Annual Report 2013

Annual Report 2013

Annual Report 2013 Year ended March 31, 2013 Business Domains of the Furukawa Company Group Since its establishment in 1875, Furukawa has emerged from its origins in mine development to build a broad range of businesses while constantly addressing the needs of the times. In our businesses, which can be broadly classified into the fields of machinery and materials, we deliver attractive products to diverse markets. Going forward, we will expand our involvement in rapidly growing businesses, while adhering to our basis corporate policies, which are to “strengthen the technical capabilities of the Machinery busi- ness and promote further overseas development” and “promote development activities aimed at new product commercialization.” Furukawa’s Technological Genealogy Mining technologies Exploitation technologies Transport / Mineral processing technologies Slurry transportation Grinding Drilling technologies Hydraulic control technologies technologies technologies Machinery Business CONSTRUCTION AND UNIC MACHINERY INDUSTRIAL MACHINERY MINING MACHINERY (ROCK DRILLS) Hydraulic breakers UNIC cranes Slurry pumps, sludge pumps Hydraulic crushers UNIC carriers Progressing cavity pumps Crawler drills Mini crawler cranes Environmental machinery Tunnel drill jumbos Ocean cranes (Electrostatic precipitators) Crushers, grinding mills, briquetting machines Steel structures Construction and Mining Machinery (Rock Drills) / UNIC Machinery Industrial Machinery Mines (iron ore, copper, coal, lime, etc.) Engineering and construction sites Steel plants Quarries Tunnel construction Refineries Bridges, Pedestrian bridges Shipyards Sewage treatment plants Various plants Logistics Incinerators Vehicle transportation Resource development Infrastructure, engineering, construction Heavy industry B U S I N E S S D O M A I N S Smelting technologies Exhaust gas treatment Flash smelting Sulfuric acid production Electric technologies technologies technologies technologies Materials Business INDUSTRIAL MACHINERY METALS CHEMICALS ELECTRONIC MATERIALS Electrolytic Cuprous oxide High-purity metallic copper Cupric oxide arsenic Sulfuric acid Other crystal products Coils Metals Chemicals Electronic Materials Paper manufacturing plant Semiconductor devices Green car Chemicals factory Electronic goods Solar power generation Paints factory Communications equipment (mobile phones, etc.) Smart community Copper plating plant PCs Next-generation medical LEDs examination equipment Digital home appliances (TVs, DVD players, etc.) Radiation meters White goods (air conditioners, refrigerators, etc.) Chemicals industry Electronics, IT, semiconductor industries Next-generation new industry B U S I N E S S D O M A I N S Annual Report 2013 1 To Our Stakeholders Business Conditions and Performance million, due to a foreign exchange gain stemming from the weak- In fiscal 2013, ended March 31, 2013, the Japanese economy ened yen. Furthermore, there was a ¥994 million gain on sales of showed signs of a moderate turnaround on the back of disaster investment securities, ¥1,264 million in compensation income, and recovery demand following the Great East Japan Earthquake. After an ¥824 million gain on sales of subsidiaries’ stocks accompanying the change in government at the end of calendar 2012, moreover, the divestiture of businesses. In other expenses, the Group posted expectations about economic recovery increased as the govern- a ¥1,259 million interest expense, a ¥63 million loss on sales and ment and the Bank of Japan embraced policies aimed at breaking retirement of noncurrent assets, and a ¥331 million impairment the deflationary cycle, which caused the yen to weaken and stock loss. As a result, net income for the fiscal year totaled ¥2,976 mil- prices to rise. However, economic instability overseas underscored lion, compared with a net loss of ¥1,659 million in the previous the risk of downward pressure on the domestic economy. fiscal year—representing a substantial year-on-year improvement Facing these conditions, the Furukawa Company Group imple- in earnings. mented a number of proactive business strategies, centering on its three machinery-based business segments: Industrial Machinery, Selection and Concentration Construction and Mining Machinery (Rock Drills), and UNIC Ma- In the year under review, the Group sold all of its shareholdings in chinery. These measures included advancing our overseas opera- Tohpe Corporation, a subsidiary handling its paints business, to Zeon tions, addressing disaster recovery demand in Japan, reducing Corporation. We also sold all of our shareholdings in Furukawa Com- costs, and enhancing business efficiency. As a result, we generated merce Co., Ltd., responsible for the fuels business, to Usami Koyu healthy year-on-year sales increases mainly in the UNIC Machinery Corp. Withdrawing from the paints and fuels businesses has enabled and Metals segments, but posted revenue declines in other seg- us to focus our management resources on our core businesses—ma- ments following the divestiture of businesses, including fuels. For chinery and materials—creating a framework conducive to selection the fiscal year, consolidated net sales amounted to ¥165,540 mil- and concentration. lion, up 5.1% from the previous fiscal year. In our Machinery business segments—Industrial Machinery, Con- On the earnings side, although the Construction and Mining struction and Mining Machinery (Rock Drills), and UNIC Machinery— Machinery (Rock Drills) segment posted a decline in income due we will steadily pursue disaster recovery demand in Japan. At the to depressed market conditions overseas, the UNIC Machinery same time, we will reinforce our technical capabilities and step up segment enjoyed a substantial jump in income owing to healthy overseas business advancement in order to address changing demand sales in Japan. Accordingly, operating income climbed 56.1%, to in resource-rich countries and emerging nations. We have identified ¥3,363 million. Turning to other income, the Group posted ¥966 several markets earmarked for future growth, such as domestic and 2 overseas infrastructure and resource development, and expanding our share of those markets is a key strategy. Net Sales Operating Income Net Assets (Billions of yen) (Billions of yen) (Billions of yen) In the Materials business, the other core business for the Group, we will focus on developing new materials, especially in the Electronic 50.9 51.5 Materials segment, in order to achieve commercialization at an early 47.6 47.7 161.9 165.6 165.5 45.7 157.6 3.4 stage. In the Metals segment, we will continue emphasizing stable ore 142.9 procurement while examining investments in mines aimed at securing 2.8 strategic interests, with the aim of building a framework to comple- 2.3 2.2 ment our smelting business. 1.6 By concentrating management resources in the Machinery and Materials businesses even more rigorously than before, we will strive to further raise profitability and corporate value. Dividend Policy '09/3 '10/3 '11/3 '12/3 '13/3 '09/3 '10/3 '11/3 '12/3 '13/3 '09/3 '10/3 '11/3 '12/3 '13/3 Furukawa places great importance on improving returns of profits to Machinery Business Materials Business all shareholders while retaining earnings required to finance capital Others Business expenditures and research and development expenses necessary to bolster earnings. Our basic policy is to appropriate profits after com- prehensive consideration of future business development and various other factors. Net Sales Operating Income Net Assets In fiscal 2013, the Company declared a year-end cash dividend of (Billions of yen) (Billions of yen) (Billions of yen) ¥2.00 per share, its first dividend payment in four years. In fiscal 2014, we plan to pay a year-end dividend of ¥2.00 per share, with no in- 50.9 51.5 47.6 47.7 terim dividend scheduled. 161.9 165.6 165.5 45.7 157.6 3.4 142.9 The Furukawa Company Group is committed to further strengthening 2.8 and upgrading its operational foundation while achieving business 2.3 2.2 growth and enhancing corporate value. To this end, Nobuyoshi Soma 1.6 assumed the post of chairman and representative director, and Nao- hisa Miyakawa was appointed president and representative director. With the new management team in place, we will continue pursuing our business operations with strategic priority on our two fundamen- tal policies, which are to “promote further overseas'09/3 development'10/3 '11/3 and '12/3 '13/3 '09/3 '10/3 '11/3 '12/3 '13/3 '09/3 '10/3 '11/3 '12/3 '13/3 strengthen the technical capabilities of the Machinery business” and Machinery Business Materials Business “promote development activities aimed at new productOthers commercialBusiness - ization.” We look forward to the understanding and support of all stakeholders as we embrace the challenges of the future. Net Sales Operating Income Net Assets (Billions of yen) (Billions of yen) (Billions of yen) August 2013 50.9 51.5 47.6 47.7 161.9 165.6 165.5 45.7 157.6 3.4 142.9 2.8 2.3Nobuyoshi Soma 2.2 Chairman and Representative Director 1.6 '09/3 '10/3 '11/3 '12/3 '13/3 Naohisa'09/3 '10/3 Miyakawa'11/3 '12/3 '13/3 '09/3 '10/3 '11/3 '12/3 '13/3 Machinery Business Materials BusinessPresident and Representative Director Others Business Annual Report 2013 3 An Interview with the President — The Furukawa Company Group’s Future Business Strategies — In today’s challenging business environment, the Group is targeting renewed growth by focusing on the expanding Machinery and Materials business domains. Question 1 How did the Furukawa

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