Medium-Term Management Plan artience 2027 | Integrated Report 2026 Financial Strategy: Accelerating Capital Efficiency and Growth Investments under Solid Financial Discipline
Published on June 30, 2026
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Progress in business portfolio management
Takeshi Arimura
Fiscal year 2025 was a year in which we worked to rebuild the foundation for realizing GROWTH amid rapidly changing environments. Due to the slowdown in the EV market, we recorded impairment losses in the CNT dispersions business, which had a significant impact on the numbers. Although operating profit reached a record high, this particular factor led to a decline in net profit for the period, with ROE remaining at 3.9%. On the other hand, excluding these impacts, profitability has steadily increased, and we expect further growth in performance in fiscal year 2026.
In particular, the 8% ROE target set in the Medium-Term Management Plan artience 2027 is an important indicator we are committed to as a management team. We aim to steadily advance by combining a business portfolio transformation centered on expanding operating profit, planned sales of strategic shareholdings, and capital policies such as strengthening shareholder returns.
We also recognize that the current PBR below 1 is due to ROE not meeting the target level on a merit basis, as well as insufficient pricing in future growth expectations. Through IR activities, it is essential to carefully communicate our strategies and progress to raise expectations. We incorporate the diverse opinions we receive from investors into concrete measures and management plans.
Looking at the macro environment, we are at a major turning point from deflation to inflation. On the business side, it has become easier to pass on prices, but future interest rate increases are inevitable. Therefore, in fiscal year 2025, we will work to reduce interest-bearing debt and strengthen our financial structure.
Regarding capital efficiency, company-wide management is conducted using ROIC (Return on Invested Capital), while on-site operations primarily use CCC (Cash Conversion Cycle) as the main indicator. Although there are differences between departments, inventory reduction is progressing mainly domestically, and the awareness on the ground is definitely changing. We are confident that the field taking autonomous improvement actions without waiting for instructions from above will become a solid strength for our group going forward.
- ROE temporarily declined in 2025 due to impairment losses.
- In 2026, driven by improved earnings, we aim to achieve over 8.0% and improve PBR by reaching levels above the cost of equity (approximately 8%).
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Business portfolio transformation |
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Increase capital efficiency |
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Capital policies |
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Efforts to lower capital costs |
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- Up to 4.5 million shares or 1 billion yen (acquisition period: May 12, 2025 ~ May 11, 2026)
PBR Trends and Performance Trends & Targets
Reviewing investment policies and optimizing cash allocation
In fiscal year 2025, we established the "Investment Policy Review Task Force" and the "BS Reform Task Force" as company-wide initiatives, and have held repeated discussions. In particular, the Investment Policy Review Task Force has focused on balancing the perspective of where to invest and accelerate growth with how to maintain financial and investment discipline, organizing and proposing specific policies.
Traditionally, investment decisions have generally been made within the range of depreciation expenses. As a result, while growth investments were prioritized, investments for maintenance and renewal were easily suppressed, and domestic sites sometimes had to use aging buildings and equipment for extended periods.
In light of these circumstances, we have reviewed our investment policy. First, regarding growth investments, we will shift to a system where necessary items are flexibly executed in separate frameworks, moving beyond the traditional framework of depreciation expenses. Furthermore, anticipating future declines in the working population, we will allocate resources thoroughly to capital investments aimed at reducing labor, reducing labor, and improving working conditions. What matters most is not to invest one-size-fits-all in every business, but to clarify the priorities of each investment. While maintaining ROIC above a certain level, we will concentrate investments that strengthen competitiveness in areas positioned as "growth businesses" or "revenue-based businesses."
Regarding specific cash allocations, we decided to postpone part of the planned investments in the CNT dispersions business in light of changes in market conditions. The funds are reallocated to growth investments and maintenance and efficiency improvements in other areas. Regarding growth investments, even in areas previously anticipated in the next medium-term management plan artience 2030, we plan to accelerate those that we judge as "the right time" based on business progress. This fiscal year, we are accelerating the strengthening of production capacity in the liquid ink business in India and the pressure sensitive adhesives business in China.
As an investment in maintenance and efficiency, we have decided to invest in the liquid ink business at the Saitama Manufacturing Plant. This business is achieving high profitability through cost reductions, such as integrating product products into integrated manufacturing and sales, and will address labor shortages and further improve efficiency through automation and equipment upgrades.
Regarding shareholder returns, we have already achieved over 50% of the total return ratio set for artience 2027. Of the total shareholder returns expected to reach 40 billion yen over three years, just over 35 billion yen has been decided to be implemented, and the dividend increase for fiscal 2026 has also been announced. We will also consider appropriate methods for residual returns.
Progress of capital policy and cash allocation over three years of medium-term management plan (unit: 100 million yen)
Shareholder returns
Enhancing the accuracy of investment decisions and fulfilling accountability
Management Plan artience 2027/2030 The key to achieving "GROWTH" is improving profit margins. While improvements in individual businesses are certainly important, it is also necessary to boldly shift portfolios toward businesses with higher capital efficiency and profit margins from a broader perspective. I believe the essence of how to leverage our stable financial foundation and connect it to enhancing corporate value is the key to this. Also, in the current period of yen depreciation and rising interest rates, maintaining an "A-grade" financial rating is crucial. This directly affects funding costs, and we will continue to uphold this policy going forward.
Active investment for growth is essential, but from the finance department's perspective, it is also essential to question the "discipline of investment." Taking into account the significant impairment loss recorded in fiscal year 2025, we will further strengthen the verification of assumptions in investment decisions and will continue to review them as appropriate after execution. However, this does not mean becoming overly conservative. After calmly assessing the validity of investments, we support truly valuable investments and put the brakes on those that are not worth it. I believe that this role is precisely that of the executive in charge of finance.
What I always focus on in decision-making is whether it can be explained. We continuously question whether we can explain the validity of every measure and proposal to both internal and external parties, and whether we can reasonably explain "why we made this decision" in a reasonable manner. Even if there are differing opinions, we pursue financial strategies that foster understanding through dialogue and fulfill true accountability.
Management Plan artience2027/2030 "GROWTH"
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