
2018 Corporate Report Year Ended March 31, 2018 Profile Established in 1918, Kansai Paint Co., Ltd. has grown Company Profile into Japan’s most progressive manufacturer in various fields related to coatings. Name: Kansai Paint Co., Ltd. Head office: 6-14, Imabashi 2-chome, Today, the company enjoys a well-established Chuo-ku, Osaka 541-8523, position as one of the world’s leading Japan paint manufacturers. Date established: May 17, 1918 The various products provided by the Kansai Capitalization: 25,658 million yen Number of employees: 15,731 (consolidated) Paint Group are highly valued and trusted in a broad Principal business lines: Manufacturing and sale variety of fields, due to the important role our of paints coatings play, such as protection, beautification, Design, manufacturing, special functionality, and environmental sensitivity. and sale of coating equipment Moreover, with Kansai Paint’s proprietary Control and undertaking research and development capabilities at its core, the of painting work Company is providing its clients around the world Design of color schemes Corporate website: https://www.kansai.co.jp/ with unparalleled customer service by expanding its manufacturing, distribution, and sales activities worldwide. Contents Five-Year Summary of Selected Financial Data ....................01 A Message from the President ...........................................02 Corporate Philosophy and Corporate Governance .............04 Board of Directors .............................................................08 Business Review Kansai Paint at a Glance ..............................................10 Business Overview by Segment ....................................12 Research and Development Operations ........................14 Product Focus ..............................................................16 Environmental Activities Policies and System on Environmental Conservation ....18 ALES ECO PLAN 2018 .................................................20 Environmental Conservation Activities .........................22 Management of Chemical Substances .........................24 Social Activities Occupational Safety and Health ...................................26 Treatment of Employees ..............................................28 Consumer Protection ...................................................29 Social Action Programs ................................................30 Financial Section ................................................................31 Directory ............................................................................64 Five-Year Summary of Selected Financial Data (Years ended March 31, 2018, 2017, 2016, 2015 and 2014) Consolidated Basis Thousands of Millions of yen U.S. dollars *1 2018 2017 2016 2015 2014 2018 For the year: Net sales ¥401,978 ¥330,236 ¥328,119 ¥349,334 ¥320,454 $3,783,678 Operating income 35,802 35,311 34,772 31,580 29,636 336,992 Income before income taxes and non-controlling interests 34,259 40,468 47,431 36,867 39,087 322,468 Net income attributable to owners of the parent 17,701 24,169 28,344 20,409 21,560 166,613 At year-end: Total assets ¥603,766 ¥542,164 ¥430,198 ¥448,085 ¥400,092 $5,683,038 Net assets 322,426 296,165 293,903 303,627 258,016 3,034,883 Yen U.S. dollars *1 Per share amounts: Net income *2 ¥68.80 ¥93.16 ¥106.41 ¥76.61 ¥80.91 $0.65 Diluted net income *3 59.29 83.46 - - - 0.56 * 1: For convenience only, U.S. dollar amounts in this report have been translated from Japanese yen at the rate of ¥106.24 to U.S.$1.00, the exchange rate at March 31, 2018. * 2: Net income per share is calculated based on the weighted average number of shares of common stock in issue during the year. * 3: Diluted net income per share is not recorded for the fiscal years ended March 31, 2016, 2015 and 2014 because there were no dilutive shares during those fiscal years. • Net sales • Operating income • Income before income taxes and non-controlling interests (Millions of yen) (Millions of yen) (Millions of yen) 500,000 40,000 50,000 47,431 34,772 35,311 35,802 40,468 401,978 31,580 39,087 400,000 29,636 40,000 36,867 349,334 30,000 34,259 320,454 328,119 330,236 300,000 30,000 20,000 200,000 20,000 10,000 100,000 10,000 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 • Net income attributable to • Total assets • Net assets owners of the parent (Millions of yen) (Millions of yen) (Millions of yen) 35,000 700,000 350,000 322,426 303,627 603,766 293,903 296,165 30,000 28,344 600,000 300,000 542,164 258,016 25,000 24,169 500,000 250,000 21,560 448,085 430,198 20,409 400,092 20,000 17,701 400,000 200,000 15,000 300,000 150,000 10,000 200,000 100,000 5,000 100,000 50,000 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Kansai Paint Co., Ltd. Corporate Report 2018 1 A Message from the President improvement in employment, Europe enjoyed robust consumer spending, and China and emerging countries in Asia continued to enjoy economic recovery owing to the effects of various measures. The Japanese economy saw mild recovery owing to improvements in the global economy as well as in the employment and income environments. The Group’s net sales for the fiscal year under review were ¥401,978 million (US$3,784 million), up 21.7% year on year, and operating income was ¥35,802 million (US$337 million), up 1.4% year on year, due to a rise in raw material prices and an increase in selling and general administrative expenses. Furthermore, due to premium severance pay for early retirement in Africa, net income attributable to owners of the parent was ¥17,701 million (US$167 million), down 26.8% year on year. Annual dividends were ¥27 per share. Outlook for the Fiscal Year Ending March 2019 In the outlook for the global economy, despite concerns about the trend in U.S. economic and To all our stakeholders: monetary policies under the new administration, The Kansai Paint Group’s Mission Statement is to uncertainty surrounding the economic outlook for “leverage superior technology to contribute to our China and other emerging countries, and customers and society, in a sustainable manner, geopolitical risks, expectations are for continuing with innovative products and services, through a strong economic growth in India, steady economic competent workforce, built on a culture of recovery in the U.S., and gradual economic customer focus, integrity, and respect to our recovery in Europe and the ASEAN region. stakeholders.” In Japan, moderate economic recovery is The coatings business, the core business of the expected to result from the effects of government Group, is supported by customers in wide-ranging policies amid continuing improvement in the market sectors, including automobiles and other employment and personal income environment. industrial products, buildings, structures, and ships. However, there are concerns about delayed The basis and reason for the Group’s existence is to economic improvement in some sectors and obtain the satisfaction of these customers, and we downward pressure on corporate earnings resulting believe we can contribute to society at large from fluctuations in raw materials prices and through realization of customer satisfaction, and currency exchange rates. contribute specifically to the Group’s stakeholders In these circumstances, the Kansai Paint Group by enhancing corporate value. will focus its capabilities on achieving the key policies in the three-year mid-term management plan—accelerated globalization, increased Overview of the Fiscal Year Ended profitability, and strengthening of the group March 2018 management foundation—and engage in business The global economy during the fiscal year under activities to further improve business results. review continued to face heightened geopolitical For the fiscal year ending March 31, 2019, risks and uncertainties in political and policy (fiscal 2018), we have set targets of net sales of developments in different countries; however, the ¥435,000 million (US$4,095 million), operating United States saw positive corporate sentiment and income of ¥40,000 million (US$377 million), and 2 Kansai Paint Co., Ltd. Corporate Report 2018 net income of ¥27,500 million (US$259 million), all through sharing and effective utilization of on a consolidated basis. We plan to pay annual enterprise resources within the Group. dividends of ¥30 per share for fiscal 2018. Closing Thoughts Management Strategies We commemorated our 100th Anniversary on May The Group has instituted a three-year mid-term 17, 2018. On behalf of all our Group employees, I management plan that began in fiscal 2016 and is would like to express our sincere gratitude for the engaging in business activities based on the following support of countless people in reaching this key policies. important milestone, and to affirm our commitment in using it as a stepping stone for future 1. Accelerated Globalization achievements. Strengthen the competitiveness of overseas People’s desires and aspirations to live a peaceful, businesses, focused on emerging economies with comfortable and convenient life remain constant. high growth prospects, by meeting market needs And our wish for our new coming 100 years is to and optimizing cost, quality, and functions. Solidify help fulfill this ambition, for each and every person. the position of existing businesses and further We will endeavor to innovate beyond our existing strengthen the Group’s presence in overseas business, in new areas and domains. By working markets. In addition,
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