9 1 0 REPORT INTEGRATED 2 2 0 1 9 I NT EGRAT ED REPORT -14, Imabashi 2-chome,Chuo-ku,-14, Osaka 541-8523, Japan Osaka 541-8523, 81-6-6203-5531 Tel: Fax: 81-6-6203-5018 www.kansai.co.jp/ https:// Japanese: https://www.kansai.com/ English: The environment-friendly vegitable oil is used for printing. 6 INTEGRATED REPORT 2019 KANSAI PAINT GROUP CORPORATE PHILOSOPHY “Continuing to be a company required by society” In recent years, we at the Kansai Paint Group have been accelerating the pace of our globalization in an effort to diversify our portfolio of business regions and fields. We are striving to achieve sustainable growth with the goal of becoming a true global player. Our Corporate Philosophy forms the foundation upon which we will achieve these goals. By sharing this vision throughout our group and ensuring that all employees understand and put into practice the content, we aim to continue being a company needed by society. On this basis, the Kansai Paint Group has put forth its Mission Statement—that is, its aim for existence and roles to fulfil in the world—as follows. We leverage superior technology to contribute to our Customers and Society, in a sustainable manner, with innovative Products and Services, through a competent workforce, built on a culture of Customer Focus, Integrity and Respect to our Stakeholders. In addition, we have also drawn up the following six Core Values as important criteria to realize our Mission Statement. We refer to these six Core Values collectively using the “icare!” logo. CONTENTS 3 TOP MESSAGE 31 PRTR Substances: Emission/Movement Volumes 5 Material Issues of the Kansai Paint Group 32 Management of Chemical Substances 6 Corporate Data 33 Quality Assurance Consumer Protection 7 Kansai Paint 3 Strengths Customer Relations 11 Financial/Non-Financial Highlights 34 Relations with Business Partners We build strong trust with all We respect diversity and embrace cultural and individual 13 Value Creation Process stakeholders, by doing the right characteristics of organization members, customers and 35 Treatment of Employees thing, and by taking decisions communities by showing empathy and understanding the 15 The 16th Medium-term Business Plan that enhance the reputation of viewpoints of distinct beliefs, philosophies and cultures. 38 Occupational Safety and Health the organization in Society. We encourage and foster an environment of learning, 17 Business Review teamwork and cooperation, that enables the development of 40 Communication all organization members. 20 TOPICS 41 Corporate Governance 23 Policies and System on Environmental Conservation 47 Risk Management We continuously strive to We facilitate the emergence of entrepreneurial ideas that have Responsible Care Organizational Structure understand and exceed a long-term perspective, originality in thinking, and practicality Management of Chemical Substances 48 Other Initiatives Customer expectations. of execution, taking responsibility to see these ideas through, IR activities with ownership at all times. 25 ALES ECO PLAN 2018 We shall continue contributing to People and Society by Other ESG data providing sustainable value to all stakeholders. 26 Formulation of ALES ECO PLAN 2021 49 10-Year Summary of Consolidated Financial Indicators 27 Materials Balance 51 Consolidated Balance Sheets 28 Environmental Accounting We encourage organization We pioneer Innovation by engaging our collective wisdom and 52 Consolidated Statements of Income members to take responsibility knowledge to create new value propositions, and continuously 29 Consolidated Statements of Comprehensive Income for their own actions and strive to generate original and novel solutions for products, Prevention of Global Warming Air Pollution Control decisions, show commitment to services, and work processes. 53 Consolidated Statements of Changes in Net Assets all stakeholders, and accomplish We experiment in different and groundbreaking ways to deal 30 Water Resource Reduction and Water Pollution Prevention work in an appropriate and with value-creation opportunities or challenges, through a 54 Consolidated Statements of Cash Flows efficient manner. deep understanding of the issue at hand. Waste Reduction 1 2 INTEGRATED REPORT 2019 A Message from the President To all our stakeholders: The Kansai Paint Groupʼs Mission Statement is to “leverage superior technology to contribute to our customers and society, in a sustainable manner, with innovative products and services, through a competent workforce, built on a culture of customer focus, integrity, and respect to our stakeholders.” Representative Director, President Kunishi Mori employment and income environment along with the We also drew up our three-year mid-term The Surrounding Environment and with ongoing recoveries in emerging countries in Asia. effects of various policies. However, there are management plan, which began in FY2019. This plan Things We Are Setting Out to Achieve The Japanese economy, which had been temporarily concerns about the impacts of raw material costs and sets out the following key principles for our business weak due to the impacts of natural disasters such as currency fluctuations on corporate profits. activities, based on which we will muster our The coatings business, which is the core business of heavy rains, continued to experience mild recovery Amid the above conditions, we are mustering our capabilities as a Group to achieve the goals we have capabilities as a Group and carrying out business our Group, is applied to various items in our daily supported by a gradual pickup in the global economy set out. lives. It protects materials, making them last longer, as well as improvements in capital expenditures and activities aimed at further improving our performance adds value through beautiful colours and designs, and employment and income environments. with the aim of achieving the following core policies imparts special functions. There is a universal The Groupʼs net sales for the period under review we set out in our three-year mid-term management Profit expansion followed by capital productivity and plan, which commenced in FY2019: Profit expansion demand for features such as these that offer were ¥427,425 million, up 6.3% year on year, while profitability improvement convenience, comfort, safety and security. As such, operating income declined to ¥32,306 million, down followed by capital productivity and profitability Improved business competitiveness the paint industry is expected to further expand as a 9.8% year on year, due to a rise of raw material improvement, Improved business competitiveness growing industry, due to a global increase in new prices and an increase in selling, general and and Improved comprehensive strength of the Group. Improved comprehensive strength of the Group middle class populations and accompanying administrative expenses. Ordinary income was For the fiscal year ending March 31, 2020 (fiscal developments in housing and infrastructure ¥34,838 million, up 4.8% year on year, due to an 2019), we have set targets of net sales of ¥440,000 equipment, progress in industrialization, and increase in equity in earnings of affiliates in Asia, and million, up 2.9% year on year, operating income of You will find more specific details of these further on ¥36,500 million, up 13.0% year on year, ordinary motorization. a decrease in provision of allowance for doubtful in this report. On the other hand, the surrounding environment has receivables. Net income attributable to owners of the income of ¥41,500 million, up 19.1% year on year, entered into a revolution era, a time of drastic and parent declined to ¥17,405 million, down 1.7% year and net income of ¥22,500 million, up 29.3% year on extremely rapid change. With these changes, we on year, reflecting provision for loss on guarantees year, all on a consolidated basis. We plan to pay expect to see needs and ideas emerge that go beyond and other factors. Annual dividends were ¥30 per annual dividends of ¥30 per share for FY2019. Closing Thoughts conventional wisdom, and we must be well placed to share. respond to these issues. Based on this recognition, Key Principles to Tackle as a Matter of Last year, Kansai Paint celebrated its 100th we will strive to achieve sustainable growth by Outlook for the Fiscal Year Ending Priority and Our Management anniversary, and we have now embarked on the next century of our journey. Our wish for people to live in maintaining a mindset that considers the short, March 31, 2020 Strategy medium and long-term, providing values that support a society that is blessed with safety, abundance and the development of people and society while convenience is a universal wish that will continue to In terms of the outlook on the global economy, In order to achieve our Mission Statement, we have satisfying contributions made through our despite risk factors such as an increasing tendency for identified the following six items as key items hold true over the coming 100 years. I hope that by conventional coatings-centered business, not to trade issues, future prospects for the Chinese (materiality) to tackle as a matter of priority, and are turning this wish into reality, we will play a part in mention new business areas. economy, uncertainty surrounding policy, and taking active steps in these areas through our solving all kinds of pressing social issues, such as fluctuations in the financial and capital markets, business operations: SDGs. Overview of the Fiscal Year Ended overall we can expect gradual recovery to continue. I believe that the realization of this wish will become March 31, 2019 Amid this, while on the one hand the Chinese -Contribution to a comfortable and secure life a source of joy for all in our Group, and hope that we economy is predicted to gradually slow down for the will be able to contribute even more to society by -Contribution to local community and industrial During the period under review, the global economy present, the US economy continues to gradually making ongoing efforts to this end.