On behalf of the NSG Group, I would like to expressmy sincere gratitude for your continued support.
I would like to present Group’s financial results for the first half (from 1 April to 30 September 2021) of the 156th fiscal period (FY2022) as follows.
Summary of the First Half of FY2022 and Outlook for the Second Half
In the first half of FY2022, while the Group's business environment was severly affected by the spread of COVID-19 infection in some businesses/regions, Architectural glass business stayed buoyant in general thanks to the demand recovery in many regions. The demand for Solar energy glass continued to be robust as well. Technical glass business also benefited from the strong consumer demand in many regions. In contrast, Automotive glass business, though significantly recovered in the first quarter, continued to struggle in the second quarter and onwards because of an extremely low level of demand as automotive production was constrained by shortages of semiconductors and other automotive components.
In addition, the Group was seriously impacted by rising input costs, particularly energy costs, but managed to mitigate it by persistent cost cutting and increasing prices reflecting the supply and demand conditions.
Consequently, the Group was able to deliver a significant year-on-year improvement and net profit exceeding our forecast for the first half of FY2022, with revenues of 290.7 billion yen (221.5 billion yen in the same period of FY2021), operating profits of 12.7 billion yen (3.2 billion yen in the same period of FY2021), and the profit attributable to the owners of the parent of 8.6 billion yen (loss of 17.3 billion yen in the same period of FY2021), partly boosted by exceptional profits (net) of 4.5 billion yen including a gain on the transfer of Battery separator business.
The business environment in the second half of FY2022 is expected to continue to be influenced by soaring input costs including rising energy prices significantly. In Automotive glass business, while uncertainties remain with respect to the timing for resolution of semiconductor and other component shortages, we aim to recover profitability on a fullyear basis by implementing additional cost reduction measures. Both Architectural and Technical glass businesses are expected to continue to enjoy a favourable business environment and our forecast of increased revenues and profits remains unchanged in all business lines.
Progress in “Revival Plan 24 (RP 24)” as a new Medium Term Management Plan
This is the first year for “RP 24” as a new Medium Term Management Plan covering the period from FY2022 to FY2024.
The Group considers the period of RP24 as the time for transformation and commits to execute Three Reforms, i.e. Cost structure reform, Business structure reform and Corporate culture reform, and Two Key Initiatives, i.e. Restoration of financial stability and Transformation into more profitable business portfolio, in a bid to achieve the business strength to enable sustainable growth.
Progresses made in the 1st half of this term include the following:
A steady progress has been made in reducing costs through Cost structure reform activities and Business structure reform has led to increased contribution of highly profitable businesses. As one good example of Transformation into more profitable business portfolio, the transfer of Battery separator business was completed on the 1st of September, contributing to a major profit increase with continued net profit in the 1st half and also, the equity ratio recovered above 10 percent paving the way toward Restoration of financial stability. Moreover, the Group has also commenced taking a variety of forwardlooking steps including a trial in glass production powered by hydrogen as well as the environmental contribution with such products as Solar energy glass and BIPV(Building Integrated Photovoltaics) aiming at carbon neutrality; advancement of Inclusion & Diversity globally as a part of Corporate culture reform; and promotion of a talent development program amongst all.
Transformation Initiatives under Revival Plan 24
||Cost structure reform
- Headcount: Consolidation/Closure of sites/production lines mainly in Automotive business in Europe and Americas. Over 500 reductions in 2022/3 (JPY 5.8 bn cost reduction vs 2020/3), resulting in over 2,000 since 2020/3 end (JPY 13.0 bn reduction at 2022/3 end vs 2020/3) (Severance cost provided in 2021/3)
- Non headcount: Direct costs savings of JPY 2.3 bn so far and JPY 4.3 bn in 2022/3 via Kaikaku and Kakushin activities. Electricity usage and CO2 emission through battery storage system in a Canadian site
- Additional cost reduction initiatives of around JPY 5 bn in Automotive business
|Business structure reform
- Contribution to profit and CO2 emission by solar energy glass furnace in the USA and Vietnam
- New float furnace construction in Argentina aiming for full operation in early 2023/3
- New products such as BIPV (Building Integrated Photovoltaics) and antiviral glass with on-line coating technology. Printer lens applied to office-use printer and glass code to industrial machines or robots
- New division: Creative Technology Business Development Division
- Test of hydrogen power and transparent solar panels for use as windows aiming for carbon neutrality
|Corporate culture reform
- Enhancing “Inclusion & Diversity (I&D)” activities globally to improve manager gender diversity and accelerate development of next generation
- Identifying new competencies to quantify specific talents and skills and develop strategy needed to deliver RP24
|Two Key Initiatives
||Restoration of financial stability
(2022/3 Q2 actual)
- Continued net profit significantly improved by JPY 26 bn year-on-year. Shareholder's equity ratio also improved above 10%
- JPY 43.4 bn of cash and JPY 78.0 bn unused commitment lines at the end of Sep. 2021
|Transformation into more
profitable business portfolio
- Disposal of Battery Separator business completed on 1st September
Enhancement of sustainability
Based on “Our Vision,” the new management principles for NSG Group, we set forth Materiality for the Group and pursue initiatives to achieve a sustainable corporate growth and to realize a sustainable society over the medium to long-term. In line with this, we have announced an endorsement of the recommendations by TCFD (Task Force on Climate-related Financial Disclosures) on climaterelated financial disclosures. We plan to elaborate our information disclosure by evaluating the potential impact of climate-related risks and opportunities more quantitatively utilizing the climate scenario analysis along with the disclosure framework recommended by TCFD.
||Contribute to the realization of a decarbonized society with GHG emissions reduction by eco-friendly manufacturing process and sales expansion of eco-friendly products
|Society Shift and Innovation
||Identify significant challenges to society and providing technology/product/service to their solution in a timely fashion
|Safe and High-Quality Products and Services
||Enhance both the products and service quality through improvement of quality and supply chain control
|Ethics and Compliance
||Carry off significant trust from stakeholders by constant address on Ethics and Compliance
||Ensure sustainable growth of the Group and contribute employees'welfare through a variety of initiatives to enhance developing Change Leaders at global level, safety, health, and Inclusion and Diversity.
Recognizing the distribution of profit to shareholders as one of its important management objectives, the Group has upheld a stable basic policy of declaring dividend payments on common shares based on sustainable business results. To that end, dividend payments by the Group will be determined in view of the enhancement of its financial status and accumulation of the appropriate level of retained earnings for future business growth.
Regretfully, the Group decided not to declare an interim dividend for this fiscal year, taking into consideration its business results and financial situations comprehensively.
I am deeply sorry and sincerely apologize to our shareholders. Group recognizes the importance of dividends to its shareholders and will concentrate its efforts to improve profitability with a view to the resumption of dividend payment as early as possible.
I would like to ask your continued understanding and support.
Representative Executive Officer
President and CEO
Nippon Sheet Glass Co., Ltd.