IR 2018.09.07 ー Integrated Report 2018 Published 8.7 MB
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GROWING THROUGH VALUE CREATION Integrated Report 2018 The Kanematsu Group’s Value Creation Process Corporate Principle “Let us sow and nurture the seeds of global prosperity” Five Key Issues The Kanematsu Group’s Capital • Five divisions, organized by business fi eld, each with Responding to changes in Organizational specifi c expertise A market characteristics and Capital • Organizational functions that support business location and changes in activities from specialized perspectives customer needs • Locations around the world • Highly specialized Group companies • Wide range of business fi elds Mutual development with Human and B local communities Intellectual • Expertise and technical capabilities regarding Capital industries and products • Accumulated know-how • Global professionals/Diverse professionals Consideration of the global • Business creation and proposal abilities C environment • Sound fi nancial position (Net D/E ratio of less than 1.0) Financial • Stable earnings base Capital • Average annual cash fl ows of approximately ¥20 billion D Enhancing governance Social and • High quality and quantity of business partners Relationship • Contribution to local communities Capital • Trust built over a period of almost 130 years Promoting respect for human E rights, human resource • Biodiversity (animals, plants, fungi, etc.) development, and diversity Natural • Sunlight, air, forests, and soil Capital • Geothermal, wind, and other forms of renewable energy To address these fi ve key issues, the Kanematsu Group will leverage all forms of its capital to advance business Contents Kanematsu’s Progress and Strengths Review of Operations Sustainability 1 The Kanematsu Group’s Value Creation Process 24 Review of Operations 34 Sustainability 2 Kanematsu’s History 26 Electronics & Devices 44 Corporate Governance 4 Message from the President 28 Foods & Grain 48 Messages from Outside Directors 30 Steel, Materials & Plant 49 Corporate Offi cers Special Features 32 Motor Vehicles & Aerospace 14 Special Feature Growth Strategy by Business under the future 135 Medium-Term Vision 22 Message from the CFO Our Beliefs: Kanematsu's Guiding Principles 1. Refl ecting the pioneering spirit of our predecessors, we believe that fairness and justice should guide our business dealings and the wise use of creative imagination and ingenuity will bring prosperity 2. Our purpose as a Company is not only to build a sound and fl ourishing business, but to fulfi ll our responsibilities as a corporate citizen, contributing to society and the security and well-being of all. 3. As members of a corporation, we act not as individuals but as representatives of that organization and as such we are bound by Company rules and attendant loyalties and must work together with a spirit of cooperation while cultivating mutual understanding and respect for fellow members. What We Do WhereW We Provide Value Businesses in the areas where we have strength and expertise Customers and business partners Electronics & Foods & Grain Devices Shareholders and investors Steel, Materials & Motor Vehicles & Plant Aerospace Employees Bolstering the management base • Strengthen governance • Increase sophistication of investment risk management • Develop global professionals Local communities Contributing to local communities and the environment • Environmental management system The global environment • Social contribution activities activities, thus increasing its enterprise value and providing value unique to Kanematsu to all stakeholders. Editorial Policy Forward-Looking Statements Financial Section and Company Information The content of the Kanematsu Group annual This annual report contains statements 50 Financial and ESG Highlights reports is based on an integrated reporting regarding the Kanematsu Group's plans, approach with reference to the International strategies, and expectations for future 52 Management’s Discussion and Analysis Integrated Reporting Council’s International performance. Such statements are inher- 54 Business Risks Integrated Reporting Framework, the G4 ently subject to risk and uncertainty. Sustainability Reporting Guidelines, a set of Actual results could diverge materially 56 Consolidated Financial Statements international standards created by the Global from the Group's projections due to 62 Notes to Consolidated Financial Statements Reporting Initiative, and ISO 26000. We changes in the economic and market hope that the report will help readers deep- environment surrounding the Group's 119 Independent Auditor’s Report en their understanding of the Kanematsu business areas, such as exchange rate 120 Major Group Companies Group. fl uctuation. 121 Network / Organization Chart 122 Network 124 Corporate Profi le KANEMATSU Integrated Report 2018 1 Kanematsu’s History Since its founding, contribution to the public good, domestic and international society, and humanity has been the basis of Kanematsu’s corporate activities. In line with this stance, Kanematsu has innovated and evolved with the times, continually creating and providing value unique to Kanematsu. 1889–1950s 1960s–1980s 1990s–2000s Guided by Kanematsu’s founder, a pio- Kanematsu grows larger, Following the expansion and collapse of Japan’s economic neer in trade between Japan and diversifying functions as a bubble and the Asian Financial Crisis, Kanematsu carried out Australia, Kanematsu weathered fi nan- trading company and decisive business selection and concentration aimed at rein- cial panics and built a solid foundation. expanding geographically. forcing its management framework. The Company also Eventually, the Company expanded to the United States and other countries. worked to improve and strengthen its fi nancial base. 1889 1967 1989 2005 Fusajiro Kanematsu Shoten of Australian Merged with the Gosho Company to 100th anniversary of the Acquired a majority stake in Shintoa Trading founded by Fusajiro Kanematsu form Kanematsu-Gosho, Ltd. Company’s founding Corp. (100% stake acquired in 2010) in Kobe 1973 1990 1890 Listed on the fi rst section of the Company name changed to Branch opened in Sydney Tokyo Stock Exchange Kanematsu Corporation Direct importing of Australian wool began 1918 1999 Company name changed to Implemented large-scale business Kanematsu Shoten Company selection and concentration 1936 Branches opened in New York and Seattle 1943 Company name changed to Kanematsu Corporation Net sales * Figures for fi scal 2017 onward are IFRS-basis profi t before tax. Corporate Principle “Let us sow and nurture the seeds of global prosperity” “Sow a seed now,” and take action to benefi t people around the globe, bade our founder, Fusajiro Kanematsu, setting a standard of public duty that we at Kanematsu continue to uphold through a com- mitment to ethical business principles and corporate responsibility. The beliefs and philosophies that inspired Fusajiro Kanematsu in the late nineteenth century Meiji period, a time when Japan was striving to build a national economy, were encapsulated in the docu- ment Our Beliefs: Kanematsu’s Guiding Principles in 1967, on the occasion of our merger with The Gosho Company. April 2004 – March 2007 Medium-Term Our Beliefs: Kanematsu's Guiding Principles Business Plan: 1. Refl ecting the pioneering spirit of our predecessors, we believe that “New KG200” fairness and justice should guide our business dealings and the wise use of creative imagination and ingenuity will bring prosperity 2. Our purpose as a Company is not only to build a sound and fl ourishing business, but to fulfi ll our responsibilities as a corporate citizen, contributing to society and the security and well-being of all. 3. As members of a corporation, we act not as individuals but as representatives of that organization and as such we are bound by Company rules and attendant loyalties and must work together with 2000 2001 2002 2003 2004 2005 2006 a spirit of cooperation while cultivating mutual understanding and respect for fellow members. 2 KANEMATSU IntegratedIntegrated ReportReport 20182018 Going forward, we will leverage strengths developed through our accumulation of a diverse wealth of Progress and Strengths Kanematsu’s experience over our long history to continue contributing to the development of international society. 2010– Kanematsu has enhanced its management base through business selection and concentration. Implementing M&A in highly specialized fi elds and business expansion, we are shifting to an aggressive management stance. 2012 2014 2019 Special Features Review of Operations Sustainability F Acquired North American oilfi eld Acquired a majority stake in 130th anniversary of the tubing company Benoit Machine Kanematsu-NNK Corp. (now Company’s founding LLC Kanematsu Sustech Corporation) 2013 2016 Paid fi rst dividends in 15 years Carried out an absorption-type merger with Diamondtelecom, Inc., aimed at expanding the mobile business Issued fi rst corporate bonds in 20 years April 2014 – March 2018 April 2018 – March 2024 Medium-Term Vision Medium-Term Vision “VISION-130” – future 135 – April 2007 – March 2010 April 2010 – March 2013 April 2013 – March 2016 inancial Section and Company Information Medium-Term Medium-Term Medium-Term Business Plan Business Plan: Business Plan: —Jump to the “team KG120” “S-Project” next stage— 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 KANEMATSU Integrated Report 2018 3 Message from the President Since 1889, the Kanematsu Group has constantly stayed ahead of the curve, continuing to grow through repeated business creation. In April 2018, we