NAGASE &CO., ANNUAL LTD. REPORT 2013 Annual Report 2013 Year ended March 31, 2013 A technology- and intelligence-oriented Company that turns wisdom into business. http://www.nagase.co.jp/english/ Osaka Head Offi ce: 1-1-17, Shinmachi, Nishi-ku, Osaka City, Osaka 550-8668, Japan Tel: (81) 6-6535-2114 Tokyo Head Offi ce: 5-1, Nihonbashi-Kobunacho, Chuo-ku, Tokyo 103-8355, Japan Tel: (81) 3-3665-3021 Nagoya Branch Offi ce: 3-14-18, Marunouchi, Naka-ku, Nagoya City 460-8560, Japan Tel: (81) 52-963-5615 Printed in Japan NAGASE & CO., LTD. Annual Report 2013 1 長長瀬13_E_表紙_校正戻し.indd瀬13_E_表紙_校正戻し.indd c2-1c2-1 113/08/123/08/12 117:187:18 To Our Stakeholders Representative Director and Senior Managing Representative Director and Managing Outside Director Director and Executive Offi cer Director and Executive Offi cer Representative Director and Managing Executive Offi cer Representative Director, President and CEO Director and Executive Offi cer Director and Executive Offi cer Outside Director Executive Offi cer Executive Offi cer Iwao Nakamura Mitsuro Naba Hiroshi Hanamoto Kenichi Matsuki Hiroshi Nagase Osamu Morishita Kenji Asakura Yasuo Nishiguchi Reiji Nagase Toshiro Yamaguchi Our management philosophy is to main- a specialized sales agent company representing the gold standard in the chemicals busi- ness, securing exclusive contracts to sell industry-leading products from America’s Union tain good and fair business practices, Carbide (Dow Chemical), GE Plastics (SABIC), and others. Today, our business model is undergoing a major change. In 2000, we began to build accelerating global ‘“CHANGE”’as out our manufacturing infrastructure to make fundamental structure changes. As a result, we were able to create a new Nagase—a technology- and intelligence-oriented company we practice the Nagase Way. that turns wisdom into business. Our next task is to accelerate the pace of this change. That is the role played by Change-S2014. The Nagase Group has come together as one 5,897-employee entity, working under the At the Nagase Group, our management philosophy is to maintain good and fair busi- guidance of our Change-S2014 medium-term management plan to focus our expertise to ness practices, accelerating global ‘“CHANGE” ’ as we practice the Nagase Way. create value in the most important components of our chemical value chain: Bio, Energy & Environment, and Electronics. July 2013 We started as a paint wholesaler in Kyoto back in 1832. As we began to import syn- The Directors of NAGASE & CO., LTD. thetic dyes from Basel Chemical Co, of Switzerland (modern-day BASF), we morphed into NAGASE & CO., LTD. Annual Report 2013 1 長長瀬13_E_本文_PDF用.indd瀬13_E_本文_PDF用.indd cc2-12-1 113/08/133/08/13 110:480:48 Corporate Profile Contents The Nagase Group: A technology- and intelligence- 1 To Our Stakeholders 2 Corporate Profi le 4 Our Strengths oriented company that turns wisdom into business 8 Medium-Term Management Plan Change-S2014 Life & Healthcare 10 13-Year Financial Highlights In 1832, Nagase & Co., the central company of what would become the Nagase Group, was founded as a dyestuffs wholesaler in Kyoto, 12 Message from the President 18 Nagase Group Businesses Japan. In 1900, the company started importing synthetic dyes from Basel Chemical Co, of Switzerland, pioneering new markets through- 20 Functional Materials out the world in cooperation with its customers. Since that time, the Company has created a strong and growing foundation of technology, 22 Advanced Materials & Processing information, and expertise. Today, the Nagase Group boasts more than 6,000 leading corporate customers, numerous employees with 28 24 Electronics advanced technical skills, a global network expanding throughout the world, strong manufacturing, research, and development functions, Automotive & Energy 26 Automotive & Energy and a solid fi nancial foundation. 28 Life & Healthcare Today, the Nagase Group combines trading company functions (in chemicals and a wide variety of fi elds), research and development 30 Greater China functions, and manufacturing and processing functions organically. We are much more than a trading fi rm, having grown into a Group that 31 ASEAN and the Middle East can contribute to the growth of Japan’s chemical and other industries at the highest levels, meeting the varied needs of our customers. 26 32 Nagase ChemteX Corporation We have secured our position as a technology- and intelligence-oriented company (trading company) leading industry into the future. 34 Hayashibara Co., Ltd. Moving forward, the Nagase Group intends to exercise all efforts to generate more opportunities for growth, creating business with our Financial Foundation 36 Nagase R&D Center customers around the world. Supporting Business 37 Nagase Application Workshop Growth 38 CSR Management 0.1% 1.7% 39 Directors, Audit & Supervisory Board Members and 10.8% Executive Offi cers 7 40 Corporate Governance 25.6% 12.5% 27.0% 34.8% Consolidated 44 Risk Management and Compliance Consolidated Net Sales Functional Materials Advanced Materials Operating Profit 47 Environmental Management 4.9% & Processingng ¥666.2 billion ¥15.5 billion 48 Nagase’s Environmental Business (Fiscal 2012) (Fiscal 2012) 50 Social Contribution Activities 17.4% 32.2% 15.3% 51 Together with Our Employees (Diversity , Work-Life 40.4% 20 22 Balance, and Professional Development) 54 Six-Year Summary Functional Materials Automotive & Energy Functional Materials Automotive & Energy Global Network 55 Management’s Discussion and Analysis of Advanced Materials Advanced Materials & Processing Life & Healthcare & Processing Life & Healthcare Operations and Finances Electronics Other Electronics Other 62 Consolidated Balance Sheets * Operating profi t composition ratio above does not refl ect corporate eliminations. 64 Consolidated Statements of Income 5 64 Consolidated Statements of Comprehensive Income 65 Consolidated Statements of Changes in Net Assets Nagase Group Manufacturing and Electronics 66 Consolidated Statements of Cash Flows Businesses Processing Functions/ 67 Notes to Consolidated Financial Statements Research and Development Functions 85 Independent Auditor’s Report 86 Consolidated Subsidiaries, Affi liates and Offi ces 6 90 Corporate Information 18 24 91 Investor Information Message from Forward-Looking Statements the President Non-historic information contained in this annual report related to NAGASE & CO. and Nagase Group revenue and profi t plans, strategies, presumptions, etc. are forward-looking statements that include elements of risk and uncertainty. Actual earnings may differ signifi cantly from forecasts due to changes in these elements. Accordingly, the reader is cautioned to refrain from placing undue reliance on such future forecasts contained in this document. Elements that 12 could impact earnings results are not necessarily limited to those explicitly noted in this document. 2 NAGASE & CO., LTD. Annual Report 2013 NAGASE & CO., LTD. Annual Report 2013 3 長長瀬13_E_本文_PDF用.indd瀬13_E_本文_PDF用.indd 22-3-3 113/08/133/08/13 110:570:57 Our Strengths Global Network In the more than 180 years since our founding, NAGASE & CO. has built a wealth of proprietary technologies and database of information. Today, our strengths lie in our Group-wide manufacturing and research and development functions, as well as in our unsurpassed global network. These strengths have helped us create a business that adds consistent value at every stage in the value chain—from research and development to manufacturing and processing to sales. We are creating integrated businesses that combine these strengths with our long-standing trading company functions (logistics, risk assumption (credit risk), cross-selling). Europe Northeast Asia Net sales ¥17.0 billion Net sales: ¥175.9 billion Operating bases: 2 companies Operating bases: 29 companies Number of Employees: 166 Number of Employees: 1,464 (•: 132, •: 34) (•: 731, •: 733) Japan Net sales: ¥361.9 billion Operating bases: 44 companies Number of Employees: 3,526 (•: 1,809, •: 1,717) The Nagase Group has created a truly global network, The Nagase Group Business Model expanding from Northeast and Southeast Asia to North, Central and Global Network Europe and throughout the Americas, all the time add- Southeast Asia South America ing to our worldwide presence in sales, manufacturing, .AGASES 4RADITIONAL4RADING Net sales: ¥85.8 billion Net sales: ¥25.4 billion and processing services. Operating bases: 19 companies 5NIQUE3TRENGTHS #OMPANY&UNCTIONS Operating bases: 9 companies Number of Employees: 578 Number of Employees: 163 ( : 85, : 493) • • (•: 102, •: 61) s-ANUFACTURINGAND 0ROCESSING&UNCTIONS Each business in the Nagase Group focuses on creat- INTERNAL'ROUPPRODUCTS s,OGISTICS The Value Chain ing greater value in every point along the value chain, s4ECHNOLOGICAL#APACITYAND s2ISK!SSUMPTION • Manufacturing and processing companies from upstream to downstream. )NFORMATION 'ATHERING&UNCTIONS •Sales and servicing companies s2ESEARCHAND$EVELOPMENT #REDIT2ISK &UNCTIONS2$#ENTER s#ROSS SELLING The Globally Expanding Nagase Network Training Global Business Leaders See page 52 Human Resources Development s'LOBAL.ETWORK The Nagase Group is engaged in activities around the world that rely on We count our employees and their understanding of advanced techni- s6ALUE#HAINCOMPLETE Nearly 60% of all Nagase Group employees hail from a the use of chemicals across a wide spectrum of products and services cal information as one of our strengths. By fostering a culture of train- technical background. This gives us an incredible