit. It also rigorously implemented price management to secure profit levels commensurate with the value of its products and services, and pursued measures to strengthen earnings, including productivity improvements and a review of low-margin projects, through a comprehensive review of its businesses.」

「Along the two growth axes of “the global environment” and “wellness,” we accelerated efforts to create new businesses that contribute to resolving social issues and to generate group synergies by integrating and optimizing the diverse businesses, human resources and technologies that constitute the management resources of our group.」

「The company will pursue ambidextrous management by deepening existing businesses to enhance their earnings power and exploring opportunities to discover and develop businesses that will drive the next phase of growth.」

「Based on this basic policy and management strategy, the group established an integrated management structure combining the company's head-office organization and group companies to maximize synergies created from its management resources—“diverse businesses, human resources, and technologies.” It worked to expand growth areas, including industrial gases in India and North America and electronics-related fields, strengthen the earnings power of existing businesses centered on wellness, and develop new businesses, including decarbonization-related operations.」

「Against this backdrop, we established “terrAWell 30,” a long-term vision toward FY2030 under which we aim to help solve social issues through our business activities along the growth axes of “the global environment” and “wellness,” while achieving sustainable growth and enhancing corporate value. We also formulated “terrAWell 30 1st stage,” a medium-term management plan to be executed over the three years through FY2024.」

「Against this economic backdrop, the Group continued to develop the foundations of its overseas businesses, particularly in industrial gases and engineering in India and North America, while also reorganising Group companies and pursuing business-structure reforms in such fields as chemicals, healthcare, and agriculture and food. In addition, with a view to further growth, it promoted overall optimisation by strengthening the business foundations in technology, gas production and engineering, which are essential to growth, and reinforcing the logistics, procurement and administrative functions supporting business operations. These initiatives, together with more efficient operations through digital transformation (DX) and higher productivity through work-style reforms, resulted in substantial progress in strengthening the earnings base.」

「Structural reforms in business areas that the Group has pursued for some time, including the reorganization of regional operating companies, overseas expansion in the industrial gas and engineering fields in India and North America, and optimization of production systems in the medical, chemicals and agricultural and food fields, strengthened the earnings base. Together with more efficient operations through digital transformation (DX) and higher productivity through work-style reforms, these initiatives steadily improved earnings power.」

「Taking advantage of the COVID-19 pandemic to build a business foundation for further corporate growth, the company integrated and reorganized group companies and reformed the organization of its manufacturing and technology divisions from a group-wide perspective. It also worked to improve operational efficiency, including by promoting digital innovation and work-style reform.」

「Looking ahead to the next 10 years, we will address social issues by leveraging conglomerate management based on diversity in businesses, technologies and human resources, and aim for further transformation and corporate growth under the keywords of technology, overseas expansion and digitalization.」

「The company actively developed markets to make new needs created by the “new normal” following the COVID-19 shock into future growth opportunities. These included gases, equipment, and materials for electronics-related applications, where demand is expanding with the progress of telework and next-generation communications standards such as 5G; infection-control products supporting medical operations; and household cooking products responding to stay-at-home demand. In addition, the group promoted work-style reform centered on digitalization and worked to improve operating efficiency and reduce costs.」

「We are also pursuing operational reform and innovation in our corporate culture to address the “new normal” created by the COVID-19 shock, including work-style and sales reforms centered on digitalization.」

「Under the core concept of “innovation—the execution of innovation,” we are pursuing six innovations and related management initiatives.」

「Although demand in part of the industrial-gases business showed signs of stagnation in the third quarter, initiatives to strengthen our earnings structure, including product price revisions, steadily improved profitability. The consolidation effect of proactive M&A and the start of monetization of the wood biomass power-generation business also contributed, and performance remained solid.」

「In addition to the consolidation effect of the M&A, the start of monetization of the wood biomass power-generation business contributed to solid progress toward the full-year earnings plan.」

「Although some businesses were affected by changes in the external environment, profitability across the businesses steadily improved, and the consolidation effect of the M&A conducted in the previous fiscal year provided an additional contribution, resulting in a solid start toward achieving the full-year earnings plan.」

「The food solutions business remained in a difficult operating environment in the ham and sausage business due to the continuing impact of weak sales in sweets and the Hokkaido Eastern Iburi Earthquake. However, frozen vegetable sales, including broccoli, expanded and production efficiency in processed foods improved, resulting in steady profit performance. In the beverages business, depreciation related to capital investment, higher personnel expenses and increased energy costs weighed on results, but contract manufacturing expanded, particularly for vegetable and fruit drinks and tea-based beverages, and structural reform in delivered water progressed, resulting in steady performance.」

「The chemicals-related business, which is shifting its business structure toward functional chemicals, performed strongly as product market conditions recovered against a backdrop of higher crude oil prices and measures to improve the profitability of major products proved effective.」

「The Group has positioned “structural reform of existing businesses” and “a growth strategy through M&A” as the two pillars of its growth strategy, and steadily advanced the various initiatives set out in the three-year medium-term management plan “NEXT2020-Ver.3,” for which the current consolidated fiscal year was the second year of implementation.」

「The medical-related and agriculture and food-related businesses, which we identified as future growth areas and expanded through proactive M&A, performed steadily. The individual businesses comprising our other business segments also performed solidly, demonstrating the strength of our Group’s management strategies of “all-weather management” and “the mouse-pack management model.”」

「This medium-term management plan identifies two management challenges: “building the corporate foundation needed to realize the ¥1 trillion company vision” and “laying the foundation for growth from FY2020 onward.” With “an even greater challenge of structural reform and sustainable growth” as its core concept, we established basic policies for three initiatives: (1) pursuing solutions services to the fullest and delivering innovation, (2) strengthening our corporate foundation through business-structure reform, and (3) addressing the challenges of growth from FY2020 onward.」

「In the chemicals-related business, we will accelerate structural reforms to build a business that is resilient to changes in the operating environment, while developing a functional chemicals business that leverages the Group’s strengths, including fine chemicals.」

「Under the theme “Challenge of structural reform and sustainable growth,” we established three basic policies: (1) strengthening our corporate foundation through business-structure reform, (2) pursuing solutions services to the fullest and delivering innovation, and (3) addressing the challenges of the “post-2020” era.」