A Message from the CFO
With the aim of achieving the goals of DIC Vision 2030, we have adopted ROIC as a metric and are working to realize business portfolio transformation.
Shuji Furuta
Head of Finance and Accounting Unit, CFO
Basic Approach
With the aim of ensuring we evolve into the organization envisioned in our long-term
management plan, DIC Vision 2030, formulated in fiscal year 2022, we have adopted
ROIC, which reflects investment efficiency and earning power, as a metric and are
promoting the transformation of our business portfolio. Our approach to financial
management centers on balancing three priorities: maintaining sound financial health,
investing in growth and ensuring returns to shareholders that are commensurate with
income growth. We will also actively place sustainability at the center of financing efforts.
In addition to ROIC, under DIC Vision 2030 we will emphasize the net debt-to-equity (D/E)
ratio*1 to gauge financial health, the payout ratio to evaluate returns to shareholders,
and earnings before interest, taxes, depreciation and amortization (EBITDA)*2 to judge
ability to generate cash, as indicators of financial performance and efforts to maximize
shareholder value.
Emphasis on Boosting ROIC and Maintaining Sound Financial Health
We have set a long-term goal of boosting ROIC to 8.0%-plus in fiscal year 2030. To advance the transformation of our business portfolio and
further bolster capital efficiency, we are making the most of cash generated in businesses with stable earnings bases through reinvestment in
next-generation growth businesses and have established criteria for withdrawing from businesses with low growth potential and profitability.
We employ EBITDA and the cash conversion cycle (CCC) as metrics for cash provided by operating activities. In addition to using EBITDA
to measure our ability to generate cash, we monitor the debt-to-EBITDA ratio to assess financial soundness from the perspective of cash
flow. We also manage CCC, used to assess working capital, meticulously by, among others, setting regional targets.
Our goal for financial soundness is to maintain our net D/E ratio at around 1.0 times, underscoring our determination to uphold sound
financial health while also pursuing an active investment strategy. We will also continue creating safety nets against sudden sharp fluctuations
in the operating environment, including by procuring funds through subordinated term loans, a type of hybrid financing recognized by credit
rating agencies as having equity credit attributes, establishing a global commitment line and keeping the percentage of total borrowings
accounted for by long-term debt at 80%.
* ROIC: Operating income x (1 – effective tax rate) / (Net interest-bearing debt + Net assets)
Investments to Accelerate Growth
To achieve the targets of DIC Vision 2030, we will allocate a total of ¥300 billion to investments—comprising ¥230 billion for strategic investments and ¥70 billion for investments in infrastructure building—over the four years from fiscal year 2022 through fiscal year 2025. Strategic investments will focus on advancing Value Transformation in three of the five priority business areas set forth in the plan (smart living, color science and sustainable packaging) to make these businesses more profitable, and New Pillar Creation in the remaining two (sustainable energy and healthcare) to establish these as new business pillars. Investments in infrastructure building will emphasize contributing to sustainability, including through the reduction of CO₂ emissions, enhancing our technology platform and promoting IT and digital transformation (DX).
Promoting Sustainable Finance
We continue to accelerate efforts to secure sustainable finance with the aim of promoting the sustainability strategies of DIC Vision 2030, as a core category of strategies set forth in the plan. The term “sustainable finance” describes the practice of incorporating ESG criteria— including environmental issues such as climate change and social considerations such as human rights and poverty—into financial services to help bring about sustainable outcomes. We are committed to entering into sustainable finance agreements to advance our sustainability strategies, as well as to contribute to the achievement of the SDGs.
Stable Returns to Shareholders
With the aim of continuing to ensure stable returns to shareholders, DIC Vision 2030 maintains our existing target for a consolidated dividend payout ratio of 30%, which will serve as a guideline for dividends over the medium term. In fiscal year 2021, we paid a fullterm dividend of ¥100.00, comprising an interim dividend of ¥50.00 and a year-end dividend of ¥50.00. We also anticipate an annual dividend of ¥100.00 in fiscal year 2022.
- D/E ratio: Interest-bearing debt / Shareholders’ equity
- EBITDA: Net income attributable to owners of the parent + Total income taxes + (Interest expenses – Interest income) + Depreciation and amortization
