Medium-Term Management Plan artience 2027 | Integrated Report 2024Business portfolio transformation

Previously, we carried out structural reforms including the promotion of alliances, the integration of sales companies and the closedown and integration of production bases in unprofitable areas to achieve some positive results.
During the artience 2027 Medium-term Management Plan, we will take a proactive stance. We have divided our existing businesses into three groups, growth businesses, stable earnings base businesses and businesses where we will implement a restructuring and rebuilding strategy. We then determined our approaches for each of these groups. Acting uniformly is the same as intensively doing nothing. The idea behind Basic Policy 1 is to change the ways that we think more drastically and to make our strengths stronger.

In the growth businesses group, we have set the goal of increasing operating profit from 6.5 billion yen in FY2023 to 9.0 billion yen in FY2026. We suspect there are more existing businesses in which we can seek greater profit. Instead of being satisfied with a certain level of profit, we will work thoroughly to avoid missing any opportunity.
The growth businesses deal mainly in packaging-related materials, including liquid inks, pressure sensitive adhesives and laminating adhesives. In Japan, we have a large share of the markets for all of these products. Since these markets are not expected grow significantly, they are not positioned as revenue foundation businesses. However, from a global perspective, there is great potential for these businesses to leap forward.

We will work very hard on our strong businesses in Southeast Asia, India, Turkey and other regions that have the potential for the growth of their populations in the future
Our liquid inks for packaging materials in Southeast Asia are strong in Thailand and Malaysia. In the future, we will put more energy into Indonesia as well. Its population is nearly 300 million. Among the companies in out Group, our India business has one of the leading growth rates, but I believe that there is still significant room to expand its market share. In Turkey, a new production base will begin operating in July 2024. According to our plan, we will increase the number of production bases and increase their capacity to increase sales not only in Turkey but also to Europe, the Middle East and Africa.

In markets that are expected to expand in the future, we will identify areas where we can leverage our business advantages. We will operate our businesses, not in a generalized manner but by placing clear emphasis on certain areas. We will develop our businesses outside of Japan into growth drivers, especially in the Asia region.
Currently, overseas net sales are approximately 54% of the Group’s total net sales. Our goal is to earn 60% to 70% of our net sales overseas.

At present, we are putting the greatest emphasis on carbon nanotube (CNT) dispersions for automotive lithium-ion batteries. CNT dispersions are a key material for extending the driving range of electric vehicles. CNTs are so difficult to handle that the dispersion technologies that we are strong in are significant in their practical application.
Our CNT dispersions have been highly received and been selected by a series of major battery manufacturers. To seize this opportunity, we increased the funds in our investment plan from over 25 billion to more than 49 billion yen. (This is a cumulative total amount including the approximately 15 billion that has already been invested.)
We forecast that the net sales of the CNT dispersions business alone will be more than 20 billion yen in FY2025 and more than 40 billion yen in FY2026. Centering on this business, our business portfolio will change dramatically. The day may possibly come in the not-so-far future when artience will be an electric vehicle brand.

Color filter materials for displays used to be an earnings pillar. Since they have become commoditized, they have become less profitable than in the past. Display production bases are moving to China. We see this change in business structure as an opportunity.
Our trust-based relationships with customers that we have established in our conventional businesses such as color filter materials and electromagnetic wave shield materials are a great advantage and asset to us. This is also true in the electronics sector. I believe that there are still latent business opportunities in the areas around the display and advanced electronics-related products that we have supplied. We will take advantage of our relationships with markets to broaden our horizons and capture needs for related materials in a bid to promote materials for next-generation displays and semiconductors.

My thinking is that, not only our design features such as colors and feels, customer’s peace of mind based on the materials we supply is also a value that resonates with the senses. We have consistently provided value that resonates with the senses in many different forms. We have recently defined value that resonate with the senses as a part of the value that we should offer. I believe that our purposeful efforts to increase this value will enable us to be competitive and lead to services that we provide to customers and to society.

The desirable state of the company that I envision is a lively atmosphere where new challenges are taken on one after another. When sales and profit increase, the atmosphere in the company will be brighter and more lively. It is important that many staff members think about how to spread this positive effect through their work and how to act with a sense of ownership. With the transformation of the business portfolio, we will get ■ back on a growth track and revitalize the Group