A Message from the President
“We are marshaling our capabilities to address increasingly urgent social imperatives and help realize a sustainable society.”
One of the world’s leading diversified chemicals companies, DIC is also the core of the DIC Group, a multinational organization comprising 173 companies in 62 countries and territories. The DIC Group is the world’s leading manufacturer of printing inks and core printing ink raw material organic pigments, as well as of polyphenylene sulfide (PPS) compounds—major engineering plastics—in terms of global market share. Against a backdrop of rapid global change, the Group continues to marshal its capabilities to promote business portfolio transformation and provide value, positioning it to respond to expectations and earn trust worldwide.
Fiscal Year 2020 in Review
With the spread of COVID-19, fiscal year 2020 forced us to contend with significant changes in society, as well as in our role as a corporate entity. Hindered by the protracted impact of the pandemic, consolidated net sales declined 8.8%, to ¥701.2 billion, while operating income slipped 4.0%, to ¥39.7 billion. Net income attributable to owners of the parent fell sharply, owing to one-time costs and the recognition of an extraordinary loss on the divestiture of a business of U.S. subsidiary Sun Chemical Corporation, both associated with our acquisition of BASF SE’s Colors & Effects business. However, thanks to signs of economic recovery beginning in the fourth quarter, the Company projects higher net sales and operating income in all segments in fiscal year 2021.
The DIC Way: Addressing Social Imperatives in an Environment of Dramatic Change
The world today is under pressure to respond not only to the protracted impact of COVID-19 but also to changes in society
itself. With the United Nations (UN) adoption of the Sustainable Development Goals (SDGs), related initiatives are underway
by countries and regions, as well as by companies and individuals. Youth activism, in particular, is on the rise, underscored
by social media–based efforts to engage young people and promote understanding. The spread of capitalism and rapid
globalization have intensified wealth inequality around the world. With countries and regions, as well as corporate entities,
increasingly striving to build sustainability and environmental, social and governance (ESG) considerations into their social
and economic activities, new metrics for analyzing investments have been developed. This has led to the emergence of what
has come to be known as ESG investing, which continues to transform the rules whereby the competitiveness of companies
is judged. In Japan, Prime Minister Yoshihide Suga has declared that the country will become carbon neutral by 2050. Going
green, including by implementing the green recovery plans set forth by countries around the world, and going digital, through
efforts to leverage artificial intelligence (AI) and digital transformation (DX), are vital, global challenges that are directly linked
to social imperatives. At the same time, both are factors that will drive the global economy in the future.
Amid both of these paradigm shifts, it is important for a company to reconsider its goals, its raison d’être. The DIC Way, an articulation of our management approach adopted in 2008, identifies our mission as being to contribute to sustainable development for our customers and society. Our current medium-term management plan, DIC111, which began in fiscal year 2019, outlines our future vision of becoming a unique global company that is trusted by society by focusing our management resources on businesses that deliver social value—i.e., help resolve issues facing society—and that enhance economic value.
At present, manufacturers in such areas as automobiles, renewable energy, semiconductors and food packaging must be
able to offer solutions that reduce environmental impact across entire supply chains. Materials producers have a key role to
play in the realization of such solutions. As a manufacturer of fine chemicals, we work to lower the environmental impact of
our production processes. We also seek to provide products that underpin sustainability for our customers and for markets
and in so doing to lower environmental impact at all stages of our supply chains by helping to improve the conditions in which
resources are extracted and used, as well as to curb CO₂ emissions and other environmental threats while at the same time
driving unceasing innovation to tackle substantive social issues.
Guided by The DIC Way, we will work to develop products and solutions that integrate DIC Group technologies to deliver the social value and enhance the economic value called for in DIC111. By further allocating this economic value to bolster management resources, we will endeavor to create a virtuous circle of growth.
Creating Value: The Road Ahead
The two basic strategies of DIC111 are Value Transformation and New Pillar Creation. In line with these strategies, we will continue
working to build a business portfolio focused on environment, safety and health (ESH)-related issues and social changes.
Value Transformation calls for rallying the DIC Group’s technological resources to advance qualitative reforms in existing core businesses by promoting a targeted shift toward products that provide greater value to both society and our customers, enabling us to reinforce our business structure. In the Packaging & Graphic segment, for example, our operations have traditionally centered on publication inks, but we have redirected our focus to products used in packaging for food products, including plastic films, adhesives and packaging inks, contributing to safety and peace of mind by helping to ensure food hygiene. Films used in food packaging comprise multiple layers of film laminated together with adhesives. By creating films with outstanding oxygenand vapor-barrier properties, we help extend the shelf life of food and reduce food loss. Moreover, by improving the recyclability of printing inks and coating agents used on paper packaging for food, we provide solutions that both heighten the performance of said packaging materials and encourage their recycling. In the Functional Products segment, our lineup of products for use in electronics equipment includes epoxy resins compatible with 5G-enabled devices that impart excellent insulation and heat resistance, facilitating high-capacity, high-speed communications. These resins were developed using our proprietary technologies for epoxy resins used in semiconductors and printed wiring boards used in smartphones, personal computers and onboard equipment for automobiles, among others. We have already begun developing epoxy resins for devices compatible with the 6G cellular telecommunications standard. Value Transformation thus translates into the development of innovative products in core businesses that offer added value and help address social imperatives.
New Pillar Creation is the leveraging of DIC Group competencies to create new growth-driving businesses that respond to ESHrelated issues and social changes. For example, we have traditionally emphasized the development of products based on organic materials such as organic pigments and synthetic resins. Recently, we have developed inorganic materials technologies that will assist in our efforts to help tackle social issues. Of particular note is a distinctive flake alumina filler, sales of which commenced in January 2021. Alumina fillers are used to help dissipate the heat generated inside automotive and electronics equipment. DIC’s new flake alumina filler imparts particularly outstanding heat-dissipating properties, reducing the amount needed and thus the weight of components and improving performance. In the area of healthcare, we provide bioproducts such as the edible blue-green algae Spirulina, which we were the first company to succeed in cultivating commercially. We have also marketed phycocyanin, a vibrant blue pigment extracted from Spirulina, as Linablue, a natural blue food coloring that today is used in food products around the world. With phycocyanin’s outstanding moisture-retention capacity recently also garnering attention, we recently commercialized a phycocyanin-based Food with Functional Claims (FFC)* that improves the skin’s barrier function.
To underpin our Value Transformation and New Pillar Creation strategies, we recently established the DIC Sustainability Index, a proprietary index that allows us to measure the social value of our products and to assess their environmental impact across the supply chain, thereby clarifying the direction of our efforts to address social imperatives.
- An FFC is a product that is permitted to carry statements about specific health benefits, including scientific evidence on food safety and effectiveness—for which the manufacturer takes full responsibility—on its packaging, in line with government-established rules. Notification must be submitted to Japan’s Consumer Affairs Agency before an FFC is marketed.
Building a Robust Management Infrastructure
Owing to COVID-19, fiscal year 2020 brought unprecedented challenges to almost everyone. The pandemic also provided an opportunity to seriously examine social and economic activities, a process that served to illuminate a number of critical problems. Of particular importance, it became very evident that Japan lags behind other economic powers in deploying IT and DX. Companies have also faced challenges on the human resources front with the shift to remote work, namely, the dilution of interpersonal relationships and difficulties in building mutual trust, both arising from feelings of isolation. Society at large and companies in particular are working to adapt to changes wrought by this forced experiment, as well as to overcome the shortcomings it has revealed. With remote work unmistakably the “new normal” for the DIC Group, we are also taking decisive steps to build systems that boost employee productivity and motivation.
■Human Resources Management
There is a general consensus that many employees will
continue to choose telework even after the pandemic,
and that systems for remote work will evolve accordingly,
meaning that hybrid remote and in-person communication
will become standard. This will necessitate changes in the
way we approach training. With conventional on-the-job
training no longer a viable option, sharpening work skills,
forming relationships with colleagues and building trust
will require highly effective communication skills. We are
pressing ahead with various initiatives to support work style
reforms and the expanded use of telework arrangements
by DIC Group employees. In January 2021, we established
the Data Science Center with the aim of fostering human
resources with specialized capabilities in such areas as data
science and materials informatics (MI),* which will greatly
influence corporate competitiveness in the years ahead.
Having skilled individuals who proactively raise their hands to fill crucial roles and who aspire always to refine their capabilities will help revitalize DIC and will positively impact efforts to reform work styles and transform our business portfolio. Going forward, we will reflect new awareness gained as a result of our experiences during the COVID-19 pandemic in efforts to foster and manage human resources. In so doing, we will endeavor to organically mobilize the diverse individuals who make up our labor force to achieve a strong corporate organization.
- MI applies statistical analysis and other informatics techniques to search large amounts of data for new materials.
In fiscal year 2020, we established the dedicated DX Promotion Department with the objective not only of lifting operational
efficiency but also transforming our businesses, and are working to incorporate DX into our production, technical, marketing and
sales departments. At production facilities, we have introduced the Internet of Things (IoT) and are making use of AI technologies
to create smart plants that can operate with a minimum number of staff by raising production efficiency through the automation of
reaction processes and the remote control of production processes. Looking ahead, we will continue to promote digitalization at our
production facilities, positioning us to respond to the demands of customers while at the same time rationalizing and increasing the
efficiency of supply chains and creating a crucial new infrastructure of smart facilities that will further improve our competitiveness.
We continue to promote the development of materials by leveraging MI, making full use of unique DIC polymer design technologies and AI technologies to, among others, realize a new molecular structure for phenolic resins for semiconductor resists. We are also actively engaged in research in collaboration with external organizations. Since fiscal year 2020, we have pursued research aimed at developing the materials of the future through quantum computer–based chemical simulation, as well as participated in a consortium of companies, academic institutions and government bodies promoting research in the area of chemical materials that fuses neuroscience and AI.
We are also advancing digital marketing. With face-to-face marketing activities hindered by COVID-19, we stepped up participation in online exhibitions. In addition, we have adopted a variety of new digital tools that enable us to share sales and marketing information with customers—to date generally conducted in person—as well as to facilitate effective remote communication in-house and raise work efficiency. Owing to COVID-19, we currently have no choice but to conduct our business remotely, but I am confident that even in a post-pandemic world we will realize considerable benefits by pursuing a hybrid style of marketing that combines digital and inperson methodologies.
DX is not simply the introduction of new systems. We recognize the importance of DX as a process for fundamentally transforming our management foundation and will continue to accelerate related efforts.
■Improved Safety and Quality
Safety, quality and environmental concerns are cornerstones of our business as a chemicals company. Drawing on the
lessons of fires that have occurred at production facilities in the past, we continue to promote production under a meticulous
configuration in a manner that reflects a priority on safety. In particular, we are working to raise awareness to ensure that
employees are able to approach their work in a manner that reflects a commitment to ensuring safety and pride in our
capabilities as a manufacturer. Of particular note, rather than one-way communications with me simply firing off instructions
and leaving it at that, we hold site meetings that facilitate dialogue, allowing me to actually hear employees’ voices as well as
for them to hear mine. With an eye on our vision for DIC 10 years in the future, we will continue to encourage the frank and open exchange of views with the aim of securing safety by transforming mindsets, building a safety-oriented corporate culture
and boosting job satisfaction.
Quality is an equally high priority for manufacturers. In January 2021, we took corrective actions in light of improprieties that arose in relation to efforts to secure approval for a certain product, causing considerable inconvenience to customers. This involved clarifying the roles of quality assurance and quality control to create a strong, unified quality management system. Efforts to fundamentally revamp our Group quality management framework and restore the trust of stakeholders also included establishing a new quality committee chaired by the CEO, who is now directly responsible for the administration and supervision of quality management Groupwide.
■Response to Climate Change
Having set a target for reducing CO₂ emissions by 30% from the fiscal year 2013 level by fiscal year 2030, we continue to invest actively in expanding our use of renewable energy, including electric power generated using biomass, solar power and wind power, and have so far achieved reductions well ahead of forecasts. After extensive deliberations in-house, we resolved to revise our target. We now aim to achieve carbon neutrality by fiscal year 2050, as well as to reduce CO₂ emissions by 50% from the fiscal year 2013 level by fiscal year 2030. With many countries reframing emissions reduction targets set with the aim of realizing the goal of the Paris Agreement into milestones on the way to carbon neutrality, we will further strengthen our efforts to ensure our achievement of carbon neutrality. Of note, in addition to expanding renewable energy as a percentage of total energy used by the DIC Group, we intend to adopt internal carbon pricing in preparation for the introduction of carbon border taxes, as well as to promote cooperation with business partners across the supply chain. In addition to initiatives aimed at reducing CO₂ emissions associated with our business activities, we will actively work to expand our lineup of products and services that contribute to decarbonization, thereby helping reduce CO₂ emissions attributable to markets, as well as to society.
A Global Organization that Responds to the Expectations of Society
The DIC Group is committed to allocating management resources to businesses that deliver social value, which in turn
enhances economic value. Perpetuating this cycle will lead to further prosperity for society and will ensure that a company
enjoys support, appreciation, trust and respect. This is the sort of organization we want to be. At present, a team of mid-tier
employees is promoting a project to formulate a concrete vision for the DIC Group of the future. This project was launched
with the goal of creating opportunities for those employees who will lead the DIC of the future to articulate their goals for the
future and put strategies for realizing that vision into practice. It will also explore novel ways to cultivate and deploy key DIC
Group resources in response to evolving trends and needs with a view to eventual commercialization.
The DIC Group is committed to allocating management resources to businesses that deliver social value, which in turn enhances economic value. Perpetuating this cycle will lead to further prosperity for society and will ensure that a company enjoys support, appreciation, trust and respect. This is the sort of organization we want to be. At present, a team of mid-tier employees is promoting a project to formulate a concrete vision for the DIC Group of the future. This project was launched with the goal of creating opportunities for those employees who will lead the DIC of the future to articulate their goals for the future and put strategies for realizing that vision into practice. It will also explore novel ways to cultivate and deploy key DIC Group resources in response to evolving trends and needs with a view to eventual commercialization.