CEO Message

On behalf of the NSG Group, I would sincerely like to thank you all for your continued support. I extend my prayers to those who have succumbed to COVID-19, wish all those affected by the disease a fast recovery, and pray for the continued well-being of all the shareholders and their family members.

FY2021 was a tough year. Economies and people's lives around the world suffered significantly as a consequence of the pandemic. NSG Group was no exception, finishing the year with unsatisfactory results, despite our very best efforts.

In the meantime, while still facing many difficulties, the global economy has quickly adapted to the situation and is steadily moving towards recovery. The fast response is partly aided by technological innovation that has penetrated people’s daily lives at an astonishing pace in many ways. These include remote working and e-commerce, that have fundamentally changed the way we work and spend our private time. Through these changes, a new society is taking shape and new requirements are emerging in the wake of the COVID-19 crisis.

Seizing this opportunity, NSG Group has set out a new Medium Term Vision for sustainable growth outlined as follows.

To become
"A global glass supplier contributing to the world with high value-added glass products and services"

  • Three areas the Group aims to contribute to:
    ① Safety & Comfort To create people-friendly surroundings and a living space that is pleasant, safe and healthy
    ② Eco society To create an eco-friendly world by various contributions such as a shift to renewable energy and lowering the usage of air-conditioning and heating
    ③ Information and Telecommunication To contribute to the development of Information and telecommunications to make people's lives more convenient and to support the advancement of the society
  • Our aspiration for the future direction of the Group
    · To never fail to take up challenges and follow through to deliver results
    · To continue to provide employees with opportunities to grow and find joy in working

We will aim to create significant value for shareholders by taking up challenges and following through to deliver results as a company that values "Customer focus", "Swift decision making and action" and "Overcoming difficulties". The market requirements for high-performance float glass are diversified and vigorous providing golden opportunities for "Value creation and business development based on glass". We will convert these opportunities into successful enterprises.

Summary of FY2021 and FY2022 Initiatives

In the first quarter of FY2021, demand fell sharply due to the worldwide spread of COVID19. However, economic activities have gradually resumed since then and demand continued to recover towards the year end. In the Architectural business, operating profit exceeded the previous year in each of the second, third and fourth quarters, and the demand for solar panels remained robust. The Automotive business recovered from the decline at the beginning of the year and Q4 is about to exceed the level of the same quarter of the previous year, although automotive manufacturers are still feeling the effects of the semiconductor shortage. The impact of COVID-19 on the Technical Glass business was relatively limited.

In FY2021, cumulative Group revenues fell by 10 percent to ¥499.2 billion (FY2020 ¥556.2 billion) and operating profits were ¥13.1 billion (FY2020 ¥21.2 billion), affected by the dramatic decline in demand during the first quarter of the year. As exceptional costs (net) associated with COVID-19, including unrecovered costs of facilities that were idle as a consequence of the spread of the pandemic, the Group accumulatively recorded JPY16.1 billion, which was mostly recorded in the first quarter. As other exceptional items, the Group recorded JPY14.7 billion of restructuring costs arising from the cost transformation program in the latter half of the year, which was partly offset by a gain of JPY7.1 billion from the disposal of land in Japan. The Group finished FY2021 with the loss attributable to owners of the parent of ¥16.9 billion (FY2020 loss attributable of ¥18.9 billion).

Among major initiatives in FY2021, the new float furnace to produce TCO (Transparent Conductive Oxide) coated glass for solar panels started operations in Ohio, USA in November 2020, which is expected to contribute to the profit growth going forward. Also, we continued to work on the development of new technologies despite the severe business environment and succeeded in developing the antibacterial/antiviral coating for glass, utilizing the sol-gel technology*. In FY2022, thanks to the easing of lockdown, the business environment is expected to improve further, and revenues and operating profit are expected to increase. Moreover, we plan to achieve a meaningful profit attributable to shareholders for this financial year by generating benefits from cost transformation measures, such as the headcount reduction implemented in FY2021 and gains from the disposal of assets and businesses.

* Sol-gel technology: It is one of the material synthesis methods for producing ceramic or glassy coatings by densifying the gel body synthesized by chemical reaction of solution materials through heat treatment. It is possible to form a highly adhesive film with the same silica structure as the substrate glass.

"Revival Plan 24 (RP24)" as a new Medium Term Management Plan

As a step towards realizing the Medium Term Vision, the Group has publicly announced "Revival Plan 24 (RP24)" as its new Medium Term Management Plan covering a three-year period from FY2022 to FY2024. RP24 is deemed as the period for business transformation during which time the Group will execute "Three Reforms" comprising "Cost structure reform", "Business structure reform" and "Corporate culture reform" and "Two Key Initiatives" of "Restoration of financial stability" and "Transformation into more profitable business portfolio". These reforms and initiatives will accomplish the drastic and fundamental initiatives needed to build the business strength that will sustain our cycle of growth.

Finally, the Group's most urgent task is to recover a sustainable financial base. We aim to quickly restore equity ratio above 10 percent by steadily generating net profit and free cash flow.

Furthermore, we are taking action to reinforce the Group's financial base over the longer term.

● Financial targets for the final year of RP24 (FY2024)
*1: Operating profit after amortization
*2: Profit attributable to owners of the parent

Approach to Sustainability

NSG Group strives to make a significant contribution both socially and environmentally through our business activities. We aim to attain our sustainability targets while satisfying the demands of every stakeholder in a well-balanced fashion. Above all, tackling climate change is a global challenge today as we manage to achieve both sustainable corporate growth and a contribution to the realization of a sustainable society over the medium to long term. In view of this, NSG Group will focus on increasing product lines contributing to energy creation and energy saving as well as their sales. At the same time, we will mobilize our all-out efforts to attain our 2030 goal of reducing our production process greenhouse gas emissions by 21 percent compared to the 2018 level. In addition, we hope to lay out our roadmap to become a carbon-neutral society at an earliest possible date.

Dividends

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.

Considering factors such as the Group's current financial position and its level of profitability, the Board of Directors has regrettably decided not to declare dividends for common shares for the fiscal year to 31 March 2021. The dividend payment on common shares for FY2022 is also forecast to be suspended. The Group recognizes the importance of dividends to its shareholders and anticipates resuming dividend payments when the financial performance of the Group allows. We look forward to the continuing support and encouragement of our shareholders.

June 2021
Shigeki Mori
Representative Executive Officer
President and CEO
Nippon Sheet Glass Co., Ltd.