Chugoku Marine Paints | 4617 |

Transcription

R
LAST UPDATE【2015/12/24】
Research Report by Shared Research Inc.
Shared Research Inc. has produced this report by request from the company discussed in the report. The
aim is to provide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide
an accurate, objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data
and findings. We will always present opinions from company management as such. Our views are ours
where stated. We do not try to convince or influence, only inform. We appreciate your suggestions and
feedback. Write to us at [email protected] or find us on Bloomberg.
R
Shared Research Report
INDEX
Executive Summary --------------------------------------------------------------------------------------------------- 3
Key financial data ----------------------------------------------------------------------------------------------------- 4
Recent updates --------------------------------------------------------------------------------------------------------- 5
Highlights ----------------------------------------------------------------------------------------------------------------------- 5
Trends and outlook --------------------------------------------------------------------------------------------------- 6
Quarterly trends and results----------------------------------------------------------------------------------------------- 6
Company forecasts and outlook --------------------------------------------------------------------------------------- 12
Business, market and value chain ------------------------------------------------------------------------------- 20
Business description ------------------------------------------------------------------------------------------------------- 20
Business by product category ------------------------------------------------------------------------------------------ 28
Strengths and weaknesses ----------------------------------------------------------------------------------------------- 41
Financial statements------------------------------------------------------------------------------------------------- 42
Income statement ---------------------------------------------------------------------------------------------------------- 42
Balance sheet ---------------------------------------------------------------------------------------------------------------- 46
Cash flow statement ------------------------------------------------------------------------------------------------------- 48
Other information---------------------------------------------------------------------------------------------------- 49
Corporate governance ---------------------------------------------------------------------------------------------------- 49
Top management----------------------------------------------------------------------------------------------------------- 49
Dividend policy ------------------------------------------------------------------------------------------------------------- 49
Shareholder composition ------------------------------------------------------------------------------------------------ 49
Number of employees ---------------------------------------------------------------------------------------------------- 50
About paints ------------------------------------------------------------------------------------------------------------------ 50
Profile --------------------------------------------------------------------------------------------------------------------------- 51
www.sharedresearch.jp
02/52
R
Chugoku Marine Paints ＞ Executive Summary
Executive Summary
2017 marks 100th year since founding; core competency in marine paints
Chugoku Marine Paints (CMP) was founded in 1917 as an early domestic pioneer in anti-fouling paints. This coating is
applied to ships to slow subaquatic growth, making for a smoother hull and thus increasing fuel efficiency. At the
company’s founding, the majority of anti-fouling paints for both public and private use were sourced from overseas. A
focus on research and prioritizing technology remains part of the company’s DNA. By leveraging its core marine paint
technologies, CMP has grown in tandem with Japan’s shipping industry, while expanding into industrial and container
paints.
Leveraging technology, expanding market share by being an early mover in environmental solutions
Even within marine paints, anti-fouling paints require the ability to develop technology. As environmental concerns grow,
the company has led development of environmentally compliant anti-fouling paints, and strengthened its product lineup.
This has increased its brand recognition. Coupled with strengthened sales activities, this resulted in the company
expanding its domestic market share xx% in FY2005. (Note: FY refers to the Japanese fiscal year ending on March 31.)
Maintaining a leading global market share in anti-fouling and container paints
CMP holds almost 30% of the global market share in anti-fouling paints for new ships, and almost 20% of the ship repair
market. It has made steady market share gains over the past two decades. In anti-fouling paint for new ships, it has
increased its share in Japan to 60% (from over 40% prior to 2000), Korea to 20% (from 10%), and China to 30%
(following the taking off of the Chinese shipbuilding industry). Over the same period, CMP’s share of container paints has
grown to almost 30% (from about 20%) in China, which accounts for 95% of global container production.
Medium-term target: 12.4% increase in sales and 34.4% increase in operating profit
The company targets sales growth of 12.4% to JPY120bn (up JPY13.3bn from FY03/15) and operating profit growth of
34.4% to JPY10bn (up JPY2.6bn from FY03/15).
Target sales mix for paints: 60% ships, 20% containers, and 20% industrial
To achieve its medium-term targets, CMP aims to establish a leading market share in ship and container products; expand
into offshore structures; cultivate new markets in the industrial paint sector; and improve profitability. Its sales mix of paint
as of FY03/15 was 75% for ships, 13% for containers, and 12% for industrial. Still, it aims for 20% in both containers and
industrial, which it considers key growth areas.
Even without this sales mix, given FY03/16 forecasts (revised up on October 29, 2015), the company could achieve its
medium-term sales targets. However, to grow sales beyond that, accelerated growth in container and industrial paints is
necessary. Other important conditions include a recovery of container paint market and developing new markets in
industrial paints.
Strengths and weaknesses
Strengths: Accumulated expertise from 100 years in core technologies、global network、and improving brand recognition.
Weaknesses: Capturing repair demand in anti-fouling paints to stabilize earnings, lack of experience in businesses other
than marine paints, and late start in offshore structures led to opportunity loss.
03/52
R
Chugoku Marine Paints ＞ Key financial data
Key financial data
Income statement
(JPYmn)
Sales
YoY
Gross profit
GPM
SG&A expenses
YoY
SG&A / sales
Operating profit
YoY
OPM
Non-operating profit
Financial income
Gains on foreign exchange
Other non-operating profit
Recurring profit
YoY
RPM
Extraordinary profit
Income taxes
Minority interests
Net income
YoY
Net margin
Total capex
Depreciation
Amortization of goodwill
R&D expenses
Per share data
Shares outstanding (mn, year-end)
Number of shares (mn, average)
BPS (JPY)
EPS (JPY)
DPS (JPY)
Balance sheet (JPYmn)
Current assets
Cash and equivalents
Accounts receivable
Inventory assets
Allowance for doubtful accounts
Others
Tangible fixed assets
Intangible assets
Investments and other assets
Investment securities
Others
Total assets
Current liabilities
Accounts payable
Short-term debt
Provision for points
Income taxes payable
Other current liabilities
Noncurrent liabilities
Long-term debt
Others
Net assets
Shareholders' equity
Treasury shares
Unrealized gains
Minority interests
Total capital and liabilities
Cash flow statement (JPYmn)
Operating cash flow
Investment cash flow
Financial cash flow
Financial ratios
Interest-bearing debt
Net cash
ROA
ROE
Equity ratio
FY03/04
Cons.
55,767
11.1%
19,220
34.5%
14,743
4.9%
26.4%
4,477
20.9%
8.0%
-183
-198
-163
177
4,294
23.4%
7.7%
-1,046
13.6%
-269
2,538
52.5%
4.6%
1,170
1,229
4
1,216
FY03/04
68.9
69.0
386
36.3
7.5
FY03/04
36,813
6,884
19,290
9,359
-491
1,772
23,454
216
7,950
6,801
-414
1,563
68,433
33,989
8,671
20,440
3,274
766
838
6,627
2,725
3,902
27,817
24,575
-41
2,068
1,174
68,433
FY03/04
2,905
-376
-1,094
FY03/04
23,165
-16,282
6.4%
10.0%
38.9%
FY03/05
Cons.
63,389
13.7%
20,803
32.8%
16,081
9.1%
25.4%
4,721
5.5%
7.4%
5
-164
44
125
4,726
10.1%
7.5%
56
38.2%
-252
2,704
6.5%
4.3%
1,004
1,265
-0
1,382
FY03/05
68.9
68.9
425
38.7
7.5
FY03/05
45,143
7,943
23,933
11,910
-485
1,842
23,205
255
8,565
7,279
-459
1,745
77,168
40,963
11,510
23,613
3,544
1,495
801
5,533
1,245
4,288
30,673
26,703
-63
2,623
1,347
77,168
FY03/05
852
-51
1,063
FY03/05
24,858
-16,915
6.5%
9.7%
38.0%
FY03/06
Cons.
67,846
7.0%
19,932
29.4%
16,300
1.4%
24.0%
3,632
-23.1%
5.4%
68
-272
287
53
3,700
-21.7%
5.5%
644
34.4%
-217
2,633
-2.6%
3.9%
2,050
1,226
-0
1,386
FY03/06
68.9
68.9
481
38.2
7.5
FY03/06
48,567
9,693
24,431
13,116
-505
1,832
24,541
225
10,382
8,981
-88
1,489
83,716
39,827
11,374
23,083
4,076
644
650
9,041
2,815
6,226
34,847
28,747
-81
4,394
1,706
83,716
FY03/06
2,653
-856
-454
FY03/06
25,898
-16,206
4.6%
8.4%
39.6%
FY03/07
Cons.
88,196
30.0%
25,654
29.1%
18,397
12.9%
20.9%
7,257
99.8%
8.2%
-127
-480
81
272
7,130
92.7%
8.1%
-16
25.8%
-426
4,853
84.3%
5.5%
2,671
1,228
-3
1,496
FY03/07
68.9
68.9
560
70.5
10.0
FY03/07
64,992
8,132
36,198
18,258
-630
3,034
26,038
427
10,600
9,101
-70
1,569
102,058
52,022
16,873
28,005
5,258
1,089
797
9,194
3,185
6,009
40,840
33,063
-101
5,511
2,265
102,058
FY03/07
-3,702
-2,954
4,368
FY03/07
31,190
-23,058
7.7%
13.5%
37.8%
FY03/08
Cons.
104,798
18.8%
28,736
27.4%
20,604
12.0%
19.7%
8,132
12.1%
7.8%
-690
-888
-162
360
7,442
4.4%
7.1%
593
29.0%
-586
5,117
5.4%
4.9%
2,602
1,458
-3
1,605
FY03/08
68.8
68.8
564
74.4
13.0
FY03/08
63,567
7,975
36,538
17,719
-700
2,035
25,571
450
8,961
7,290
-41
1,712
98,550
49,722
15,866
26,515
5,174
1,479
688
7,723
2,555
5,168
41,105
37,020
-156
1,798
2,286
98,550
FY03/08
4,846
-2,621
-1,419
FY03/08
29,070
-21,095
7.4%
13.2%
39.4%
FY03/09
Cons.
103,622
-1.1%
29,072
28.1%
20,642
0.2%
19.9%
8,429
3.7%
8.1%
-530
-521
-431
422
7,899
6.1%
7.6%
-153
25.8%
-717
5,031
-1.7%
4.9%
3,044
1,555
22
1,800
FY03/09
68.8
68.8
550
73.1
13.0
FY03/09
60,629
8,625
34,891
16,002
-645
1,756
23,837
843
6,465
4,958
-5
1,512
91,776
44,351
13,193
25,088
4,369
785
916
7,410
3,001
4,409
40,013
40,433
-187
-2,581
2,161
91,776
FY03/09
4,074
-1,634
-711
FY03/09
28,089
-19,464
8.3%
13.1%
41.2%
FY03/10
Cons.
86,810
-16.2%
29,976
34.5%
19,981
-3.2%
23.0%
9,995
18.6%
11.5%
272
-173
-30
475
10,268
30.0%
11.8%
-129
37.6%
-901
5,422
7.8%
6.2%
2,062
1,605
21
1,939
FY03/10
68.7
68.8
633
78.9
13.0
FY03/10
64,068
14,767
35,302
12,829
-952
2,122
24,394
841
7,042
5,823
-50
1,269
96,346
44,124
12,976
22,478
4,948
2,893
829
5,683
1,182
4,501
46,538
44,954
-194
-1,466
3,049
96,346
FY03/10
14,290
-2,805
-5,790
FY03/10
23,660
-8,893
10.9%
13.3%
45.1%
FY03/11
Cons.
96,595
11.3%
28,844
29.9%
20,020
0.2%
20.7%
8,823
-11.7%
9.1%
291
-29
-68
388
9,114
-11.2%
9.4%
-87
30.0%
-619
5,701
5.1%
5.9%
1,505
1,680
21
1,908
FY03/11
68.7
68.7
665
82.9
13.0
FY03/11
70,070
12,412
41,758
14,156
-789
2,533
23,484
878
5,872
4,708
-46
1,210
100,305
45,145
17,368
20,676
5,031
1,225
845
6,285
1,920
4,365
48,874
49,756
-201
-4,011
3,129
100,305
FY03/11
1,252
-1,768
-1,671
FY03/11
22,596
-10,184
9.3%
12.8%
45.6%
FY03/12
Cons.
93,560
-3.1%
24,855
26.6%
19,381
-3.2%
20.7%
5,474
-38.0%
5.9%
567
-129
343
353
6,040
-33.7%
6.5%
-11
42.5%
-396
3,067
-46.2%
3.3%
1,188
1,535
24
1,902
FY03/12
68.7
68.7
688
44.6
13.0
FY03/12
70,233
17,615
37,694
13,751
-830
2,003
23,026
728
5,862
4,709
-42
1,195
99,850
42,423
12,535
23,508
4,808
847
725
7,012
2,847
4,165
50,414
51,927
-204
-4,619
3,106
99,850
FY03/12
3,676
-2,154
3,094
FY03/12
26,355
-8,740
6.0%
6.6%
47.4%
FY03/13
Cons.
83,656
-10.6%
22,079
26.4%
17,363
-10.4%
20.8%
4,715
-13.9%
5.6%
404
-21
94
331
5,119
-15.2%
6.1%
-57
33.1%
-410
2,978
-2.9%
3.6%
1,382
1,426
24
1,789
FY03/13
66.2
67.4
798
44.2
13.0
FY03/13
74,315
22,011
36,944
14,360
-905
1,905
23,782
887
7,255
6,382
-45
918
106,240
41,879
13,370
21,998
4,893
816
802
7,661
3,314
4,347
56,699
53,097
-1,179
-277
3,878
106,240
FY03/13
8,719
-3,624
-4,455
FY03/13
25,312
-3,301
5.0%
5.9%
49.7%
FY03/14
Cons.
90,901
8.7%
25,227
27.8%
21,168
21.9%
23.3%
4,058
-13.9%
4.5%
1,001
53
504
444
5,058
-1.2%
5.6%
832
34.8%
-571
3,269
9.8%
3.6%
1,340
1,562
27
1,714
FY03/14
66.2
66.2
944
49.4
13.0
FY03/14
83,118
28,367
38,677
15,129
-2,701
3,646
25,610
1,296
8,994
8,133
-54
915
119,019
43,178
14,664
20,910
5,415
1,435
754
8,508
3,373
5,135
67,332
55,501
-1,183
6,985
4,844
119,019
FY03/14
10,084
-2,364
-4,420
FY03/14
24,283
4,084
4.5%
5.7%
52.5%
FY03/15 FY03/16
Cons.
Est.
106,737 115,000
17.4%
7.7%
29,424
27.6%
21,982
3.8%
20.6%
7,442
9,000
83.4%
20.9%
7.0%
7.8%
916
800
201
262
453
8,359
9,800
65.3%
17.2%
7.8%
8.5%
-460
29.7%
-808
4,748
6,000
45.2%
26.4%
4.4%
5.2%
1,163
1,671
30
1,849
FY03/15
66.2
66.2
1,095
71.7
90.6
15.0
15.0
FY03/15
95,726
30,682
47,119
17,626
-2,130
2,429
25,915
1,501
11,944
10,826
-926
2,044
135,087
50,201
19,420
21,670
6,641
1,438
1,032
6,660
1,086
5,574
78,225
59,296
-1,192
13,184
5,745
135,087
FY03/15
4,355
-597
-3,900
FY03/15
22,756
7,926
6.6%
7.0%
53.7%
Source: Shared Research based on company data
04/52
R
Chugoku Marine Paints ＞ Recent updates
Recent updates
Highlights
Shares Research initiates coverage of Chugoku Marine Paints, Ltd. (CMP) with this report.
05/52
R
Chugoku Marine Paints ＞ Trends and outlook
Trends and outlook
Quarterly trends and results
Income statement
(JPYmn)
Sales
YoY
Gross profit
GPM
SG&A expenses
YoY
SG&A / sales
Operating profit
YoY
OPM
Q1
20,231
3.1%
5,456
27.0%
4,630
1.8%
22.9%
825
3.6%
4.1%
O P befor e dep. & amor tization of good 1,189
YoY
4.5%
OPM
5.9%
359
Financial income
82
161
116
Recurring profit
1,183
YoY
21.0%
RPM
5.8%
Income taxes
-455
Implied tax rate
38.5%
Minority interests
-98
Net income
628
YoY
21.9%
Net margin
3.1%
Performance by segment
(JPYmn)
Sales
Japan
China
Korea
Southeast Asia
Europe/US
Marine paints
Industrial paints
Container paints
Other
YoY
Japan
China
Korea
Southeast Asia
Europe/US
Marine paints
Industrial paints
Container paints
Operating profit
Japan
China
Korea
Southeast Asia
Europe/US
Elimination
OPM
Japan
China
Korea
Southeast Asia
Europe/US
FY03/14
Q2
Q3
23,733 22,680
1.0%
9.6%
6,402 6,363
27.0% 28.1%
5,653 5,239
32.3% 23.8%
23.8% 23.1%
750 1,124
-62.0% -10.4%
3.2%
5.0%
1,150 1,520
-50.6% -6.5%
4.8%
6.7%
215
281
-43
11
158
125
100
145
966 1,405
-47.7% -2.8%
4.1%
6.2%
178
402
-450
-526
39.3% 29.1%
-182
-151
512 1,132
-52.7% 11.2%
2.2%
5.0%
Q4
24,257
22.3%
7,006
28.9%
5,646
31.0%
23.3%
1,359
97.0%
5.6%
1,788
66.8%
7.4%
146
3
60
83
1,504
76.9%
6.2%
252
-619
35.3%
-140
997
175.4%
4.1%
Q1
22,932
13.4%
6,277
27.4%
5,000
8.0%
21.8%
1,277
54.8%
5.6%
1,678
41.1%
7.3%
155
135
-91
111
1,431
21.0%
6.2%
-322
22.5%
-159
949
51.1%
4.1%
FY03/15
Q2
Q3
27,531 27,792
16.0% 22.5%
7,759 7,495
28.2% 27.0%
5,733 5,347
1.4%
2.1%
20.8% 19.2%
2,026 2,147
170.1% 91.0%
7.4%
7.7%
2,439 2,581
112.1% 69.8%
8.9%
9.3%
156
343
16
41
29
161
111
141
2,182 2,491
125.9% 77.3%
7.9%
9.0%
-6
4
-605
-681
27.8% 27.3%
-184
-239
1,388 1,574
171.1% 39.0%
5.0%
5.7%
Q4
28,482
17.4%
7,893
27.7%
5,902
4.5%
20.7%
1,992
46.6%
7.0%
2,445
36.7%
8.6%
262
9
163
90
2,255
49.9%
7.9%
-458
-734
40.9%
-226
837
-16.0%
2.9%
FY03/16
Q1
Q2
27,991 31,581
22.1% 14.7%
8,243 9,677
29.4% 30.6%
6,083 6,811
21.7% 18.8%
21.7% 21.6%
2,160 2,866
69.1% 41.5%
7.7%
9.1%
2,584 3,303
54.0% 35.4%
9.2% 10.5%
374
177
150
7
94
44
130
126
2,534 3,043
77.1% 39.5%
9.1%
9.6%
-2
-32
-742
-807
29.3% 26.8%
-230
-275
1,558 1,930
64.2% 39.0%
5.6%
6.1%
FY03/14
FY03/15
FY03/16
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
20,231 23,733 22,680 24,257 22,932 27,531 27,792 28,482 27,991 31,581
8,661 8,795 8,604 8,948 8,872 8,779 9,780 9,101 9,945 9,565
5,440 7,168 6,699 6,756 6,021 9,608 9,257 9,470 7,540 9,766
1,727 2,182 2,071 2,492 2,620 2,749 2,838 3,368 3,798 4,613
2,189 2,887 2,543 2,929 2,594 2,964 2,750 3,508 2,869 3,514
2,212 2,701 2,762 3,133 2,823 3,432 3,166 3,035 3,837 4,123
14,453
3,014
2,686
78
3.1%
-3.1%
0.0%
1.0%
23.6%
25.3%
17,162
3,105
3,378
86
1.0%
2.3%
-20.8%
45.5%
26.4%
30.1%
16,540
3,228
2,841
71
9.6%
0.7%
-5.4%
48.6%
30.3%
60.4%
-9.8% -1.9%
7.2%
9.4% 14.6% 11.8%
257.7%
5.2% 23.7%
825
750 1,124
471
579
475
-60
-662
-127
29
168
175
261
410
400
-128
-140
-167
253
394
367
4.1% 3.2% 5.0%
5.4%
6.6%
5.5%
-1.1% -9.2% -1.9%
1.7%
7.7%
8.5%
11.9% 14.2% 15.7%
-5.8% -5.2% -6.0%
18,567
3,098
2,511
81
22.3%
10.5%
11.3%
55.9%
31.2%
71.4%
17,362
3,153
2,333
82
13.4%
2.4%
10.7%
51.7%
18.5%
27.6%
20,027
3,140
4,282
83
16.0%
-0.2%
34.0%
26.0%
2.7%
27.1%
20,418
3,209
4,086
78
22.5%
13.7%
38.2%
37.0%
8.1%
14.6%
21,943
3,183
3,271
85
17.4%
1.7%
40.2%
35.2%
19.8%
-3.1%
21,607
2,990
3,318
74
22.1%
12.1%
25.2%
45.0%
10.6%
35.9%
24,967
2,958
3,571
85
14.7%
9.0%
1.6%
67.8%
18.6%
20.1%
24.4% 20.1% 16.7% 23.4% 18.2% 24.4% 24.7%
17.3%
4.6%
1.1% -0.6%
2.7% -5.2% -5.8%
16.1% -13.1% 26.8% 43.8% 30.3% 42.2% -16.6%
1,359 1,277 2,026 2,147 1,992 2,160 2,866
441
438
347
388
425
679
617
229
104
759
860
622
348
771
3
59
38
22
32
91
163
406
414
494
451
625
562
762
-107
-72
-114
-146
-266
-294
-191
388
333
502
572
555
773
743
5.6% 5.6% 7.4% 7.7% 7.0% 7.7% 9.1%
4.9%
4.9%
4.0%
4.0%
4.7%
6.8%
6.5%
3.4%
1.7%
7.9%
9.3%
6.6%
4.6%
7.9%
0.1%
2.3%
1.4%
0.8%
1.0%
2.4%
3.5%
13.9% 16.0% 16.7% 16.4% 17.8% 19.6% 21.7%
-3.4% -2.6% -3.3% -4.6% -8.8% -7.7% -4.6%
FY03/16 1H
% of 1H 1H Act. Init. Est.
108.3% 59,572 55,000
18.1%
17,920
30.1%
12,894
20.1%
21.6%
132.3%
5,026
52.2%
8.4%
5,887
43.0%
9.9%
551
157
138
256
136.0%
5,577
54.4%
9.4%
-34
-1,549
27.9%
-505
139.5%
3,488
49.3%
5.9%
FY03/16 1H
2.3%
3,800
55.8%
4,100
56.9%
2,500
58.1%
% of 1H 1H Act. Init. Est.
59,572
19,510
17,306
8,411
6,383
7,960
46,574
5,948
6,889
159
18.1%
10.5%
10.7%
56.7%
14.8%
27.3%
24.6%
-5.5%
4.1%
5,026
1,296
1,119
254
1,324
-485
1,516
8.4%
6.6%
6.5%
3.0%
20.7%
-6.1%
FY03/16 FY
% of FY FY Est.
51.8% 115,000
7.7%
9,000
20.9%
7.8%
9,800
17.2%
8.5%
6,000
26.4%
5.2%
FY03/16 FY
% of FY FY Est.
51.8% 115,000
55.8%
9,000
06/52
R
1H FY03/16 results (out October 30, 2015)
Quarterly earnings
Marine paints
30.0
25.3
21.2
20.0
10.0
2.4
1.1
17.6
7.9
0.0
(JPYbn)
Q1
FY03/11
2.7
2.5
20.0
9.5
25.0
25.1
3.1
2.9
3.7
4.8
18.1
10.2
17.3
8.7
Q3
23.1
2.5
3.8
16.8
7.3
Industrial paints
25.0
22.4
22.0
3.4
2.8
2.2
2.6
2.1
19.0
17.3
18.2
2.6
5.7
5.5
Q1
FY03/12
5.1
Q3
Container paints
23.7
23.5
19.6
2.7
2.8
0.8
3.2
16.0
17.5
8.4
4.1
Q1
FY03/13
OPM (%)
20.7
19.8
20.2
3.1
2.9
2.3
2.6
2.2
3.0
2.7
3.4
15.4
14.9
6.1
Q3
14.5
4.1
3.5
Q1
FY03/14
17.2
3.2
22.7
3.2
2.8
16.5
5.0
24.3
3.1
2.5
18.6
5.6
Q3
Operating profit (right-axis)
31.6
27.5
27.8
28.5
28.0
3.0
22.9
3.1
3.2
3.2
3.0
3.6
3.2
2.3
4.3
4.1
3.3
3.3
20.0
20.4
21.9
21.6
7.4
7.7
7.0
7.7
17.4
5.6
Q1
FY03/15
Q3
3.0
2.0
25.0
1.0
9.1
Q1
FY03/16
0.0
Q3
(JPYbn)
Exchange rate assumptions (mid-year and year-end)
170
160
150
140
130
120
110
100
90
80
70
Q1
FY03/07
JPY/USD （mid-year average)
JPY/USD (year end)
JPY/EUR （mid-year average)
JPY/EUR (year end)
20
18
16
JPY/RMB （mid-year average)
JPY/RMB (year end)
JPY/100KRW （mid-year average)
JPY/100KRW (year end)
14
12
10
8
Q1
FY03/09
Q1
FY03/11
Q1
FY03/13
Q1
FY03/15
6
Q1
FY03/07
Q1
FY03/09
Q1
FY03/11
Q1
FY03/13
Q1
FY03/15
Earnings summary
Mainstay marine paints capture demand; favorable exchange rates also contribute to 18.0% YoY sales growth
In 1H FY03/16, sales were JPY59.6bn (up 18.0% YoY; up about 11% excluding forex effects) and operating profit was
JPY5.0bn (up 52.2% YoY). In mainstay marine paints, production volume of new ships continued to bottom in key
shipbuilding countries (such as Japan, Korea, and China), while demand was steady in ship repairs. By capturing steady
demand in these markets, the company saw sales in marine paints rise by 24.6% YoY to JPY46.6bn, bolstering overall
consolidated results.
Industrial paints stagnant in domestic and overseas markets; momentum declining in container paints
Sales of industrial paints were down 5.5% YoY, to JPY5.9bn, caused by stagnant demand in the construction sector in
Japan due to the lingering effects of the consumption tax hike, alongside sluggish performance overseas. Although
container paints were strong at the beginning of FY03/16, the market began to lose momentum from Q2 onward, leading
to sales of JPY6.9bn, up 4.1% YoY.
Improved profitability absorbs effects of VOC tax hike in China; operating profit up 52.2% and OPM up 1.9pp YoY
Operating profit grew by 52.2% YoY, the result of higher sales and improved profitability. GPM improved by 2.3pp to
30.1% as lower raw materials costs offset the effects of an increase in the Chinese volatile organic compound (VOC) tax,
which pushed down profits by more than JPY200mn. The lower raw material costs were primarily caused by lower oil
prices and measures to cut procurement costs. The company’s initial estimates included the effects of the higher VOC tax.
Chinese VOC tax: A consumption tax of 4% is applied to compounds with a VOC value that exceeds 420g/l. The tax applies to products
manufactured or imported on or after February 1, 2015.
07/52
R
SG&A expenses increased due to higher sales commission fees and personnel expenses. Risk from customers
defaulting––initially seen as a concern at the beginning of FY03/16––did not prove to be a major issue. As a result,
operating profit was JPY5.0bn (up JPY1.7bn YoY), and OPM was 8.4% (up 1.9pp YoY).
Marine paints
Marine paints
30.0
Japan
China
Korea
Southeast Asia
Europe/US
YoY (right-axis)
24%
25.0
20.0
17.6
20.0
18.1
17.3
16.8
19.0
17.3
18.2
16.0
15.0
-5%
10.0
-5%
-4%
-4%
5.0
0.0
(JPYbn)
17.5
5%
15.4
17.2
14.9
14.5
7%
16.5
18.6
20%
24%
23%
17%
20.0
20.4
18%
21.9
30%
25%
25.0
20%
21.6
10%
17.4
0%
-2%
-8%
-10%
-10%
-11%
-20%
-18%
Q1
FY03/11
Q3
Q1
FY03/12
Q3
Q1
FY03/13
Q3
Q1
FY03/14
Q3
Q1
FY03/15
Q3
Q1
FY03/16
Q3
-30%
In marine paints, although the overall new ship production market was showing signs of bottoming out, credit risk was
rising in the ship production industry in China and Korea. This credit risk was incorporated into the company’s initial
estimates for FY03/16, but was not an issue during 1H.
Japan
Sales were JPY16.6bn, up 14.0% YoY. In the domestic market, the company expected paint for new ships to see slightly
lower demand in 2015 than in 2014. The domestic shipping market is seeing price competition is intensifying against a
backdrop of a weaker yen, and the bulk shipping market is subject to a slowing Chinese economy and concerns of
economic stagnation in emerging markets. Still, the domestic market saw less of an effect compared to other markets by
shifting from bulk ships to ships such as tankers. CMP’s market share was on par with FY03/15, slightly increasing to over
60%.
China
Sales were JPY10.4bn, up 20.2% YoY. The company forecasts the Chinese market to be smaller than it initially expected
due to the effects of a downturn in bulk shipping. Still, CMP also sees that the market hit bottom in fiscal 2013 and 2014,
and is recovering. CMP’s sales grew significantly, and it maintained its market share amid the recovering market and forex
impact.
Korea
Sales were JPY8.4bn, up 59.1% YoY. The Korean shipbuilding industry was struggling, pressured by technological
competition and the weaker yen from Japan, and cost competitiveness in China. The company was focusing on marine
resource development, given the drop in oil prices and resulting market stagnation. In 2015, marine paint demand was
boosted due to an increase in completed ships, but the company forecasts demand to decrease in 2016. Despite this
market environment, CMP’s sales activities to shipowners expanded its market share and bolstered sales.
Repair demand
A rush in repair demand in spring 2015 boosted CMP’s 1H FY03/16 results. Demand was spurred by the impending
adoption of the International Convention for the Control and Management of Ships' Ballast Water and Sediments, which
08/52
R
seeks to prevent the movement of harmful organisms and pathogens within ballast water.* However, this demand was
cooling as of November 2015.
*International Convention for the Control and Management of Ships' Ballast Water and Sediments: Ratified by the International Maritime
Organization in February 2004, the conditions for activation have not yet been satisfied as of November 2015. The conditions are ratification
by 30 or more countries (satisfied) and the total shipping tonnage of the ratified countries to achieve 35% of global volume (32.86% as of
August 2015). The convention will go into effect 12 months from the day the conditions are satisfied. Key countries that have yet to ratify and
are possible candidates to do so in the near future are Italy (1.39% of global shipping tonnage), Indonesia (1.14%), and India (0.78%).
Industrial paints
Industrial paints
3.5
Japan
3.0
3.1
2.7
China
2.6
2.5
2.4
2.5
Korea
2.9
Southeast Asia
2.8
Europe/US
2.8
2.6
2.7
2.9
3.2
YoY (right-axis)
3.1
3.0
2.6
15%
12%
17%
3.1
3.1
1%
3%
1%
3.2
-7%
0.0
(JPYbn)
Q1
FY03/11
Q3
Q1
FY03/12
-9%
20%
3.0
15%
5%
3%
-1%
1%
0%
-5%
1.0
0.5
3.0
10%
5%
6%
1.5
3.2
12%
9%
2.0
3.2
-6%
-5%
-10%
-10%
Q3
Q1
FY03/13
Q3
Q1
FY03/14
Q1
FY03/15
Q3
Q3
Q1
FY03/16
-15%
Q3
Industrial paints were weak, both in Japan and abroad. In the domestic market, recovery was sluggish for
construction-related paints, which account for about two-thirds of the company’s sales. Overseas sales were weak given a
significant portion of sales coming from petrochemical plants (with sluggish performance) in Southeast Asia.
The company appears to have adopted a cautious stance for 2H, in light of the sluggish trends in Japan and overseas
during 1H.
Domestic sales and new housing starts
New housing starts floor area
1,934
25
1,665
1,651
1,495
20
1,429 1,420
1,550
1,405
1,523 1,471
Domestic indusrial paints (right axis)
1,628
1,594 1,616
1,679 1,706
1,560
1,373
2,000
1,539
1,365
1,363 1,414 1,337
1,600
15
1,200
10
800
5
0
400
17.8
19.3
19.6
17.2
Q1
FY03/11
(mn sqm)
18.5
21.0
18.7
17.6
Q1
FY03/12
19.4
Q1
FY03/13
20.4
21.0
18.6
21.7
Q1
FY03/14
23.1
23.9
18.7
18.8
Q1
FY03/15
18.9
19.3
17.0
19.6
Q1
FY03/16
19.5
0
(JPYmn)
09/52
R
Container paints
Container paints
5.0
China
4.8
3.7
4.0
3.0
Southeast Asia
3.8
3.4
2.1
36%
1.0
-40%
Q1
FY03/11
258%
3.2
2.2
1.1
0.0
YoY (right-axis)
248%
2.5
2.0
(JPYbn)
Europe/US
Q3
Q1
FY03/12
-57%
Q3
0.8
-6%
4.3
3.4
2.2
3%
5%
3.3
2.8
2.7
2.3
400%
4.1
5%
2.5
24%
16%
300%
3.6
3.3
200%
2.3
-13%
27%
44%
30%
100%
42%
-17%
0%
-80%
Q1
FY03/13
Q3
Q1
FY03/14
Q3
Q1
FY03/15
Q3
Q1
FY03/16
Q3
-100%
Container paints show volatile performance. Demand appeared to be softening from Q2 onward, and CMP was expecting
it to decelerate in 2H, as some demand from 2H was pushed forward to 1H. Still, full-year figures for 2015 are expected to
be on par with 2013.
China (export) containerized freight index
1,400
1,200
1,300
1,100
1,200
1,000
1,100
1,000
900
900
800
800
700
700
600
Apr-11
Apr-12
Apr-13
Apr-14
Apr-15
600
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Source: Shared Research based on Bloomberg data
10/52
R
Breakdown of sales
Sales by product category
(JPYmn)
Marine paints
Japan
China
Korea
Southeast Asia
Europe/US
YoY
Japan
China
Korea
Southeast Asia
Europe/US
Industrial paints
Japan
China
Korea
Southeast Asia
Europe/US
YoY
Japan
China
Korea
Southeast Asia
Europe/US
Container paints
China
Southeast Asia
Europe/US
YoY
China
Southeast Asia
Europe/US
FY03/14
Q1
Q2
14,453 17,162
6,988 7,094
2,681 3,703
1,722 2,157
937 1,584
2,122 2,626
-9.8% -1.9%
-4.6%
0.9%
-40.6% -34.0%
1.2% 44.3%
15.5% 17.9%
26.5% 30.5%
3,014 3,105
1,594 1,616
347
412
5
24
1,020 1,027
46
26
9.4% 14.6%
4.7%
9.9%
-5.7% -8.2%
-37.5% 300.0%
28.6% 35.8%
-23.3% -7.1%
2,686 3,378
2,411 3,054
230
277
43
49
257.7%
5.2%
332.9%
2.1%
38.6% 49.7%
65.4% 36.1%
Q3
16,540
6,853
3,691
2,064
1,276
2,656
7.2%
0.3%
-19.9%
48.4%
36.6%
60.1%
3,228
1,679
467
8
1,023
52
11.8%
3.1%
9.6%
166.7%
25.8%
188.9%
2,841
2,541
244
55
23.7%
24.2%
20.2%
22.2%
Q4
18,567
7,162
4,222
2,480
1,682
3,021
24.4%
8.0%
11.8%
56.1%
45.4%
70.2%
3,098
1,706
356
12
983
41
17.3%
24.3%
4.1%
50.0%
9.6%
95.2%
2,511
2,177
265
69
16.1%
11.5%
48.0%
115.6%
FY03/15
Q1
Q2
17,362 20,027
7,229 7,331
3,598 5,087
2,578 2,679
1,300 1,713
2,656 3,217
20.1% 16.7%
3.4%
3.3%
34.2% 37.4%
49.7% 24.2%
38.7%
8.1%
25.2% 22.5%
3,153 3,140
1,560 1,365
422
544
42
70
1,049 1,020
77
142
4.6% 1.1%
-2.1% -15.5%
21.6% 32.0%
740.0% 191.7%
2.8% -0.7%
67.4% 446.2%
2,333 4,282
2,000 3,977
243
232
89
73
-13.1% 26.8%
-17.0% 30.2%
5.7% -16.2%
107.0% 49.0%
Q3
20,418
8,163
4,987
2,815
1,411
3,041
23.4%
19.1%
35.1%
36.4%
10.6%
14.5%
3,209
1,539
499
22
1,108
41
-0.6%
-8.3%
6.9%
175.0%
8.3%
-21.2%
4,086
3,771
232
84
43.8%
48.4%
-4.9%
52.7%
Q4
21,943
7,653
6,038
3,344
1,970
2,938
18.2%
6.9%
43.0%
34.8%
17.1%
-2.7%
3,183
1,363
483
24
1,274
39
2.7%
-20.1%
35.7%
100.0%
29.6%
-4.9%
3,271
2,949
263
58
30.3%
35.5%
-0.8%
-15.9%
FY03/16
Q1
Q2
21,607 24,967
8,456 8,143
4,324 6,113
3,787 4,578
1,461 2,150
3,578 3,981
24.4% 24.7%
17.0% 11.1%
20.2% 20.2%
46.9% 70.9%
12.4% 25.5%
34.7% 23.7%
2,990 2,958
1,414 1,337
336
425
11
34
1,151 1,103
75
61
-5.2% -5.8%
-9.4% -2.1%
-20.4% -21.9%
-73.8% -51.4%
9.7%
8.1%
-2.6% -57.0%
3,318 3,571
2,878 3,229
256
261
183
81
42.2% -16.6%
43.9% -18.8%
5.3% 12.5%
105.6% 11.0%
FY03/16 1H
1H Act.
46,574
16,599
10,437
8,365
3,611
7,559
24.6%
14.0%
20.2%
59.1%
19.8%
28.7%
5,948
2,751
761
45
2,254
136
-5.5%
-5.9%
-21.2%
-59.8%
8.9%
-37.9%
6,889
6,107
517
264
4.1%
2.2%
8.8%
63.0%
11/52
R
Company forecasts and outlook
Full-year company forecasts (out October 29, 2015)
Income statement
(JPYmn)
Sales
YoY
Operating profit
YoY
OPM
Recurring profit
YoY
RPM
Net income
YoY
Net margin
Perfomance by segment
(JPYmn)
Sales
Japan
China
Korea
Southeast Asia
Europe/US
FY03/14
1H
43,964
1.9%
1,575
-43.2%
3.6%
2,149
-23.9%
4.9%
1,140
-28.7%
2.6%
FY03/14
1H
43,964
17,456
12,608
3,909
5,076
4,913
Marine coatings
Industrial coatings
Container coatings
YoY
Japan
China
Korea
Southeast Asia
Europe/US
Operating profit
Japan
China
Korea
Southeast Asia
Europe/US
Elimination
OPM
Japan
China
Korea
Southeast Asia
Europe/US
YoY
Japan
China
Korea
Southeast Asia
Europe/US
31,615
6,119
6,064
1.9%
-0.5%
-13.0%
21.8%
25.2%
27.9%
1,575
1,050
-722
197
671
-268
647
3.6%
6.0%
-5.7%
5.0%
13.2%
-5.5%
-43.2%
-20.0%
3,840.0%
36.4%
-
FY03/15
1H
50,463
14.8%
3,303
109.7%
6.5%
3,613
68.1%
7.2%
2,337
105.0%
4.6%
FY03/15
1H
50,463
17,651
15,629
5,369
5,558
6,255
FY
2H
56,274 106,737
19.9%
17.4%
7,442
4,139
83.4%
66.7%
7.4%
7.0%
8,359
4,746
63.1%
65.3%
8.4%
7.8%
4,748
2,411
13.2%
45.2%
4.3%
4.4%
2H
46,937
15.8%
2,483
27.7%
5.3%
2,909
26.8%
6.2%
2,129
54.3%
4.5%
FY
90,901
8.7%
4,058
-13.9%
4.5%
5,058
-1.2%
5.6%
3,269
9.8%
3.6%
2H
46,937
17,552
13,455
4,563
5,472
5,895
FY
90,901
35,008
26,063
8,472
10,548
10,808
35,107
6,326
5,352
15.8%
5.4%
2.3%
52.5%
30.8%
66.1%
2,483
916
102
178
806
-274
755
5.3%
5.2%
0.8%
3.9%
14.7%
-4.6%
27.7%
1.6%
-72.1%
65.8%
-
37,389
42,361
66,722
12,445
6,293
6,392
7,357
11,416
6,615
19.9%
14.8%
8.7%
7.6%
2.4%
1.1%
24.0%
39.2%
-5.7%
36.6%
37.3%
36.0%
9.5%
14.4%
28.0%
27.3%
5.2%
46.2%
4,058
3,303
4,139
813
1,966
785
863
1,482
-620
97
54
375
1,076
908
1,477
-186
-412
-542
1,402
835
1,127
4.5%
6.5%
7.4%
4.4%
4.3%
5.6%
5.5%
7.9%
-2.4%
4.4%
1.8%
0.9%
17.2%
14.0%
16.3%
-3.0%
-6.6%
-5.0%
-13.9% 109.7%
66.7%
-11.2%
-25.2%
-11.2%
- 1,352.9%
-50.8%
-69.7%
51.0%
35.3%
33.5%
-
2H
FY
56,274 106,737
36,532
18,881
18,727
34,356
11,575
6,206
6,258
11,816
6,201
12,456
79,750
12,685
13,972
17.4%
4.4%
31.8%
36.6%
12.0%
15.2%
7,442
1,598
2,345
151
1,984
-598
1,962
7.0%
4.4%
6.8%
1.3%
16.8%
-4.8%
83.4%
-18.7%
-59.7%
34.3%
-
FY03/16 revised
FY03/16 Initial est.
1H 2H Est.
FY Est. 1H Est. 2H Est.
FY Est.
59,572 55,428 115,000 55,000 60,000 115,000
7.7%
6.6%
9.0%
18.1%
-1.5%
7.7%
3,974
9,000
3,800
4,200
8,000
5,026
7.5%
1.5%
15.0%
20.9%
-4.0%
52.2%
7.0%
7.0%
8.4%
7.2%
7.8%
6.9%
4,223
9,800
4,100
4,700
8,800
5,577
5.3%
-1.0%
13.5%
17.2%
-11.0%
54.4%
7.7%
7.8%
9.4%
7.6%
8.5%
7.5%
2,500
2,800
5,300
6,000
2,512
3,488
11.6%
16.1%
7.0%
26.4%
49.3%
4.2%
4.6%
5.9%
4.5%
5.2%
4.5%
4.7%
FY03/16 revised
FY03/16 Initial est.
FY Est.
FY Est. 1H Est. 2H Est.
1H 2H Est.
59,572 55,428 115,000 55,000 60,000 115,000
19,510
17,306
8,411
6,383
7,960
46,574
5,948
6,889
18.1%
10.5%
10.7%
56.7%
14.8%
27.3%
5,026
1,296
1,119
254
1,324
-485
1,516
8.4%
6.6%
6.5%
3.0%
20.7%
-6.1%
52.2%
65.1%
29.7%
161.9%
45.8%
-
-1.5%
3,974
7.2%
-4.0%
-
7.7%
9,000
7.8%
20.9%
-
9.0%
3,800
6.9%
15.0%
-
6.6%
4,200
7.0%
1.5%
-
7.7%
8,000
7.0%
7.5%
-
Revised company forecasts
On October 29, 2015, CMP made upward revisions to its 1H FY03/16 and full-year FY03/16 forecasts. It cited the
following reasons:
◤
Robust demand for marine paints for new ships, and a rush in demand for ship repairs due to the impending
adoption of the International Convention for the Control and Management of Ships' Ballast Water and Sediments;
◤
◤
Improved profitability overall;
No issues regarding clients defaulting, initially expected for 1H.
In 2H forecasts, however, sales and profits were revised down. The company stated the following reasons:
◤
Some 2H demand may have been pushed forward to 1H, given the robust repair demand;
12/52
R
◤
◤
◤
◤
Decelerating demand for container paints, which was robust in Q1;
In industrial paints, caution regarding construction demand in Japan and plant demand in Southeast Asia;
Concerns regarding recovering liabilities in the hundreds of millions of yen;
Possible effects of lower oil prices and raw materials costs not included in domestic forecasts.
Market forecasts for 2016 (CMP’s FY03/17)
Marine paints
CMP’s 2016 market forecasts (November 2015)
Japan: The company estimates that the 2016 domestic market will be on par with 2015. This is due to increased
competitiveness from the weaker yen and the shift away from bulk shipping.
China: Although 2015 undershot initial expectations due to a decline in bulk shipping, the company has not changed its
view that the Chinese market has been recovering after bottoming in 2013 and 2014. It appears that CMP expects market
in 2016 to be on par with or higher than the 2012 market.
Korea: The Korean shipbuilding industry was struggling, pressured by the weaker yen from Japan, and cost
competitiveness in China. In particular, recent focus placed on offshore structures combined with lower oil prices was
hurting the Korean marine paint market. In 2015, marine paint demand was boosted due to an increase in completed
ships, but the company forecasts demand to decrease in 2016.
Repairs
As the compliance deadline approaches, 2016 may see the same rush demand as in the previous year. Despite that
possibility, Shared Research believes that the company was expecting the same level of demand in 2016 as in the latter
half 2015, based on the fact that the rush demand had subsided in the second half of 2015.
13/52
R
Outlook
Targeting sales of JPY120bn and operating profit of JPY10bn
In the medium-term, CMP target sales of JPY120bn (up 12.4%, or JPY13.3bn, versus FY03/15) and operating profit of
JPY10bn (up 34.4%, or JPY2.6bn).
Target sales mix for paint: 60% ships, 20% containers, and 20% industrial-use
CMP sees the following factors as key to reaching its targets:
▶
▶
▶
▶
Establish a leading market share in paint for ships and containers;
Expand into offshore structures;
Cultivate new markets in the industrial sector;
Improve profitability.
The company’s sales mix as of FY03/15: 75% ships, 13% containers, and 12% industrial. But the company wants to make
paint for containers and industrial reach 20% each.
Even without the 60:20:20 sales mix, given FY03/16 forecasts (revised up on October 29, 2015), the company could
achieve its medium-term sales targets. But to grow sales beyond JPY120bn, accelerated growth in container and industrial
paints is necessary. Other important conditions include a recovery of the container paint market and developing new
markets in industrial paints.
Top market share in ship and container paint
Aim for top market share by improving weaker areas
CMP has top global market shares for marine and container paints. Yet certain regions and markets pose challenges, and it
seeks to improve in these areas. The company’s market share estimates for paint (as of FY03/15) stand at under 30% for
new ships, about 20% for ship repairs, and under 30% for containers. Plans seek to increase these figures to over 30% for
new ships and containers, and almost 30% for repairs.
Ship construction undertaken in major shipbuilding countries and demand for marine paints
Orders on hand (end 2014)
Western
Europe/
Northern
Europe
2%
Others
9%
Korea
31%
Global
Japan
17%
China
41%
Ship
repairs
60%
CMP
New
shipbuil
ding
40%
Ship
repairs
45%
New
shipbuil
ding
55%
Source: Shared Research based on World Shipbuilding Statistics, company data
14/52
R
Global market share by market segment (unit volume; company estimates)
New ships
Japan/new ships
Ship repair
China/new ships
Korea/new ships
20%
28%
China/container
15%
28%
28%
56%
CMP
Other
CMP
Other
CMP
Other
CMP
Other
CMP
Other
CMP
Other
Repair demand
According to company estimates, in the overall market, marine paint demand comprises about 40% for new ships and
60% for ship repairs in 2015. In contrast, for CMP, new ships accounted for about 55% of sales, demonstrating CMP’s
strength in the new ship market, but also space to capture demand in the ship repair market.
Global marine transport volume (million tons) and shipping tonnage
14,000
Crude oil
Petroleum products
Coal
Iron ore
LPG/LNG
Others
1,400
Shipping tonnage (mn of gross tons, right axis)
12,000
1,200
10,000
1,000
8,000
800
6,000
600
4,000
400
2,000
200
(mnt)
0
CY85
CY90
CY95
CY00
CY05
CY10
CY15
0
(mn gross
tons)
Source: The Japanese Shipowners’ Association, IHS, Clarkson, Shared Research based on company data
New shipbuilding order volume, completion volume, and orders on hand
400
Orders on hand
Order volume
Completion volume
Completion volume/orders on hand (right axis)
8
350
7
300
6
250
5
200
4
150
3
100
2
50
1
0
(mn gross
tons)
CY94 CY95 CY96 CY97 CY98 CY99 CY00 CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14
0
Source: Shared Research based on materials from The Japanese Shipowners’ Association and HIS
Aim to establish its brand
CMP has been able to acquire a high market share in the new ship market due to its connections with ports and
shipowners, combined with strong sales activities. In the ship repair market, however, customer needs vary—some value
cost while others value functionality. Customers in Europe tend to be particularly sensitive to costs.
To further increase market share in marine paint for new ships, CMP plans to focus on sales activities to shipowners, and
strengthening brand recognition leveraging its position as a market leader. New products that demonstrate functionality
and quality are essential, as is a strong track record.
15/52
R
CMP was able to provide efficient and quality products, and to strengthen its track record. It was one of the first marine
paint companies to adapt its products to meet environmental needs. The company introduced its SEAFLO NEO series of
anti-fouling paints in 2010. SEAFLO NEO significantly reduces VOC (volatile organic compounds), and improves fuel
efficiency through reduced friction. As of 1H FY03/16, its NEO series—including SEAFLO NEO Z, introduced in
2014—accounted for over half of marine paint sales. CMP plans to increase market share through sales activities
leveraging the track record of its SEAFLO NEO series.
Strengthening partnerships
CMP has made creating a global structure a top priority, and has created a global service network for production (plants),
supply (storage locations), and marketing (sales offices). As of October 2015, it had a presence in about 30 countries and
80 bases (production, supply and marketing). Its network includes local subsidiaries, as well as technological partnerships
with companies overseas. CMP has already extended its network into key regions, and it plans to continue expansion into
locations with potential long-term demand, such as areas with potential natural resources or economic growth.
Responding to environmental concerns through VOC products for container paint
The company has a container paint market share of almost 30%, and is focusing on further growth through development
of environmentally compliant paint. It thinks that stricter regulations will mean an industry shift to water-based paints, and
began test sales of a water-based paint in 2013. China is seeing tightening environmental regulations, such as added
taxation on paints with VOC over a certain level. According to the company, all major marine paint manufacturers have
developed water-based paints for containers, although performance varies. The industry has yet to transition to
water-based paints due to cost issues such as creating facilities for organic solvents, but this could change with stricter
VOC policies in China.
Chinese VOC tax: A consumption tax of 4% is applied to compounds with a VOC value that exceeds 420g/l. The tax applies to products
manufactured or imported on or after February 1, 2015.
Expansion into offshore structures
Winning orders for large-scale projects, despite slow start of Japanese companies (CMP’s customers)
CMP’s market share in offshore structures is small. While Japanese companies (CMP’s primary customers) were slow to
develop offshore structures for marine resource development, non-Japanese companies were actively entering the
market. As a result, rival firm International Paint (subsidiary of Akzo Nobel N.V.; Euronext: AKZA) captured a large global
market share, compared to CMP, which relied on Japanese companies. Although development projects around the world
are being postponed or canceled due to low oil prices, it is still a large market, and remains on the company’s radar.
Order balance for major Korean shipbuilding companies
（USDbn, October 2015）
Samsung Heavy Industries
Daewoo Shipbuilding & Marine Engineering
Hyundai Heavy Industries
Hyundai Samho
Total
Order balance
36.6
43.7
38.8
8.8
127.9
Shipping
18.2
23.7
17.8
8.8
68.5
Marine structures
18.4
20.0
21.0
59.4
To enter marine development, the company established a marine development department in 2012. In 2013, its products
were chosen for use in the MOSE project, large-scale mobile gates to prevent flooding in Venice, Italy.
Anti-flooding gates are typically installed underwater to prevent damage to the surrounding environment. This requires
materials with high levels of anti-corrosion and anti-fouling functions. After evaluating various coating materials and
16/52
R
systems for more than 10 years, the MOSE project selected CMP’s products—primarily Bioclean. The company’s paints
were delivered in line with construction progress, and sales were recorded on a quarterly basis during FY03/15. The
company expects continued demand from the second stage of construction. Maintenance is to be conducted every five
to ten years, for 100 years.
In 2014, the company’s anti-corrosion products—primarily BANNOH 2000—were selected for use in the construction,
maintenance, and operation of the Uruguay-based Floating LNG Storage and Regasification Unit (FSRU), undertaken by
Mitsui O.S.K. Lines, Ltd. (TSE1: 9104). As of October 2015, the FSRU project was under construction by Daewoo
Shipbuilding & Marine Engineering Co., Ltd. (Korea-based KRX: 042660), and had the largest LNG storage tank in the
world, with capacity of 263,000 cubic meters. It is slated for operation in mid 2017.
CMP’s has high market share when considering sales solely to Japanese companies. It is particularly strong in offshore
wind power generation, where it holds 90% domestic market share. If the market share of Japanese companies grows,
then CMP’s market share should follow suit. Still, amid a decline in oil prices, more time may be required until global
investment in marine resource development and LNG gain momentum.
Development and sales department to market new applications and coordinate industrial and marine segments overseas
In July 2015, the company established a development and sales department to oversee the existing marine department
and overseas industrial sales department. This new department serves to win new projects and lead development of new
product applications, in addition to coordinating operations between the industrial and marine segments. CMP’s market
share in offshore structures is small, so Shared Research sees significant potential to expand market share.
Offshore structures
April 2015
Total
Planning
Costructing
Operating
237
73
368
October 2015
FPSO
FSO
SEMI
TLP
SPAR
FSRU
BARGE
Floating Production, Storage and Offloading Vessel
Floating Storage and Offloading Vessel
Production Semisubmersible
Tension Leg Platform
Production Spar (cylingrical shape)
Floating LNG Storage and Regasification Unit
South
America
Gulf of
Mexico
South
America
Gulf of
Mexico
50
22
64
40
4
15
1
1
6
Canada
27
4
54
1
2
North Sea
44
12
61
2
Canada
8
1
9
17
19
US
8
US
Mediterranean
27
10
48
North Sea
37
15
4
5
13
2
10
Mediterranean
24
9
13
2
3
7
1
1
Southwest Asia
Middle East
Southeast Asia Oceania
10
6
18
Southwest Asia
Middle East
36
14
80
Southeast Asia Oceania
3
8
7
25
49
2
1
1
2
2
China
13
3
15
9
16
China
11
2
13
1
1
1
Source: Shared Research based on the Floating Production Systems Report published by Energy Maritime Associates
Seeking new markets in industrial paints
CMP aims to increase industrial paints to 20% of sales, by leveraging its core technologies in new areas. Its heavy
anti-corrosion technology includes anti-fouling paint for use in offshore structures and offshore wind power plants, as well
as CONTECT (to prevent peeling of concrete in humid environments).
CMP began sales of CONTECT in 2013. In June 2015, CONTECT WE100 (with additional special fibers) was registered on
the New Technology Information System (NETIS) of the Japanese Ministry of Land, Infrastructure, Transport and Tourism.
NETIS is a system to evaluate and promote technologies for public works projects. CONTECT is used to prevent and repair
concrete peeling in public infrastructure such as highways and railroads. According to the information registered in
NETIS, this product reduces lead times by as much as 50% compared with previous methods of attaching layers of fiber
sheets, cutting total costs by more than 20% on lower personnel and facilities expenses. Although sales for this product as
of FY03/15 were still in the tens of millions of yen, the company anticipates future growth.
17/52
R
Enter the automotive market leveraging its paints for woodwork
Apart from the heavy anti-corrosion sector, CMP is seeking to break into the high function paint market. A key product is
PHOLUCID—a hard coating material intended for use in automotive headlight covers. This product takes CMP’s UV
curable paint technology for woodwork and applies it to plastics. Headlight covers typically use polycarbonate materials,
which become opaque and yellow, and are easy to scratch. The company provides hard coatings to protect these
polycarbonate materials. As of November 2015, evaluations had been completed in the US, and the company had applied
for regulatory approval. It was expecting the product to enter the market in 2016.
Strengths of PHOLUCID (per CMP):
1.
Curing starts immediately after ultraviolet light irradiation, leading to faster production lines
2.
Large-scale drying ovens are not necessary, leading to compact facilities and simpler production lines
3.
High hardness properties, contributes to durability
4.
Various functions can be incorporated to meet customer needs
5.
Possible to apply to various materials including ABS and PET plastics
The company does not expect PHOLUCID to reach the target of 20% of sales in the near future given the small scale of
sales of high function paints. Still, through the development and sales department CMP seeks to expand its products and
their applications. Other products that saw new applications include CMP LINER (uses technology from the CUS product,
a railway caulking resin to fill gaps between beams and crossties which has been sold to bullet train and railway operators
both in Japan and abroad for more than 40 years), and EVATRON (a radio wave absorbing paint that can reduce
interference and prevent corrosion).
CONTECT
PHOLUCID
Improving profitability
Targeted sales of JPY120bn and operating profit of JPY10bn imply a target OPM of 8.3%. Using the revised FY03/16
forecasts (sales of JPY115bn, operating profit of JPY9bn, OPM of 7.8%), Shared Research calculates that CMP may be able
to post an operating profit of JPY10bn if it hits its sales targets. The company thinks it can improve profitability even
further, if it can increase efficiency and lower costs.
CMP is exploring initiatives such as unmanned factories, inventory cost reductions, and consolidation and discontinuation
of certain products and raw materials.
Unmanned factories
CMP is exploring the implementation unmanned factories. This initiative was triggered by environmental factors
(measures to combat VOC), and cost factors (personnel expenses). Plans call for tests in Europe, followed by expansion
into its key production bases in Shanghai and Japan.
18/52
R
To curb manufacturing and raw materials costs, the company is also considering reducing inventory costs by improving
inventory efficiency, and consolidation and discontinuation of certain products and raw materials.
Comparison of company estimates and historical results
Forecasts versus results
(JPYmn)
Initial forecasts
Q1
Q2
Q3
Sales
Results
vs. initial forecasts
vs. Q1
vs. Q2
vs. Q3
Initial forecasts
Q1
Q2
Q3
Operating
Results
profit
vs. Q1
vs. Q2
vs. Q3
Initial forecasts
Q1
Q2
Q3
Recurring
Results
profit
vs. Q1
vs. Q2
vs. Q3
Initial forecasts
Q1
Q2
Q3
Net income Results
vs. Q1
vs. Q2
vs. Q3
FY03/09
Cons.
107,000
107,000
107,000
107,000
103,622
-3.2%
-3.2%
-3.2%
-3.2%
8,300
8,300
8,300
8,300
8,429
1.6%
1.6%
1.6%
1.6%
7,800
7,800
7,800
7,800
7,899
1.3%
1.3%
1.3%
1.3%
5,300
5,300
5,300
5,300
5,031
-5.1%
-5.1%
-5.1%
-5.1%
FY03/10
Cons.
94,000
94,000
87,000
87,000
86,810
-7.6%
-7.6%
-0.2%
-0.2%
8,000
8,000
9,300
9,300
9,995
24.9%
24.9%
7.5%
7.5%
7,500
7,500
9,200
9,200
10,268
36.9%
36.9%
11.6%
11.6%
4,800
4,800
5,000
5,000
5,422
13.0%
13.0%
8.4%
8.4%
FY03/11
Cons.
92,000
92,000
92,000
92,000
96,595
5.0%
5.0%
5.0%
5.0%
10,100
10,100
10,100
10,100
8,823
-12.6%
-12.6%
-12.6%
-12.6%
10,300
10,300
10,300
10,300
9,114
-11.5%
-11.5%
-11.5%
-11.5%
5,600
5,600
5,600
5,600
5,701
1.8%
1.8%
1.8%
1.8%
FY03/12
Cons.
100,000
100,000
95,000
95,000
93,560
-6.4%
-6.4%
-1.5%
-1.5%
9,000
9,000
5,700
5,700
5,474
-39.2%
-39.2%
-4.0%
-4.0%
9,250
9,250
6,000
6,000
6,040
-34.7%
-34.7%
0.7%
0.7%
5,250
5,250
3,500
3,500
3,067
-41.6%
-41.6%
-12.4%
-12.4%
FY03/13
Cons.
92,000
92,000
84,500
84,500
83,656
-9.1%
-9.1%
-1.0%
-1.0%
4,000
4,000
4,900
4,900
4,715
17.9%
17.9%
-3.8%
-3.8%
4,200
4,200
5,000
5,000
5,119
21.9%
21.9%
2.4%
2.4%
2,500
2,500
2,900
2,900
2,978
19.1%
19.1%
2.7%
2.7%
FY03/14
Cons.
84,000
84,000
84,000
84,000
90,901
8.2%
8.2%
8.2%
8.2%
4,000
4,000
4,000
4,000
4,058
1.5%
1.5%
1.5%
1.5%
4,200
4,200
4,200
4,200
5,058
20.4%
20.4%
20.4%
20.4%
2,600
2,600
2,600
2,600
3,269
25.7%
25.7%
25.7%
25.7%
FY03/15
Cons.
96,000
96,000
96,000
105,000
106,737
11.2%
11.2%
11.2%
1.7%
5,500
5,500
5,500
7,000
7,442
35.3%
35.3%
35.3%
6.3%
6,000
6,000
6,000
7,800
8,359
39.3%
39.3%
39.3%
7.2%
3,700
3,700
3,700
5,000
4,748
28.3%
28.3%
28.3%
-5.0%
FY03/16
Est.
115,000
115,000
115,000
8,000
8,000
9,000
8,800
8,800
9,800
5,300
5,300
6,000
19/52
R
Chugoku Marine Paints ＞ Business, market and value chain
Business, market and value chain
Business description
Earnings
Sales
160,000
OP
GPM (right axis)
OPM (right axis)
40%
140,000
35%
120,000
30%
100,000
25%
80,000
20%
60,000
40,000
20,000
(JPYmn)
0
11.5%
5.0%
2,113
4.3%
1,808
FY03/99
3.6%
1,658
FY03/01
7.7%
6.9%
5.3%
3,481
2,598
FY03/03
4,294
7.4%
4,721
5.4%
3,632
FY03/05
8.2%
7,257
7.8%
8,132
FY03/07
8,429
FY03/09
15%
9.1%
8.1%
5.9%
9,995
8,823
FY03/11
5,474
5.6%
4,715
4.5%
4,058
FY03/13
7.0%
7,442
FY03/15
10%
5%
0%
Sales by market
120
100
Marine paints
Industrial paints
Container paints
88.2
80
60
40
20
(JPYbn)
0
104.8
Others
41.9
45.8
10%
26%
13%
27%
63%
58%
49.0
50.2
9%
25%
10%
25%
64%
64%
55.8
14%
23%
62%
63.4
15%
22%
61%
67.8
16%
20%
63%
26%
25%
106.7
103.6
15%
86.8
13%
2%
12%
14%
96.6
93.6
13%
12%
12%
11%
83.7
10%
13%
90.9
13%
13%
12%
14%
15%
58%
60%
71%
86%
76%
76%
76%
73%
75%
FY03/00 FY03/01 FY03/02 FY03/03 FY03/04 FY03/05 FY03/06 FY03/07 FY03/08 FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15
Business expansion
History
2017 marks 100th anniversary since founding; core competency in marine paints
The company was founded in 1917 by a former technical officer of the Kure Naval Arsenal as a domestic pioneer in
anti-fouling paint. At that time, the majority of anti-fouling paints for both public and private use were sourced from
overseas. In its initial year, the company acquired patents in Japan, the UK, and the US, and was registered as a naval
supplier in 1926. In addition to anti-fouling paints, the company acquired patents for products such as oxygen-generating
agents and synthetic resins. A focus on research and prioritizing technology remains part of the company’s DNA.
CMP’s HQ and resin production facility in 1929
Source: Company data
20/52
R
CMP’s anti-fouling paints were chosen as a “superior domestic product” by the Ministry of Commerce and Industry in
September 1930, and designated as a “standard paint” by the Ministry of the Navy of Japan in March 1931. CMP grew in
tandem with Japan’s postwar shipping industry, expanding into industrial and container paints.
Expanding from marine paints to container paints; shifting production locations to capture top market share
In the 1973, CMP established a main overseas base in Hong Kong, and expanded into container paints. It shifted its
production of container paints from Japan to Korea, Taiwan, and China. CMP held about 30% share in the container paint
market.
Business trends
120
12
12
10
10
80
8
8
60
6
6
40
4
4
20
2
2
Sales excluding marine pains
Marine paints sales
Reccurring profit (right axis)
100
0
(JPYbn)
FY03/80
FY03/90
FY03/00
0
FY03/10 FY03/15
0
Reccurring profit
(JPYbn)FY03/80
14%
RPM (right axis)
12%
10%
8%
6%
4%
2%
FY03/90
FY03/00
0%
FY03/10 FY03/15
Local production for local consumption; creating overseas network through partnerships
In 1985, the Plaza Accord caused a rapid appreciation in the yen, and the company took advantage of this opportunity to
establish production bases overseas, working throughout the 1990s and 2000s to consolidate its network. In contrast
with standard overseas production models, the company aimed for local production for local consumption. By partnering
with local firms to license its technology, the company filled regional gaps, leading to its current overseas network. CMP
still uses this model of localized production and consumption.
In the industrial paints sector, which has various applications, the company narrowed its focus during the 1990s to
concentrate resources on heavy anti-corrosion (anti-rust) and wooden materials (construction materials).
Overseas network
Source: Company data
21/52
R
Technology responding to environmental concerns
Leveraging technology to expand; core competency in anti-fouling paints
Anti-fouling paints are a segment of marine paints where technological ability is particularly valuable. As environmental
concerns grow, the company has prioritized developing environmentally compliant anti-fouling paints. In the late 1980s,
organotin compounds (particularly tributyltin), frequently used in anti-fouling paints, were discovered to have
detrimental effects on marine life. CMP swiftly responded by terminating anti-fouling paints that contained organotin
compounds, and worked to develop more environmentally friendly products.
Swift response to global tin-free movement; success in gaining market share
Organotin compounds are suitable for use as biocides, but in 2001an international agreement adopted by the
International Maritime Organization banned new coats of anti-fouling paints containing organotin from 2003 onward.
From 2008, the organotin compounds were banned outright. This meant either complete removal of the compounds
from ships, or a protective coat to prevent them from leaking into the environment. This tin-free movement significantly
impacted the marine paints industry. In the 1980s International Paint was the market leader, followed by five smaller firms,
but Japanese companies were able to quickly catch up and expand market share due to their early development of tin-free
paints. In Japan a voluntary ban on the compounds was enacted by the Japan Paint Manufacturers Association in the
1990s.
In the 2000s, hydrolysable paints that react with seawater to become hydrophilic resins became the industry standard.
Hydrophilic resins dissolve with seawater, demonstrating anti-fouling properties. Competition for development of tin-free
paints is heated among Japanese companies, especially between Nippon Paint Holdings Co., Ltd. (TSE1: 4612), NOF
Corporation (TSE1: 4403), and CMP. CMP strengthened its product lineup through development of all types of
hydrolysable paints, including acrylic polymer and silyl polymer. These strengths in development and product variety
contributed to strong brand recognition, and in combination with improved sales activities, CMP gained the leading
position in the domestic market.
Hydrolysable anti-fouling paints (SEAFLO NEO series, etc.) and hydration separation paints (SEAJET series, etc.)
Anti-fouling paint
Seawater
Material
Material
Material
Resin contained in the anti-fouling paint undergoes chemical
reaction with seawater
Paint is broken up and resin is released
Remaining anti-fouling agent is released, preventing
attachment of organisms
Anti-fouling paint
Seawater
Material
Material
Material
Resin contained in the anti-fouling paint undergoes chemical
reaction with seawater
Hydration layer is created
Anti-fouling agent contained in hydration layer is released,
preventing attachment of organisms
Market share
CMP holds almost 30% of the global market in anti-fouling paints for new ships, and almost 20% for ship repairs. It has
made steady market share gains over the past two decades, increasing its share in anti-fouling paints for new ships in
Japan to 60% (from more than 40% prior to 2000), Korea to 20% (from 10%), and China to 30% (following the start of
large-scale ship production there). Its share for container paints has also grown to almost 30% (from about 20%) in China,
22/52
R
which accounts for 95% of global container production.
Global market share by market segment (unit volume; company estimates)
New shipbuilding
Ship repair
Japan/new ship
building
China/new
shipbuilding
Korea/new ship
building
20%
28%
China/container
15%
28%
28%
56%
CMP
Other
CMP
Other
CMP
Other
CMP
Other
CMP
Other
CMP
Other
Note: Figures for new ships and ship repair are for FY03/15; figures for new ships by region and Chinese containers are five-year totals.
Competitors
Marine paints: Top three market leaders (including CMP) hold 70% share; top five hold 90% share
Competitors in marine paints include International Paint (Netherlands), Jotun Group (Norway; unlisted), Hempel Group
(Denmark; unlisted), and PPG Protective & Marine Coatings (US; subsidiary of PPG Industries; NYSE: PPG). CMP,
International Paint, and Jotun account for about 70% of the global market. Including Hempel and PPG, these top five
companies hold about 90% of the global market. Each company has joint ventures or partnerships in key shipbuilding
countries––Japan, China, and Korea.
Joint ventures and partnerships for major marine paint companies
Japan
China
Korea
Chugoku Marine Paints, Ltd.
-
Chugoku Marine Paints Shanghai, Ltd.
92% stake
Chugoku-Samhwa Paints. Ltd.
59.46% stake
International Paint
International Paint Japan KK
International Paint of Shanghai, Co. Ltd.
International Paint (Korea) Ltd.
Jotun
NOF Kansai Marine Coatings Co., Ltd
Guangzhou Jotun Ocean Paint Co., Ltd.
Chokwang-Jotun Ltd.
Hempel
Dai Nippon Toryo Co., Ltd (TSE1:4611)
Hempel-Hai Hong Coating Co., Ltd.
Dongin Industrial Co., Ltd.
PPG (Sigma Coating)
Shinto Paint Co., Ltd. (TSE1:4615)
Sigma Coatings (Kunshan) Co., Ltd.
SFC Paint
Container paints: CMP and COSCO Kansai hold top global market share, top four companies hold 80–90% global market share
In container paints, CMP and COSCO Kansai Paint & Chemicals (joint venture between Kansai Paint Co., Ltd. [TSE1: 4613]
with a 35.29% stake and COSCO International Holdings Limited [SEHK: 517], established in 1992) together hold about
50-60% of the market. Combined with Hyundai Group’s KCC Corporation (KRX: 002380) and Hempel, these four
companies have an oligopoly, holding 80-90% market share.
Industrial paints: Construction materials account for about 2/3 of domestic sales; market share of over 50% in wood floor coatings
In industrial paints, the company maintains a high market share within Japan in anti-fouling paints for power generation
and wood floor coatings. CMP controls more than 50% of the market in wood floor coatings. Combined with Washin
Chemical Industry Co., Ltd. (unlisted), Natoco Co., Ltd. (TSE JASDAQ: 4627), and DIC Corporation (TSE1: 4631), the four
companies have a market share of close to 100%.
Production and development
Production bases centered on local production, local consumption
Under the model of local production, CMP has manufacturing bases in various countries. Marine paints are manufactured
23/52
R
at all of its bases. Container paints are manufactured in China, where demand is highest. Industrial paints are
manufactured in Southeast Asia, China, and Japan, where demand is high. Production capacity of marine paints is about
25,000 metric tons per month, with almost half produced in Shanghai and Guangdong, China, and less than 40% in
Japan. Utilization rates are about 90%, and particularly busy months are managed through overtime production.
No significant investments expected, excluding unmanned plants
The company’s production capacity is increasing, and investment is not likely to spike in the immediate future. However,
it is considering building unmanned plants, and related investment may be made at plants in Europe, Shanghai, and
Japan. The company stated that about JPY1.5bn is required to establish a plant with monthly output of 2,000–5,000 tons.
Factoring in the additional investment required for an unmanned factory, the figure could be JPY2.0–2.5bn.
Production capacity by location and plans for capacity increase contained in securities reports for the past 10 years
Production capacity by location
10~20
%
40%
50%
Japan
China
Others
Annual securities report Plant location
Details
FY03/06
Shanghai, China
Coating material production facilities
FY03/09
Shanghai, China
FY03/10
Capacity increase Started
Completed
(Planned)
Planned investment
Investment
(JPYmn)
(JPYmn)
(t/month)
2,800
891
3,500
Aug-05
Sep-06
New factory
2,500
770
4,280
Nov-08
Mar-10
Shanghai, China
New factory
2,500
1,537
4,280
Nov-08
Mar-10
Korea
121
-
1,000
May-10
Aug-10
FY03/12
Shanghai, China
1,050
93
500
Jun-12
Jun-13
FY03/14
Shanghai, China
1,050
480
500
Jul-12
Aug-13
FY03/13
Shanghai, China
1,331
1,248
500
Jul-12
Jun-14
FY03/15
Kyushu
298
-
1,000
Apr-15
Jan-16
Creating global supply structure through out-licensing
CMP’s global supply network includes licensees of its technology. The following table outlines major overseas
partnerships. CMP receives an initial upfront payment and royalties based on sales.
24/52
R
Licensees and royalties received
Egypt
Brazil
Argentina
120
100
Royalties received
% of recurring profit (right axis)
50
35
43
1.2%
1.3%
34
52
3.0%
1.2%
FY03/00
FY03/02
FY03/04
FY03/08
2.0%
74
2.0%
1.5%
1.2%
0.7%
FY03/06
2.5%
84
1.5%
1.0%
0.9%
76
73
1.5%
1.4%
paints
paints
paints
paints
paints
paints
paints
paints
paints
101
1.8%
51
42
of
of
of
of
of
of
of
of
of
116
72
20
(JPYmn)
technology
technology
technology
technology
technology
technology
technology
technology
technology
92
2.1%
40
0
110
2.8%
80
60
Technology
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Licensing
Jacobsen Manufacturing Ltd.
Supalux Paint Co. Pty. Ltd.
Charter Chemical & Coating Corp.
Dekro Paints (PTY) Ltd.
Haiphong Paint Joint Stock Company
Petro Vietnam Paint Joint Stock Company
Suez Canal Paints & Chemicals Co.
Renner Herrmann S. A.
Sinteplast S. A.
New Zealand
Australia
The Philippines
Republic of South Africa
Vietnam
1.0%
0.8%
FY03/10
1.0%
0.5%
FY03/12
0.0%
FY03/14
Development structure: Hiroshima (marine, containers) and Shiga (industrial) as backbones; possible aggressive investment
Production is concentrated in Hiroshima (marine paints, container paints, resins) and Shiga (industrial paints). Marine
paints are developed in Hiroshima and produced in areas such as Kyushu. Container paints are developed in Hiroshima
and produced in China. Industrial paints are both developed and produced in Shiga.
Technology departments are located in Shanghai, Korea, Singapore, and the Netherlands, and serve to adjust formulas to
local conditions, and customize products to meet local needs. While master formulas are created in Japan, each local
market has different materials that may be used, materials that may be bought at lower costs, and demand, so the local
departments optimize and adjust the master recipes to meet local needs. The Netherlands base also gathers data on
CMP’s European competitors. R&D expenses are almost JPY2.0bn, mainly from personnel expenses. As it has sufficient
funds, the company plans to actively invest in R&D.
R&D expenses
2,000
1,500
3.5%
1,486
% of sales (right axis)
R&D expenses
3.3%
1,511
1,316
2.7%
1,382
1,179
2.3%
1,000
1,386
1,496
2.2%
2.2%
FY03/00
FY03/02
1,908
1,902
1,789
1,605
1,714
1,849
4.0%
3.0%
2.2%
2.0%
1.7%
0
1,939
1,216
500
(JPYmn)
1,800
FY03/04
FY03/06
1.5%
FY03/08
1.7%
2.0%
2.0%
2.1%
2.0%
1.9%
1.7%
1.0%
FY03/10
FY03/12
FY03/14
0.0%
25/52
R
Major group companies
Domestic
Hong Kong
Shanghai, China
Guangdong, China
Korea
Singapore
Malaysia
Netherlands
Indonesia
Thailand(*)
US
Ohtake-Meishin Chemical, Co., Ltd
Kobe Paints, Ltd.
CHUGOKU MARINE PAINTS (Hong Kong), Ltd.
CHUGOKU MARINE PAINTS (Shanghai), Ltd.
CHUGOKU MARINE PAINTS (Guang Dong), Ltd.
CHUGOKU SAMHWA PAINTS, Ltd.
CHUGOKU MARINE PAINTS (Singapore) Pte. Ltd.
CHUGOKU MARINE PAINTS (Malaysia) Sdn. Ltd.
CHUGOKU MARINE PAINTS B.V.
P.T. CHUGOKU PAINTS INDONESIA
TOA-CHUGOKU PAINTS Co., Ltd.
CMP COATINGS, Inc.
Investment ratio
100.0%
100.0%
100.0%
92.0%
100.0%
59.5%
100.0%
100.0%
100.0%
54.6%
49.0%
100.0%
Business
Production of raw materials (resins)
Production and sale of paint. Separate brand consolidated in 1994
Product sales
Product manufacturing and sales
Product manufacturing and sales*
* Made a consolidated subsidiary given its substantial performance
As of FY03/15, the company had 24 consolidated subsidiaries. Aside from Kobe Paints, Ltd., all have a financial year-end in
December. Although the company’s stake in its Thai subsidiary is 49.0%, CMP controls operations and so it is
consolidated.
When analyzing income from equity-method affiliates, focus on Thailand, Korea, and China
Income from equity-method affiliates is heavily influenced by the performance of consolidated subsidiaries in Thailand
(49.0% stake; mainly industrial paints) and Korea (59.5% stake; mainly marine paints). Performance of the Shanghai
subsidiary (92% stake) is also a factor, as container paints are volatile and almost entirely target the Chinese market.
All joint ventures are local companies.
Earnings from equity-method subsidiaries
0
FY03/00
-200
-95
FY03/02
-130
-280
-400
FY03/04
-219
-269
-600
-800
FY03/06
-252
-5.3%
-6.5%
-9.2%
-8.3%
-1,200
Minority interests in income and loss
FY03/10
FY03/12
FY03/14
0%
-2%
-217
-5.0%
-396
-426
-6.0%
-586
-7.3%
-1,000
(JPYmn)
FY03/08
-619
-6.9%
-717
-9.3%
-901
-8.9%
-4%
-410
-6%
-571
-6.6%
-808
-8.1%
-9.7%
-8%
-10%
-10.2%
-12%
Minority interests in income and loss/earnings before income taxes (right axis)
26/52
R
Segments
Structure by segment
Sales (top) and operating profit (bottom) by segment
Japan
Southeast Asia
120
100
China
Europe/US
Korea
Asia
103.6
88.2
80
60
40
20
0
42.3
41.9
27.2
28.5
FY03/99
(JPYbn)
12
10
8
6
4
2
0
-2
-4
104.8
45.8
49.0
50.2
29.5
29.1
29.7
FY03/01
55.8
86.8
8.4
6.3
10.4
67.8
63.4
20.4
31.8
FY03/03
FY03/05
39.6
35.3
34.5
33.2
FY03/07
0.1
1.5
0.4
0.7
2.0
0.9
2.4
-0.0
2.0
FY03/99
0.5
1.1
0.7
1.5
2.5
2.6
0.8
2.4
3.0
2.8
FY03/03
FY03/01
(JPYbn)
1.0
1.9
FY03/05
1.3
2.0
5.8
2.1
1.4
41.4
FY03/09
2.1
1.9
43.6
5.7
2.0
FY03/07
7.9
7.7
9.1
31.2
31.4
40.8
37.5
83.7
7.4
8.2
6.2
12.5
10.8
11.8
11.6
10.5
8.5
27.6
26.1
34.2
35.0
34.4
36.5
FY03/13
2.9
2.5
5.1
3.0
8.6
7.4
8.5
90.9
FY03/15
3.7
1.4
5.1
93.6
FY03/11
3.1
2.2
106.7
96.6
1.7
3.7
-0.9
2.5
-1.1
-1.1
FY03/11
FY03/09
3.1
2.7
2.6
1.1
2.2
-0.9
2.0
-0.6
-0.5
2.3
1.6
-0.6
FY03/13
Japan
China
Korea
Southeast Asia
Europe/US
Asia
Others
Elimination
Corporate expenses
OP
FY03/15
The company’s reportable segments are divided by region. CMP also releases sales by region and market. As regional
segments have a combination of marine, industrial, and container paints, the data can be difficult to decipher. It is more
effective to consider the company’s performance by product category—marine paints, industrial paints, and container
paints.
Sales by region (FY03/15, JPYbn)
(JPYbn)
Japan
5.8
16%
China
Korea
0.3
1%
Southeast Asia
0.2
1%
Marine paints
Industrial paints
Container paints
Others
4.5
38%
19.7
57%
1.9
6%
30.4
83%
0.3
0.3 3%
2%
1.0
8%
12.7
37%
Europe/US
6.4
54%
11.9
95%
11.4
99%
Marine paints
Marine paints
Industrial paints
Container paints
Others
Marine paints
Industrial paints
Container paints
Others
Industrial paints
Container paints
Others
Marine paints
Industrial paints
Container paints
Others
Segment summary
(JPYmn)
Sales and % of sales
FY03/05
FY03/15
10 years average growth rate
Japan
China
Korea
Southeast Asia
Europe/US
Marine paints
38,913
79,750
7%
30,376
19,710
11,416
6,394
11,852
61%
75%
38%
25%
14%
8%
15%
Container paints
14,112
22%
13,972
13%
-0%
12,697
91%
970
7%
304
2%
Industrial paints
9,723
12,685
3%
5,827
1,948
158
4,451
299
15%
12%
46%
15%
1%
35%
2%
Wooden flooring
Electric anti-fouling
Over 50%
Approx.2/3
Market share
New shipbuilding Less than 30%
Ship repair
Approx. 20%
China
Clients
Shipowner/shipyard
Container manufacturer/shipowner
Less than 30%
Building material and plant industries
27/52
R
Business by product category
Marine paints (75% of FY03/15 sales)
Sales of marine paints
90
Japan
China
Korea
Southeast Asia
Europe/US
80
73.7
70
74.3
63.4
60
51.2
50
40
26.8
26.3
30
31.6
32.1
34.3
38.9
42.9
20
0
71.2
8.3
4.2
8.5
7.6
4.2
9.1
18.2
19.0
33.7
10
(JPYbn)
79.8
72.9
FY03/00
FY03/02
FY03/04
FY03/06
FY03/08
31.4
FY03/12
FY03/10
63.9
66.7
7.1
4.2
6.2
10.4
18.5
14.3
27.8
28.1
5.5
8.4
11.9
6.4
11.4
19.7
30.4
FY03/14
Summary
Marine paints primarily used in large ships such as tankers
Marine paints are used primarily for large ships such as tankers, bulk ships, and container ships, but also for pleasure boats
and fishing boats. This business has built upon core technologies developed since the company’s founding, and has high
margins compared with other product categories. In particular, CMP has been able to add value in anti-fouling paints.
The following describes the company’s business structure for paints for large ships, which account for the majority of
sales.
Demand: new ships and repairs (averaging three years)
Demand for large ships can be divided into new ships and ship repairs. Shipbuilding is done primarily in China, Japan, and
Korea. Repair demand is centered in Southeast Asian areas such as Singapore, given the location along global shipping
lanes and the concentration of shipping and maintenance companies in those countries. Global demand for marine paints
is about 40% for new ships and 60% for ship repairs. CMP is a global market leader, with almost 30% share in new ships
and more than 20% in ship repairs. The sales composition is split 55:45 between new ships and ship repairs.
Demand for new ships occurs at various stages during the shipbuilding process, but the initial stages show the most
demand. The ship repair cycle is two to five years, with an average of three years. Demand is heavily influenced by global
shipping tonnage. During repairs, anti-fouling paints are completely reapplied. Each repair cycle sees the re-emergence
of competition, so a high market share in new ships does not translate into a high share in repairs. Generally, it seems that
about 1% of a ship’s overall manufacturing cost is earmarked for paint.
Ship construction undertaken in major shipbuilding countries and demand for marine paints (company estimates)
Orders on hand (end 2014)
Western
Europe/
Northern
Europe
2%
Others
9%
Korea
31%
Global
Japan
17%
China
41%
Ship
repairs
60%
CMP
New
shipbuil
ding
40%
Ship
repairs
45%
New
shipbuil
ding
55%
Source: Shared Research based on World Shipbuilding Statistics, company data
28/52
R
New ship demand
The marine transport industry has continued to grow amid global economic growth and globalization. Increased marine
transport volume has boosted demand for shipping. Increased shipping tonnage (number of ships multiplied by average
capacity per ship) have led to demand for new ships. Demand for new ships was particularly robust from 2003, in line
with China’s rapid economic growth.
Shipbuilding orders fell sharply during the global financial crisis. In the shipbuilding industry, after 2010–2012, when
orders received in 2007–2008 were completed, the number of orders for new ships was on a downtrend. This surplus
shipping capacity led to falling prices, compressing margins in the marine transport industry, and leading to fewer new
ships being built.
In 2013, orders received began to recover, and it appears that conditions have bottomed out in core shipbuilding
countries such as Japan, China, and Korea. The number of orders on hand in these countries at end 2014 has been steady
for about two years, leading CMP to expect shipbuilding demand to be steady. Still, paint prices have declined due to
constrained spending on shipbuilding following the global financial crisis, and this effect has remained through FY03/15.
Global marine transport volume and shipping tonnage
14,000
Crude oil
Petroleum products
Coal
Iron ore
LPG/LNG
Others
1,400
Shipping tonnage (mn of gross tons, right axis)
12,000
1,200
10,000
1,000
8,000
800
6,000
600
4,000
400
2,000
200
(mnt)
0
CY85
CY90
CY95
CY00
CY05
CY10
CY15
0
(mn gross
tons)
Source: The Japanese Shipowners’ Association, IHS, Clarkson, Shared Research based on company data
New shipbuilding order volume, completion volume, and orders on hand
400
Orders on hand
Order volume
Completion volume
8
350
7
300
6
250
5
200
4
150
3
100
2
50
1
0
(mn gross
tons)
0
Order volume, completion volume, and orders on hand in main shipbuilding countries
70
Orders on
hand
Order
volume
60
50
Japan
140
100
40
80
30
60
20
40
10
20
0
0
(mn gross
tons)
CY00
CY05
Orders on
hand
Order
volume
120
CY10
(mn gross
tons)
160
China
Orders on
hand
Order
volume
140
120
Korea
100
80
60
40
20
CY00
CY05
CY10
0
(mn gross
tons)
CY00
CY05
CY10
Source: Shared Research based on data from the Japanese Shipowners’ Association and HIS
29/52
R
Repair demand
Repair demand for paint is driven by bottom paint, which deteriorates with age. Demand fluctuates less for ship repair
than for new ships, although there is some volatility. In addition, demand can spike with stricter regulations, as companies
rush to comply. On the whole, demand for repairs is steady.
When repairing ships, anti-fouling paints are reapplied to the entire bottom. The ship repair cycle is about two to five
years, with an average of three years. The amount of paint is driven by surface area but also by how much shipping
volume. As a result, more shipping volume means more paint.
Primary uses for CMP products in large-scale ships
Interior: Anti-corrosion paint, water-resistant paint, living quarters paint, etc.
Deck paint
Anti-fouling paint
Exterior panel paint
Tank paint
Business structure
From receiving orders to booking sales
The construction of a large ship requires between three to four years from contract signing to completion. After the
contract is signed, stages include planning and design, ship block construction, block installation, launch and rigging,
testing, and delivery. The keel must be laid about six months prior to delivery, and contracts for paint must be signed
about one to two years before the keel is laid. As most of marine paint sales are booked during the stage when the keel is
laid, from receiving an order to recording sales can take between one and two years.
Block installation is done either on a berth or in a construction dock. The official beginning of construction of a ship either on a berth or in a
construction dock is called laying the keel. Launch entails floating the ship that was previously in a berth or construction dock. Completion
refers to the completion of all construction work .
30/52
R
Ship construction process
1）Request from client
Requests received from client for specifications and cost estimates
2）Contract/order
Win order and execute contract
3）Plan/design
Three-dimensional computer model created
Model based on designs and conduct tests in pools created
4）Lay the keel
Large ships are made via the block construction method
Parts are constructed by block, and construction occurs on berths or in docks
Includes cutting, bending, welding, construction, and painting of the hull
After parts are joined, water is flooded into the dock and the ship is floated (launch)
Anchored to the port, internal construction is undertaken (rigging)
5）Launch/rigging
6）Testing
Test runs are made to ensure the ship meets design specifications
7) Delivery
Source: Shared Research based on company data, and the Japanese Shipowners’ Association
Customers: ports and shipowners for new ships, shipowners for repairs
Customers for new ships and ship repairs vary slightly. For new ships, shipowners contract with shipyards to build a ship.
Unless requested by the future owner, the shipyard chooses paints based upon a standardized list according to the
intended use of the ship. However, when paint reapplication is required for ship repairs, shipowners contract directly
with paint manufacturers. The shipowner can request a certain paint type, even those not on the list, so sales to
shipowners become essential. In paint for new ships, the company aims to be included on the standard list and to be
requested by shipowners. In paint for repairs, the company is directly targeting shipowners, including operators.
Maintaining and increasing market share requires strong connections with shipyards and shipowners
The company has gained a high market share in the new shipbuilding market due to its connections with shipyards and
shipowners, which it strengthens through sales activities. Yet in the ship repair market, customer needs vary—some value
cost while others value functionality. Customers in Europe are particularly cost sensitive.
Sales strategy map for marine paints
Sales
Repairs: Ship owners
New ships: Shipbuilders
(Attempt to capture
requests from ship owners)
Ship owner
(Pure owner)
Shipbuilding facility
Repair order
(Shipbuilding
companies)
Ship owner
(Marine transport
company)
Sales
(Registration on standard list)
Charter
and
New ship construction order
Shipbuilding facility
(Shipbuilding
companies)
Delivery of paints
Chugoku Marine Paints
Where are sales booked?
New ships: sales are booked in the country of the shipyard where the ship is built. Paints are delivered to the shipyard.
Ship repairs: sales are booked in the country where the shipowner is based. The shipowner places the order.
Geographic segment profits
In international shipping, shipowners and shipyards are unevenly distributed geographically. In response, CMP has
established a group to unify its global network and win orders. Although localized production and consumption is a core
policy for CMP, raw materials may be sourced from and operating expenses concentrated in certain regions. This can
cause geographic segment profits to show up as losses.
31/52
R
Regional characteristics
Japan
Marine paint sales for the Japanese market
10%
Marine paints sales (Japan)
8%
YoY
50 30%
8.3
5%
33.7
28.1
27.8
0%
30.4
-7%
-5%
-11%
-10%
-15%
FY03/11
FY03/12
FY03/13
Marine paints sales (Japan)
8.3 8.4
40 20%
1%
31.4
8.7
FY03/14
FY03/15
10
YoY
8.2
7.3
7.0 6.8
6.6
7.0 7.1 6.9 7.2 7.2
7.3
8.5
7.7
8.1
8
30 10%
6
20
0%
4
10 -10%
2
0 -20%
FY03/16
7.98.0 7.77.7
(JPYbn)
Q1
Q1
Q1
Q1
Q1
Q1
FY03/11
FY03/12
FY03/13
FY03/14
FY03/15
FY03/16
0
(JPYbn)
Japanese companies have global market share of 20% (new ships); CMP holds 60% domestic share in new ships, top in repairs
Based on completed projects, Japan has a global market share of about 20% in the market for new ships (2014). New
ships comprise 38% of marine paint sales (FY03/15). In new ships, the company holds a market share of about 60% in
Japan. For repairs it faces fierce competition for the top market share. As of 2014, it was second to NKM Coatings Co., Ltd.
(wholly owned subsidiary of Kansai Paint; partnered with Jotun).
CMP has relative strength in large ocean-going vessels, but as the bulk of domestic demand comes from coastal vessels, it
cannot use this strength in Japan. However, Shared Research thinks that the company is more focused on competing for
ocean-going vessel demand, which represents a larger market. Competition for Japanese coastal vessel repair is limited to
domestic competitors, but in overseas ocean-going vessels it is competing with International, Jotun, Hempel, and PPG.
Keels laid for new ships and domestic sales
Industrial and others
12,000
Marine
Domestic keels laid for new ships (gross tons, right axis)
5,000
10,000
4,000
8,000
3,000
6,000
2,000
4,000
1,000
2,000
0
0
(JPYmn)
Q1
FY03/04
Q1
FY03/05
Q1
FY03/06
Q1
FY03/07
Q1
FY03/08
Q1
FY03/09
Q1
FY03/10
Q1
FY03/11
Q1
FY03/12
Q1
FY03/13
Q1
FY03/14
Q1
FY03/15
-1,000
Q1
FY03/16
(gross
tons)
Source: Ministry of Land, Infrastructure, Transport and Tourism, Shared Research based on company data
Orders received, orders completed, and orders on hand in Japan
80
Orders on hand
Order volume
Completion volume
8
70
7
60
6
50
5
40
4
30
3
20
2
10
1
0
(mn gross
tons)
0
Source: The Japanese Shipowners’ Association, Shared Research based on HIS data
32/52
R
Domestic repair demand (gross tons) and domestic sales
75
50
25
60
40
20
40
45
30
15
30
30
20
10
20
15
10
5
10
0
0
0
Domestic repair volume
FY03/99
FY03/03
Domestic sales (right axis)
FY03/07
FY03/11
FY03/15
FY03/99
FY03/03
50
Domestic sales (right axis)
Domestic keels laid volume
FY03/07
FY03/11
FY03/15
0
(JPYbn)
(JPYbn)
Domestic new ship and repair demand
Although domestic repair demand fell in 2000–2005, CMP’s sales were gently rising. This was due to the company
shifting its ship repair docks for ocean-going vessels, such as to China and Singapore. As of 2015, domestic ship repair
demand was centered on coastal vessels. Shared Research does not foresee any further decline in domestic repair
demand.
Domestic keels laid and repair demand
60%
Domestic keels
laid volume
YoY
40%
20%
6,000 60%
Domestic repair
volume
YoY
5,000 40%
12,000
10,000
4,000 20%
8,000
3,000
0%
6,000
-20%
2,000 -20%
4,000
-40%
1,000 -40%
2,000
-60%
0
0%
(gross
tons)
Q1
FY03/04
Q1
FY03/06
Q1
FY03/08
Q1
FY03/10
Q1
FY03/12
Q1
FY03/14
Q1
FY03/16
-60%
(gross
tons)
Q1
FY03/04
Q1
FY03/06
Q1
FY03/08
Q1
FY03/10
Q1
FY03/12
Q1
FY03/14
Q1
FY03/16
0
Domestic anti-fouling paint demand
The following charts show a correlation between CMP’s solvent-based anti-fouling paints, and anti-fouling paint sales in
the Japanese market.
Domestic anti-fouling paint shipments and the company’s domestic marine-related sales
5,000
12,000
50%
40%
4,000
10,000
1,600
30%
20%
1,200
10%
3,000
8,000
-
800
-10%
-20%
2,000
Q1
FY03/04
(JPYmn)
Q1
FY03/06
Q1
Q1
Q1
Q1
Q1
FY03/08 FY03/10 FY03/12 FY03/14 FY03/16
Domestic anti-fouling paint shipments
Marine paints sales (Japan, right axis)
6,000
400
-30%
-40%
Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
(JPYmn)
Domestic anti-fouling paint shipments
YoY
(JPYmn)
Source: Ministry of Economy, Trade and Industry, Japan Paint Manufacturers Association, Shared Research based on company data
33/52
R
China
Marine paint sales for the Chinese market
40%
Marine paints sales (China)
38%
YoY
30%
20%
19.0
18.2
16 20%
14.3
12
-10%
-23%
-20%
-30%
FY03/11
FY03/12
FY03/13
FY03/14
FY03/15
5.4
20 40%
-3%
0%
Marine paints sales (China)
24 60%
19.7
18.5
4%
10%
28 80%
FY03/16
5.3
5.1
4.0
3.7
4.2
YoY
5.6
4.7 4.8 4.5
7
6.1
6.0
6
5.1 5.0
4.6
3.8
3.7 3.7
5
4.3
4.2
3.6
4
2.7
0%
3
8 -20%
2
4 -40%
1
0 -60%
(JPYbn)
0
Q1
Q1
Q1
Q1
Q1
Q1
FY03/11
FY03/12
FY03/13
FY03/14
FY03/15
FY03/16
(JPYbn)
China has a global market share of about 35% for new ships (completed) in 2014. CMP’s sales composition of marine
paints is 25% for new ships (FY03/15). The company has a market share in Chin of almost 30% for new ships, and jostles
with Jotun for the prime position. Shipbuilding in China grew in tandem with the country’s rapid economic development.
Yet a limited number of Chinese companies have the necessary shipbuilding technology to shift away from the bulk
shipping market, meaning the Chinese market could be hit if the bulk shipping market declines. Many Japanese
companies, by contrast, can use their technologies to shift from manufacturing bulk ships to tankers or other ships.
Jotun—which competes with CMP for the top position—established Jotun Ocean Paint in 1993 in partnership with
COSCO. As such, for new ships and ship repairs involving COSCO, order will go to Jotun. However, CMP has been
successful in acquiring other customers, and its share in China has been about 30% from 2005.
Orders received, orders completed, and orders on hand in Japan (millions of gross tons)
150
Orders on hand
Order volume
Completion volume
10
135
9
120
8
105
7
90
6
75
5
60
4
45
3
30
2
15
1
0
0
Korea
Marine paint sales for the Korean market
Marine paints sales (Korea)
40%
YoY
36%
11.4
20%
8.5
6%
9.1
0%
FY03/12
FY03/13
Marine paints sales (Korea)
12 20%
4
FY03/15
0
FY03/16(JPYbn)
5
4.6
3.8
4
3.3
2.9
2.6
8 -20%
FY03/14
YoY
40%
0%
-32%
FY03/11
80%
16 60%
8.4
6.2
-20%
-40%
36%
2.3
1.4
1.6
1.9
2.7
2.1
1.7
1.5 1.4 1.6
1.7
2.2 2.1
2.5 2.6
2.7
2.8
3
2
-40%
1
-60%
-80%
Q1
Q1
Q1
Q1
Q1
Q1
FY03/11
FY03/12
FY03/13
FY03/14
FY03/15
FY03/16
0
(JPYbn)
34/52
R
Korea had a global market share of about 35% for new ships (completed) in 2014. CMP’s sales composition for marine
paints is 14% for new ships (as of FY03/15). The company had a market share of about 10% for new ships until 2013, but
sales measures to capture demand from southern European shipowners were successful. Market share was 20–30% in
2014.
Competitors include Jotun, International, and KCC, rounding out the top four companies in the country (including the
company). However, shipyards in Korea tend to use domestic KCC products, and CMP is aiming to increase its market
share through stronger sales activities to shipowners. Additionally, Korean firms are strong in marine resource
development (offshore structures), and if the oil and energy market gains momentum, demand for related anti-fouling
materials may increase. Still, as of 2015 demand for offshore structures was soft on relatively low oil prices.
Orders received, orders completed, and orders on hand in Japan
160
Orders on hand
Order volume
Completion volume
8
140
7
120
6
100
5
80
4
60
3
40
2
20
1
0
0
Korean shipbuilders: orders received
（USDbn, Octber 2015）
Samsung Heavy Industries
Daewoo Shipbuilding & Marine Engineering
Hyundai Heavy Industries
Hyundai Samho
Total
Balance of orders
36.6
43.7
38.8
8.8
127.9
Shipping
18.2
23.7
17.8
8.8
68.5
Marine structures
18.4
20.0
21.0
59.4
Key products
Anti-fouling paints
Anti-fouling paints (to prevent degradation of ship bottoms) have long been a core technology for the company.
Anti-fouling paints cut friction with water by acting as a protective coating to prevent shellfish and algae from attaching to
ship bottoms. This boosts fuel efficiency. Wave drag resistance, viscous pressure resistance, and friction all effect marine
vessel operation. Of these, viscous pressure and friction accounts for 60–80% of total resistance. Smoothing the painted
surface can further decrease friction and increase fuel efficiency. As shipping companies look to increase efficiency, the
company is focusing on providing high-performance anti-fouling paints that are environmentally compliant.
35/52
R
Anti-fouling paints, friction, and fuel efficiency
SEAFLO NEO track record
Fuel efficiency
Bulk Carrier
High-speed ferry
Bulk Carrier
(10 months post-application)
(30 months post-application)
Ratio of improvement
Ship type
Shipowner A
17.1%
PCC
Shipowner B
14.3%
PCC
Shipowner C
4.4%
RORO
Shipowner D
5.0%
Container
Shipowner E
3.0%
Bulk Carrier
Anti-fouling paint sale activities focus on track record, plus price and efficiency
SEAFLO NEO, which went on sale in 2010, was used on more than 200 vessels in three years. The product has continued
to enjoy steady sales growth. In 2013, the company unveiled SEAFLO NEO Z, with further improvements in performance.
SEAFLO NEO Z lasts up to 60 months, and has proven to be a smooth, stable paint. SEAFLO NEO Z leads to a 5–8%
improvement in fuel efficiency (SEAFLO NEO is 3–5%) when compared with traditional hydrolysable anti-fouling paints,
according to the company. The paint also addresses environmental concerns such as reducing carbon dioxide and VOC
emissions. It received recognition in 2014 by the Ministry of the Environment and the Nihon Keizai Shimbun for
combating global warming.
In anti-fouling paints, the company has been focusing on its track record, in addition to price and functionality. The NEO
series, including SEAFLO NEO Z, already makes up 50% of mainstay anti-fouling paint sales. The company can use this
solid track record when winning new customers.
Container paints (13% of FY03/15 sales)
Sales of container paints
30
Japan
China
Korea
Southeast Asia
Europe/US
25
26.0
22.9
20
15.7
15
10
5
0
(JPYbn)
4.3
7.9
6.1
4.3
9.7
12.1
11.0
0.5
4.9
1.3
FY03/00
FY03/02
FY03/04
FY03/06
FY03/08
FY03/10
11.4
11.5
0.7
11.4
8.4
0.7
10.6
FY03/12
7.5
14.0
1.0
1.0
10.2
12.7
FY03/14
Container paint overview
Container paints use technology gained while the company was producing marine paints. The company makes and sells
36/52
R
paints for the exterior, interior, and floors of shipping containers. Most container buyers are in China, causing sales and
production (including paints) to be conducted mainly in China.
Demand
Container demand closely correlated to shipping volume; demand for container paints almost all new
The total number of shipping containers has continued to increase in proportion to shipping volume growth. The average
lifespan of a container is 12–13 years. The price of a new container is about USD1,500. Old containers are sold as scrap
material or converted for other uses. As a result, repair demand is low, so container coating sales hinge on new unit
production. Global economic downturn can prompt a big drop in demand for container paint.
Marine transport volume and marine container handling volume
800
Marine transport volume growth
80,000
Container transaction volume YoY growth (right axis, `000 TEU)
600
60,000
400
40,000
200
20,000
0
0
-200
-400
(mn tons)
-20,000
CY86
CY88
CY90
CY92
CY94
CY96
CY98
CY00
CY02
CY04
CY06
CY08
CY10
CY12
CY14
-40,000
('000 TE U )
Source: Shared Research based on data from the Shipbuilders’ Association of Japan and the International Association of Ports and Harbors
Container ships on key shipping routes continue to get bigger, supporting container paint demand
Shipping containers must first be installed in a container terminal, for temporary storage. Then containers are stacked on
the appropriate container ship, carried on a container vessel capable of carrying several thousand TEUs along key
shipping routes, and transferred to smaller container vessels, which transport them to their final destination.
The construction of new container vessels was previously expected to lead to 3x container demand, as it would require
one container for the starting point, for transport, and for the destination. But now, due to efficiency gains, construction
to new container vessels leads to under 2x container demand. Trends of building vessels with increased capacity have led
to vessels carrying more than 10,000 TEUs, and vessels with 20,000-plus TEU capacity are slated for completion in 2017.
TEU (twenty-foot equivalent units): TEUs are units used to express a container's carrying capacity, with 1 TEU corresponding to a single 20ft
container. Containers are typically 20ft by 40ft; a 40ft container is classified as 2 TEU.
Global container ships and composition by TEU capacity
TEU nominal
18,000 21,000
13,300 17,999
10,000 13,299
7,500 9,999
5,100 7,499
4,000 5,099
3,000 3,999
2,000 2,999
1,500 1,999
1,000 1,499
500 999
100 499
Total
Total after Exp. Scrap/Slip
YoY
Ships
Dec-14
15
81
169
404
501
745
255
649
575
679
766
197
5,036
5,036
Dec-15
36
111
182
473
508
749
265
666
588
698
758
188
5,222
5,171
2.7%
Dec-16
48
135
202
503
509
752
271
700
622
710
762
188
5,402
5,247
1.5%
Dec-17
81
149
232
505
515
756
278
727
634
724
762
188
5,551
5,296
0.9%
Dec-18
92
160
240
509
515
756
284
732
636
724
762
188
5,598
5,243
-1.0%
1000 TEU
Dec-14
276
1,147
2,021
3,528
3,087
3,378
884
1,650
982
789
568
63
18,374
18,374
Dec-15
676
1,603
2,154
4,161
3,131
3,399
921
1,686
1,005
810
561
60
20,166
20,000
8.8%
Dec-16
907
1,944
2,362
4,435
3,137
3,412
942
1,769
1,065
823
564
60
21,421
21,025
5.1%
Dec-17
1,571
2,141
2,708
4,454
3,173
3,428
968
1,839
1,086
839
564
60
22,831
22,186
5.5%
Dec-18
1,778
2,296
2,816
4,493
3,173
3,428
990
1,853
1,090
839
564
60
23,380
22,484
1.3%
4years CAGR
59.3%
18.9%
8.6%
6.2%
0.7%
0.4%
2.9%
2.9%
2.6%
1.5%
-0.2%
-1.2%
6.2%
5.2%
Source: Shared Research based on Alphaliner “FleetForecast” (August 2015)
37/52
R
Business structure
Sales and customers
Key customers for container paint are container manufacturers. CMP also sells to shipowners who own containers, and
container leasing companies. Using its existing sales network and local support facilities has enabled it to maintain its
market share.
Container production centered on China, where CMP has almost 30% market share
Almost 95% of global production of containers is centered on China. As such, the company sells almost all of its container
paint in China. The worldwide container handling volume is increasing in net terms by 15mn to 20mn units annually. In
line with this, container demand is estimated at around 2.5mn to 3mn containers per year, and company forecasts
suggest that demand will continue to be around 2.5mn a year, plus or minus 10% (although demand for new containers
could increase to more than 3mn, as it did in 2007 and 2014).
The company was an early entrant to the Chinese market, and has been able to maintain a market share of almost 30%.
CMP is one of the top groups, alongside COSCO Kansai. Demand spiked in FY03/07 and FY03/08, after which sales
declined significantly, mainly due to a decline in paint prices that followed a slowdown in the overall container industry.
The company's market share also dropped from more than 30% to under 30%.
Competitor COSCO Kansai has captured demand from the COSCO Group. Yet CMP captured demand from companies
other than COSCO, enabling it to increase market share in FY03/07 and FY03/08.
Changes in Chinese marine container handling volume and sales of the company’s container paints
35,000
Sales of container paints
Chinese container transaction volume YoY growth (right axis; '000 TEU)
25,000
30,000
20,000
25,000
15,000
20,000
10,000
15,000
5,000
10,000
0
5,000
-5,000
0
FY03/00
CY99
FY03/04
CY03
FY03/02
CY01
FY03/06
CY05
FY03/08
CY07
FY03/10
CY09
FY03/12
CY11
FY03/14
CY13
-10,000
('000 TE U )
Source: Shared Research based on company data, the Japan Shipbuilders’ Association, and IAPH
Chinese container paint market and the company’s market share
4,000
40%
Other companies
CMP
CMP market share (right axis)
3,000
30%
2,000
20%
1,000
10%
('000 TE U )
0
CY2008
CY2009
CY2010
CY2011
CY2012
CY2013
CY2014
0%
38/52
R
Industrial paints (12% of FY03/15 sales)
Sales of industrial paints
Japan
16
14
China
12.3
12
Korea
12.5
12.5
Southeast Asia
12.9
Europe/US
14.1
13.2
14.8
13.4
13.7
10.8
10.7
11.2
10
2.6
8
1.6
10.5
6
4
6.7
2
0
(JPYbn)
FY03/00
FY03/02
FY03/04
FY03/06
FY03/08
FY03/10
12.4
12.7
4.1
4.5
11.0
2.7
3.3
1.8
1.6
5.8
6.0
1.6
1.9
6.6
FY03/12
5.8
FY03/14
Summary
Resources concentrated in anti-corrosion and wooden materials during the 1990s; high domestic market share
Industrial paints use the company’s experience gained in marine paints. In the 1990s CMP focused on heavy
anti-corrosion (anti-rust) and wooden construction materials.
By region, sales in Southeast Asia were JPY4.5bn in FY03/15. Domestically, construction sales are 2x heavy anti-corrosion
sales. In construction, products for wooden floors comprise about half of sales. For heavy anti-corrosion, products for
manufacturing plants account for one third of sales, and anti-fouling paint for electricity generation about one quarter.
CMP has been able to strengthen its technological ability through focusing on certain businesses. Its domestic share of
anti-fouling paint for electricity generation is almost two thirds of the overall market; in wooden flooring it holds over half.
Sales of industrial paints, domestic sales and domestic market share for key products
FY03/15 sales by
region
0.3bn
Domestic sales
breakdown
Anti-fouling paints for
electric power generation
For wooden flooring
2%
5.8bn
46%
4.5bn
35%
0.2bn
1%
Japan
Korea
Europe/US
1/3
2/3
70%
1.9bn
16%
China
Southeast Asia
more
than
50%
Building material
Heavy anti-corrosion
CMP
Others
CMP
Others
Figures are approximate
Demand and business
Domestic demand impacted by housing starts; overseas business mainly comprises heavy anti-corrosion paints
Construction paints comprise about 2/3 of the company’s domestic industrial paint sales, making it particularly vulnerable
to conditions in housing starts. Overseas sales mainly comprise heavy anti-corrosion paints.
By region, sales to Southeast Asia (mainly Thailand) comprise a majority of sales. In Thailand, key users are manufacturing
plants (mostly petrochemical plants) and public infrastructure like bridges. TOA, a local partner company of CMP’S
consolidated subsidiary TOA-CHUGOKU PAINTS CO., LTD. (49% stake), handles new local projects.
Many of the projects are ODA (Official Development Assistance) projects from Japan. In March 2013 CMP used its
39/52
R
high-durability paint Fluorex on Nhat Tan Bridge (Vietnam-Japan Friendship Bridge), constructed in Hanoi as an ODA
project. CMP’s partners can help it comply with ODA program requirements, such as finding local manufacturers.
Domestic sales and new housing starts
1,665
1,651
1,495
20
Domestic indusrial paints (right axis)
New housing starts floor area
1,934
25
1,429 1,420
1,550
1,405
1,523 1,471
1,628
1,594 1,616
1,679 1,706
1,560
1,373
2,000
1,539
1,365
1,363 1,414 1,337
1,600
15
1,200
10
800
5
0
400
17.8
19.3
19.6
17.2
Q1
FY03/11
(mn sqm)
18.5
21.0
18.7
17.6
Q1
FY03/12
19.4
Q1
FY03/13
20.4
21.0
18.6
21.7
23.1
23.9
18.7
Q1
FY03/14
18.8
Q1
FY03/15
18.9
19.3
17.0
19.6
Q1
FY03/16
19.5
0
(JPYmn)
Measures for new markets
In industrial paints, the company wants to expand into new fields using its core technologies. Heavy anti-corrosion paint
technologies include anti-corrosion paint BIOCLEAN intended for offshore structures and wind power generation, and
CONTECT, which can prevent the peeling of concrete in humid conditions.
Apart from the heavy anti-corrosion sector, CMP is also seeking to enter high function paints. For example, PHOLUCID—a
hard coating material for use in automotive headlight covers—uses the company’s core technologies in UV curable paints
for woodwork, and applies them to plastics.
40/52
R
Strengths and weaknesses
Strengths
◤
100 years’ experience in core technologies: After being founded in 1917, the company focused on marine
paints as its core technology, beginning sales to the Japan’s Navy before the WWII, and expanding to the civil
shipbuilding market domestically as well as to China and Korea after the war. It has been successful in maintaining a
leading market share. Shared Research views this success as a result of CMP’s focus on technology and leveraging
the technology to quickly respond to evolving market needs such as demand for environmentally compliant and fuel
efficient paints. Capitalizing on its core technology, the company has expanded to include container paints and
industrial paints, and is now searching for a profitable niche in industrial paints.
◤
Global network: Shipbuilding is concentrated in Japan, China, and Korea, while repairs are centered in Southeast
Asia. The majority of shipowners are located in Europe and the Americas. As such, a global network in each major
area of the world is important to success in marine paints. CMP’s model is “local production for local
consumption”—the company was early to expand overseas through joint ventures and partnerships, allowing it to
build a global production, storage, and distribution network. While the number of partners still lags that of its
western rivals, CMP’s coatings are sought by shipowners, and its paints have been placed on standard lists of
shipyards. This allowed the company to expand and maintain a high market share.
◤
Growing brand recognition: Both sales capabilities and a strong brand are prerequisite to expand market share,
with functionality, cost, and track record being the key to successful customer acquisition. The company has been
developing fuel efficient and environmentally compliant products since 2010. During FY03/15, about 1/2 of CMP’s
marine paint sales were from new products introduced from 2010 or later, and its brand recognition has been rising.
Shared Research believes that if the company could further lower its cost base, it would be able to increase its
market share in repairs, particularly in anti-fouling paints.
Weaknesses
◤
Need to capture repair demand in anti-fouling paints to stabilize earnings: CMP leads the market in the
marine paints industry for new ships, at almost 30%. However, its market share in repairs is lower, at about 20%. For
the industry overall, the market for new ships vs. repairs is roughly 2:3. The repair market is less influenced by the
vagaries of the industry cycle compared to the new ship market. Gaining ground in the market for repairs would
lead to increased earnings stability.
◤
Limited experience outside of the marine paints domain: The company targets a sales mix of 60% marine
paints, 20% container paints, and 20% industrial paints. As of FY03/15, these figures were 75%, 13%, and 12%,
respectively. Although the company has introduced new products using its existing core technology, such as
anti-peeling paints for concrete, and hard coatings for automobile headlights, their contributions to earnings as of
FY03/16 was limited. In Shared Research’s view, these new areas are requiring time to accumulate technologies and
marketing experience, and to build sales and customer networks.
◤
Late entry into offshore structures leading to opportunity losses: Although CMP has a market share of
between 20% and 30% in marine paints, its share in offshore structures (marine resource development) is low
despite a substantial addressable market. International Paint, a major rival, has had a head start in this area, while
CMP is yet to gain any meaningful traction. In the Korean shipbuilding industry, where the market is concentrated,
total orders outstanding for the top three companies as of October 2015 stood at USD127.9bn, of which 46%
(USD59.4bn) was for offshore structures. CMP, on the other hand, had only one order from a Japanese company,
highlighting its late start.
41/52
R
Chugoku Marine Paints ＞ Financial statements
Financial statements
Income statement
Income statement
FY03/05 FY03/06 FY03/07 FY03/08 FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14
(JPYmn)
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Sales
63,389 67,846 88,196 104,798 103,622 86,810 96,595 93,560 83,656 90,901
YoY
13.7%
7.0%
30.0%
18.8%
-1.1% -16.2%
11.3%
-3.1% -10.6%
8.7%
Gross profit
20,803 19,932 25,654 28,736 29,072 29,976 28,844 24,855 22,079 25,227
GPM
32.8% 29.4% 29.1% 27.4% 28.1% 34.5% 29.9% 26.6% 26.4% 27.8%
SG&A expenses
16,081
16,300
18,397
20,604
20,642
19,981
20,020
19,381 17,363 21,168
Personnel
5,905
6,134
6,411
6,875
6,939
6,915
6,747
6,627
6,501
7,177
Transportation
2,826
2,927
3,369
3,826
3,779
3,265
3,665
3,477
3,071
3,389
Sales commission
1,877
2,174
2,009
2,162
2,401
2,215
1,312
1,820
Provision of allowance for doubtful accounts
91
16
133
144
117
393
125
59
1,560
Other
7,260
7,223
6,607
7,585
7,798
7,246
7,207
6,937
6,420
7,222
YoY
9.1%
1.4%
12.9%
12.0%
0.2%
-3.2%
0.2%
-3.2% -10.4% 21.9%
SG&A / sales
25.4%
24.0%
20.9%
19.7%
19.9%
23.0%
20.7%
20.7% 20.8% 23.3%
Transportation/sales
4.5%
4.3%
3.8%
3.7%
3.6%
3.8%
3.8%
3.7%
3.7%
3.7%
Sales commission/marine paints sales
3.7%
3.4%
2.7%
2.9%
3.3%
3.1%
2.1%
2.7%
Operating profit
4,721
3,632
7,257
8,132
8,429
9,995
8,823
5,474
4,715
4,058
YoY
5.5% -23.1%
99.8%
12.1%
3.7%
18.6% -11.7% -38.0% -13.9% -13.9%
OPM
7.4%
5.4%
8.2%
7.8%
8.1%
11.5%
9.1%
5.9%
5.6%
4.5%
OP before depreciation & amortization of goo
5,986
4,859
8,482
9,587 10,006 11,621 10,524
7,033
6,165
5,647
YoY
4.8% -18.8%
74.6%
13.0%
4.4%
16.1%
-9.4% -33.2% -12.3%
-8.4%
OPM
9.4%
7.2%
9.6%
9.1%
9.7%
13.4%
10.9%
7.5%
7.4%
6.2%
5
68
-127
-690
-530
272
291
567
404
1,001
Financial income
-164
-272
-480
-888
-521
-173
-29
-129
-21
53
44
287
81
-162
-431
-30
-68
343
94
504
Royalities received
42
51
72
110
116
73
76
74
92
101
Technological training fee
87
109
124
156
124
140
137
117
114
93
-4
-107
76
94
182
262
175
162
125
250
Recurring profit
4,726
3,700
7,130
7,442
7,899 10,268
9,114
6,040
5,119
5,058
YoY
10.1% -21.7%
92.7%
4.4%
6.1%
30.0% -11.2% -33.7% -15.2%
-1.2%
RPM
7.5%
5.5%
8.1%
7.1%
7.6%
11.8%
9.4%
6.5%
6.1%
5.6%
56
644
-16
593
-153
-129
-87
-11
-57
832
Income taxes
-1,826
-1,494
-1,834
-2,331
-1,997
-3,814
-2,706
-2,565
-1,673
-2,050
Implied tax rate
38.2%
34.4%
25.8%
29.0%
25.8%
37.6%
30.0%
42.5% 33.1% 34.8%
Minority interests
-252
-217
-426
-586
-717
-901
-619
-396
-410
-571
Net income
2,704
2,633
4,853
5,117
5,031
5,422
5,701
3,067
2,978
3,269
YoY
6.5%
-2.6%
84.3%
5.4%
-1.7%
7.8%
5.1% -46.2%
-2.9%
9.8%
Net margin
4.3%
3.9%
5.5%
4.9%
4.9%
6.2%
5.9%
3.3%
3.6%
3.6%
Total capex
1,004
2,050
2,671
2,602
3,044
2,062
1,505
1,188
1,382
1,340
Depreciation
1,265
1,226
1,228
1,458
1,555
1,605
1,680
1,535
1,426
1,562
-0
-0
-3
-3
22
21
21
24
24
27
R&D expenses
1,382
1,386
1,496
1,605
1,800
1,939
1,908
1,902
1,789
1,714
Performance by segment
(JPYmn)
Sales
China
Japan
Korea
Southeast Asia
Europe/US
Cons.
Est.
17.4%
29,424
27.6%
21,982
7,746
4,021
2,594
129
7,492
3.8%
20.6%
3.8%
3.3%
7,442
83.4%
7.0%
9,143
61.9%
8.6%
916
201
262
84
116
253
8,359
65.3%
7.8%
-460
-2,342
29.7%
-808
4,748
45.2%
4.4%
1,163
1,671
30
1,849
7.7%
9,000
20.9%
7.8%
800
800
9,800
17.2%
8.5%
106,737 115,000
6,000
26.4%
5.2%
-
FY03/05 FY03/06 FY03/07 FY03/08 FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Est.
63,389 67,846 88,196 104,798 103,622 86,810 96,595 93,560 83,656 90,901 106,737 115,000
33,172
34,475
35,333
39,622
43,579
41,351
40,821
37,529 34,182 35,008 36,532
13,686
16,747
30,804
38,145
31,990
20,360
31,229
31,412 27,640 26,063 34,356
10,377
8,543
9,097
6,202
8,472 11,575
6,303
7,394
7,658
8,238 10,548 11,816
6,890
6,442
9,118
11,154
10,838
8,417
8,607
7,862
7,391 10,808 12,456
-
China
Japan
Korea
Southeast Asia
Europe/US
38,913
14,112
9,723
641
13.7%
4.2%
34.1%
20.9%
42,933
13,240
10,992
681
7.0%
3.9%
22.4%
-6.5%
51,238
13,401
22,892
663
30.0%
2.5%
83.9%
41.5%
63,350
14,831
26,026
590
18.8%
12.1%
23.8%
22.3%
Marine coatings
Industrial coatings
Container coatings
Operating profit
China
Japan
Korea
Southeast Asia
Europe/US
Elimination
OPM
China
Japan
Korea
Southeast Asia
Europe/US
4,721
2,789
-269
7.4%
8.4%
-
10.3%
-6.2%
13.1%
3,632
2,054
148
5.4%
6.0%
-
19.3%
1.2%
108.3%
7,257
1,381
700
8.2%
3.9%
-
23.6%
10.7%
13.7%
8,132
1,990
720
7.8%
5.0%
-
YoY
Marine coatings
Industrial coatings
Container coatings
Others
FY03/15 FY03/16
73,730
74,270
13,661
10,806
15,720
1,335
509
398
-1.1% -16.2%
10.0%
-5.1%
-16.1% -36.4%
-2.8% -22.3%
72,933
11,199
12,084
379
11.3%
-1.3%
53.4%
-17.7%
17.3%
2.3%
71,236 63,876
10,454 10,993
11,504
8,419
365
366
-3.1% -10.6%
-8.1%
-8.9%
0.6% -12.0%
6.5% -31.8%
3.6%
7.6%
-8.7%
-6.0%
66,722 79,750
12,445 12,685
11,416 13,972
316
328
8.7% 17.4%
2.4%
4.4%
-5.7% 31.8%
36.6% 36.6%
28.0% 12.0%
46.2% 15.2%
16.4%
-7.9%
-39.6%
8,429
2,992
697
8.1%
6.9%
-
-1.8%
3.6%
805.2%
8,823
3,690
2,466
624
988
-1,125
2,179
9.1%
9.0%
7.9%
7.3%
13.4%
-13.1%
-2.3%
-6.7%
-4.8%
5,474
2,458
1,652
222
811
-1,130
1,460
5.9%
6.5%
5.3%
2.4%
10.6%
-14.4%
4.5%
13.2%
35.6%
4,058
1,966
-620
375
1,477
-542
1,402
4.5%
5.6%
-2.4%
4.4%
14.0%
-5.0%
0.7%
-20.9%
-91.5%
9,995
5,104
1,439
1,673
982
-864
1,660
11.5%
12.3%
7.1%
16.1%
15.6%
-10.3%
-10.3%
5.2%
-26.8%
4,715
2,214
1,090
-22
978
-902
1,358
5.6%
6.5%
3.9%
-0.4%
11.9%
-12.2%
19.5%
1.9%
22.4%
7,442
1,598
2,345
151
1,984
-598
1,962
7.0%
4.4%
6.8%
1.3%
16.8%
-4.8%
7.7%
-
9,000
7.8%
-
42/52
R
Effects of market environment changes
Until FY03/13, for the parent company, material costs accounted for almost 90% of CoGS. Owing to the impact of the
naphtha market, market prices overseas became increasingly volatile, and domestically forex played a role as well. Resin
takes up a large share of costs by value and has a high processing cost—which allows CMP to add value—meaning that the
naphtha market has an indirect impact, although delayed. This trend becomes even stronger for materials that use special
resins like anti-fouling paints.
CoGS breakdown for the parent
100%
6%
10%
8%
10%
80%
55.4%
6%
10%
58.8%
57.0%
6%
9%
6%
8%
6%
8%
6%
9%
5%
7%
6%
8%
5%
7%
56.3%
58.1%
54.9%
60%
85%
84%
82%
40%
86%
86%
85%
48.9%
20%
86%
49.6%
88%
88%
86%
5%
7%
54.3%
88%
FY03/99
FY03/03
FY03/01
Material expenses
55%
53.6%
51.6%
87%
86%
60%
5%
7%
6%
7%
52.4%
87%
87%
50%
50.4%
48.0%
47.9%
0%
6%
7%
6%
7%
FY03/05
Personnel expenses
FY03/07
Expenses
FY03/09
FY03/11
FY03/13
45%
Material expenses/product sales (right axis)
Naphtha CIF prices (thousand yen/KL) and GPM
0
Naphtha price
10
38%
GPM (right axis)
36%
20
34%
30
32%
40
30%
50
28%
60
26%
70
24%
80
22%
90
(JPY'000/KL) Q1
FY03/04
Q1
FY03/05
Q1
FY03/06
Q1
FY03/07
Q1
FY03/08
Q1
FY03/09
Q1
FY03/10
Q1
FY03/11
Q1
FY03/12
Q1
FY03/13
Q1
FY03/14
Q1
FY03/15
20%
Q1
FY03/16
Naphtha CIF prices (thousand yen/KL) and domestic anti-fouling paint unit prices (yen/KG)
0
Naphtha price
10
900
Average price of anti-fouling paints
850
20
800
30
750
40
700
50
650
60
600
70
550
80
500
90
Q1
FY03/04
(JPY'000/KL)
Q1
FY03/05
Q1
FY03/06
Q1
FY03/07
Q1
FY03/08
Q1
FY03/09
Q1
FY03/10
Q1
FY03/11
Q1
FY03/12
Q1
FY03/13
Q1
FY03/14
Q1
FY03/15
Q1
FY03/16
450
(JPY/KG)
Exchange rates
CMP has created a world-wide network for both manufacturing and sales. The company aims for localized production and
consumption. It does not experience effects from exchange rates on a sales or operating profit level like a normal
exporting company. These effects are typically felt from conversion rates when forming a new partnership. Raw material
prices are affected but the impact on the company is not significant. Forex gains and losses in non-operating profit mainly
comprise both settlement and valuation differences. Note that the impact of Chinese subsidiaries when they borrow
dollars is significant.
43/52
R
Exchange rate assumptions (mid-year and year-end)
170
160
150
140
130
120
110
100
90
80
70
Q1
FY03/07
JPY/USD （mid-year average)
JPY/USD (year end)
JPY/EUR （mid-year average)
JPY/EUR (year end)
JPY/RMB （mid-year average)
JPY/RMB (year end)
JPY/100KRW （mid-year average)
JPY/100KRW (year end)
20
18
16
14
12
10
8
Q1
FY03/09
Q1
FY03/11
Q1
FY03/13
6
Q1
FY03/15
Q1
FY03/07
Q1
FY03/09
Q1
FY03/11
Q1
FY03/13
Q1
FY03/15
The following describe elements of the income statement unique to CMP.
SG&A expenses
The main components of SG&A expenses are semi-fixed costs like personnel expenses, and variable costs like
transportation expenses and sales commissions. A big overseas footprint means exchange rates have a big impact.
Royalties received—non-operating profit
Licensees of its technology are part of its global supply network. The following table shows the major overseas
partnerships. From partners, CMP gets an initial royalty plus a percentage of sales.
Technological training fee—non-operating profit
After application the paint becomes like a film coating and starts to exhibit its properties. The company receives
technological training fees when aiding in the process. As the amount of work increases as the number of people
associated with a project increases, this may impact SG&A expenses.
Tax rate
Differences with statutory tax rate
Statutory tax rate
Effective tax rate
Difference
Difference in tax rate of overseas subsidiaries
Items that are never included in income such as international fees
Items that are never included in gains such as dividend income
Pending dividends
Accrued directors' bonuses
Decline from adoption of overseas tax deductions
Decline from deductions from research and testing fees
Change in valuation allowance related to deferred tax assets
Income tax from previous years
Other
FY03/05 FY03/06 FY03/07 FY03/08 FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15
40.5%
40.5%
40.5%
40.5%
40.5%
40.5%
40.5%
40.5%
37.8%
37.8%
35.4%
38.2%
34.4%
25.8%
29.0%
25.8%
37.6%
30.0%
42.5%
33.1%
34.8%
29.7%
-2.3%
-6.1%
-14.7%
-11.5%
-14.7%
-2.9%
-10.5%
2.0%
-4.7%
-3.0%
-5.7%
-19.8%
-16.3%
-27.0%
-26.9%
-14.9%
-10.5%
-12.3%
-13.1%
-12.9%
-14.9%
-11.9%
1.8%
1.7%
3.4%
3.0%
3.2%
3.3%
5.2%
4.2%
4.5%
4.1%
3.4%
-1.5%
-2.4%
-1.8%
-1.5%
-1.7%
-4.2%
-5.2%
-6.6%
-5.6%
-3.3%
-4.8%
16.3%
17.8%
14.6%
20.4%
10.2%
8.4%
12.9%
16.5%
13.2%
15.1%
9.0%
0.4%
0.2%
0.4%
0.3%
0.2%
0.3%
0.5%
0.5%
0.2%
0.2%
-2.6%
-4.2%
-1.9%
-2.1%
-1.1%
-5.2%
-1.3%
-1.4%
-1.9%
-0.7%
-2.9%
-1.4%
-1.8%
-1.7%
-1.5%
-1.7%
-2.5%
-2.1%
-2.3%
-2.3%
0.6%
0.1%
0.2%
0.2%
-2.5%
1.1%
0.7%
-0.1%
0.9%
2.2%
2.2%
7.2%
0.3%
-1.9%
1.3%
-1.4%
1.0%
2.5%
-5.6%
-3.6%
-0.8%
-0.9%
-0.8%
Income from equity-method affiliates
Income from equity-method affiliates is heavily influenced by the performance of consolidated subsidiaries in Thailand
(49.0% stake; mainly industrial paints) and Korea (59.5% stake; mainly marine paints). Performance of the Shanghai
subsidiary (92% stake) is also a factor, as container paints are volatile and almost entirely target the Chinese market.
All joint ventures are local companies.
Geographic segment profits
In international shipping, shipowners and shipyards are unevenly distributed geographically. In response, CMP has
established a group to unify its global network and win orders. Although localized production and consumption is a core
policy for CMP, raw materials may be sourced from and operating expenses concentrated in certain regions. This can
44/52
R
cause geographic segment profits to show up as losses.
Breakdown of sales
Income by segment
(JPYmn)
Sales
YoY
Marine coatings
Japan
China
Korea
Southeast Asia
Europe/US
YoY
Japan
China
Korea
Southeast Asia
Europe/US
Industrial coatings
Japan
China
Korea
Southeast Asia
Europe/US
YoY
Japan
China
Korea
Southeast Asia
Europe/US
Container coatings
Japan
China
Korea
Southeast Asia
Europe/US
YoY
Japan
China
Korea
Southeast Asia
Europe/US
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Est.
63,389 67,846 88,196 104,798 103,622 86,810 96,595 93,560 83,656 90,901 106,737 115,000
13.7%
7.0% 30.0% 18.8%
-1.1% -16.2% 11.3%
-3.1% -10.6%
8.7% 17.4%
7.7%
38,913 42,933 51,238 63,350 73,730 74,270 72,933 71,236 63,876 66,722 79,750
33,696
31,359 27,821 28,097 30,376
18,214
19,007 18,508 14,297 19,710
8,535
9,066
6,176
8,423 11,416
4,214
4,225
4,245
5,479
6,394
8,272
7,577
7,124 10,425 11,852
- 10.3% 19.3% 23.6% 16.4%
0.7%
-1.8%
-2.3% -10.3%
4.5% 19.5%
-6.9% -11.3%
1.0%
8.1%
4.4%
-2.6% -22.8% 37.9%
6.2% -31.9% 36.4% 35.5%
0.3%
0.5% 29.1% 16.7%
-8.4%
-6.0% 46.3% 13.7%
14,112 13,240 13,401 14,831 13,661 10,806 11,199 10,454 10,993 12,445 12,685
6,745
5,804
5,995
6,595
5,827
1,640
1,773
1,585
1,582
1,948
8
31
25
49
158
2,631
2,731
3,259
4,053
4,451
173
114
127
165
299
-6.2%
1.2% 10.7%
-7.9% -20.9%
3.6%
-6.7%
5.2% 13.2%
1.9%
- -14.0%
3.3% 10.0% -11.6%
8.1% -10.6%
-0.2% 23.1%
- 287.5% -19.4% 96.0% 222.4%
3.8% 19.3% 24.4%
9.8%
- -34.1% 11.4% 29.9% 81.2%
9,723 10,992 22,892 26,026 15,720
1,335 12,084 11,504
8,419 11,416 13,972
11,373
10,631
7,547 10,183 12,697
548
702
733
1,016
970
161
170
139
216
304
- 13.1% 108.3% 13.7% -39.6% -91.5% 805.2%
-4.8% -26.8% 35.6% 22.4%
-6.5% -29.0% 34.9% 24.7%
28.1%
4.4% 38.6%
-4.5%
5.6% -18.2% 55.4% 40.7%
-
45/52
R
Balance sheet
Balance sheet
(JPYmn)
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Current assets
36,813 45,143 48,567 64,992 63,567 60,629 64,068 70,070 70,233 74,315 83,118 95,726
Cash and equivalents
6,884
7,943
9,693
8,132
7,975
8,625
14,767
12,412
17,615
22,011
28,367
30,682
Accounts receivable
19,290
23,933
24,431
36,198
36,538
34,891
35,302
41,758
37,694
36,944
38,677
47,119
Inventory assets
9,359
11,910
13,116
18,258
17,719
16,002
12,829
14,156
13,751
14,360
15,129
17,626
Deferred tax assets
694
724
730
861
735
841
1,024
826
703
777
1,169
1,010
-491
-485
-505
-630
-700
-645
-952
-789
-830
-905
-2,701
-2,130
Others
1,077
1,118
1,102
2,173
1,300
915
1,098
1,707
1,300
1,128
2,477
1,419
23,454
23,205
24,541
26,038
25,571
23,837
24,394
23,484
23,026
23,782
25,610
25,915
Intangible assets
216
255
225
427
450
843
841
878
728
887
1,296
1,501
7,950
8,565
10,382
10,600
8,961
6,465
7,042
5,872
5,862
7,255
8,994
11,944
Investment securities
6,801
7,279
8,981
9,101
7,290
4,958
5,823
4,708
4,709
6,382
8,133
10,826
-414
-459
-88
-70
-41
-5
-50
-46
-42
-45
-54
-926
Others
1,563
1,745
1,489
1,569
1,712
1,512
1,269
1,210
1,195
918
915
2,044
Fixed assets
31,620 32,025 35,149 37,065 34,983 31,146 32,278 30,235 29,617 31,925 35,901 39,361
Total assets
68,433 77,168 83,716 102,058 98,550 91,776 96,346 100,305 99,850 106,240 119,019 135,087
Current liabilities
33,989 40,963 39,827 52,022 49,722 44,351 44,124 45,145 42,423 41,879 43,178 50,201
Accounts payable
8,671
11,510
11,374
16,873
15,866
13,193
12,976
17,368
12,535
13,370
14,664
19,420
Short-term debt
20,340
21,983
22,453
27,875
25,885
24,939
20,659
19,529
23,436
21,933
20,862
19,320
Current portion of debt
100
1,630
630
130
630
149
1,819
1,147
72
65
48
2,350
Accounts payable - other
3,274
3,544
4,076
5,258
5,174
4,369
4,948
5,031
4,808
4,893
5,415
6,641
Income taxes payable
766
1,495
644
1,089
1,479
785
2,893
1,225
847
816
1,435
1,438
Other current liabilities
838
801
650
797
688
916
829
845
725
802
754
1,032
Noncurrent liabilities
6,627
5,533
9,041
9,194
7,723
7,410
5,683
6,285
7,012
7,661
8,508
6,660
Long-term debt
2,725
1,245
2,815
3,185
2,555
3,001
1,182
1,920
2,847
3,314
3,373
1,086
Asset retirement obligations
2,226
2,228
3,038
3,040
3,044
3,026
3,026
3,026
2,644
2,615
2,615
2,370
Deferred tax liabilities
604
666
709
745
691
659
596
604
779
951
1,153
1,082
Others
1,072
1,393
2,479
2,224
1,433
724
879
735
742
781
1,367
2,122
Total liabilities
40,616 46,495 48,868 61,217 57,445 51,762 49,808 51,431 49,436 49,541 51,686 56,861
Net assets
27,817 30,673 34,847 40,840 41,105 40,013 46,538 48,874 50,414 56,699 67,332 78,225
24,575
26,703
28,747
33,063
37,020
40,433
44,954
51,927
49,756
53,097
55,501
59,296
Issued capital
11,626
11,626
11,626
11,626
11,626
11,626
11,626
11,626
11,626
11,626
11,626
11,626
Reserves
7,784
7,785
7,785
7,785
7,785
7,783
7,783
7,783
7,783
7,783
7,783
7,783
Retained earnings
5,206
7,355
9,418
13,753
17,764
21,210
25,739
30,547
32,721
34,867
37,276
41,079
Treasury stock
-41
-63
-81
-101
-156
-187
-194
-201
-204
-1,179
-1,183
-1,192
Unrealized gains
2,068
2,623
4,394
5,511
1,798
-2,581
-1,466
-4,011
-4,619
-277
6,985
13,184
Unrealized gains on investment securities
1,062
1,546
2,717
2,730
1,497
-15
535
47
-39
884
2,124
4,062
Foreign currency translation adjustment
-87
83
Subscription rights to new shares
Equity-method affiliates
1,174
1,347
1,706
2,265
2,286
2,161
3,049
3,129
3,106
3,878
4,844
5,745
Total capital and liabilities
68,433 77,168 83,716 102,058 98,550 91,776 96,346 100,305 99,850 106,240 119,019 135,087
Total capex
1,170
1,004
2,050
2,671
2,602
3,044
2,062
1,505
1,188
1,382
1,340
1,163
Depreciation
1,229
1,265
1,226
1,228
1,458
1,555
1,605
1,680
1,535
1,426
1,562
1,671
4
-0
-0
-3
-3
22
21
21
24
24
27
30
Working capital
19,978
24,333
26,172
37,583
38,391
37,700
35,155
38,546
38,910
37,934
39,142
45,325
Interest-bearing debt
23,165
24,858
25,898
31,190
29,070
28,089
23,660
22,596
26,355
25,312
24,283
22,756
Net cash
-16,282
-16,915
-16,206
-23,058
-21,095
-19,464
-8,893
-10,184
-8,740
-3,301
4,084
7,926
Accounts receivable turnover
63.13
124.44
130.09
125.46
126.67
125.80
147.57
145.59
154.98
162.83
151.82
146.69
Inventories turnover
46.74
91.15
95.32
91.55
86.32
82.55
92.58
72.69
74.13
83.32
81.95
77.32
Payables turnover
43.30
86.48
87.16
82.43
78.55
71.14
84.03
81.74
79.43
76.78
77.90
80.46
Working capital efficiency
66.57
129.10
138.25
134.58
134.43
137.21
156.11
136.54
149.68
169.36
155.87
143.56
Current ratio
108%
110%
122%
125%
128%
137%
145%
155%
166%
177%
193%
191%
Fixed ratio
118.7% 109.2% 106.1%
96.1%
90.1%
82.3%
74.2%
66.1%
62.6%
60.4%
57.5%
54.3%
Equity ratio
38.9%
38.0%
39.6%
37.8%
39.4%
41.2%
45.1%
45.6%
47.4%
49.7%
52.5%
53.7%
Intangible assets
The increase in FY03/14 relates to land use rights from expanding the Shanghai plant. Currency rates explain fluctuations
thereafter.
Land was revalued at end March 2000. The difference in value was recorded in net assets—JPY3.7bn at end FY03/15.
FY03/15’s increase in the “others” item is from bankruptcy rehabilitation claims.
Amid the 2008 global financial crisis, China’s shipbuilding industry suffered and payment periods lengthened. Increases
from FY03/14 onwards relate to sales in China and Korea.
46/52
R
Accounts payable and accrued expenses—current liabilities
Accounts payable for sales commissions are recorded in this item. Unpaid portions are recorded according to
construction progress. The difference between accounts payable and accrued expenses lies in whether or not the liability
has been determined. We note that the government’s recognition of this can be different.
Guaranteed obligations
In contingent liabilities, guaranteed obligations for Mitsubishi Corporation Chemical (JPY869mn at end FY03/15) are
listed, to lower the risk of customers defaulting.
47/52
R
Cash flow statement
Cash flow statement
(JPYmn)
Operating cash flow
Income before income taxes
Depreciation
Change in provisions for points
Change in accounts receivable
Change in inventory assets
Change in accounts payable
Change in accrued consumption tax
Others
Subtotal
Interest and dividends income received, paid
Security deposits paid, collected
Income taxes paid
Operating cash flow
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
3,248
1,229
4
113
-333
-101
-78
4,783
1,265
-0
104
-3,497
-2,518
2,751
4,344
1,226
-0
-5
1,615
-387
-931
7,115
1,228
-3
24
-10,319
-4,575
4,873
8,035
1,458
-3
-107
-4,599
-975
297
7,746
1,555
22
-62
-3,082
-310
111
10,138
1,605
21
53
2,825
3,501
-655
9,027
1,680
21
-64
-8,683
-2,183
5,157
6,029
1,535
24
74
3,403
-11
-4,519
5,062
1,426
24
46
4,038
762
-356
5,890
1,562
27
-28
3,338
1,265
-335
7,899
1,671
30
-19
-6,351
-1,349
3,574
-462
3,619
142
-314
-543
2,905
-717
2,171
151
-321
-1,149
852
-685
5,176
200
-502
-2,221
2,653
-203
-1,860
246
-743
-1,343
-3,702
2,380
6,486
330
-1,153
-1,727
4,846
1,275
7,255
254
-783
-2,652
4,074
-1,035
16,453
178
-359
-1,982
14,290
750
5,705
238
-272
-4,418
1,252
-178
6,357
252
-366
-2,566
3,676
-383
10,619
344
-374
-1,870
8,719
-192
11,527
415
-371
-1,740
10,084
1,021
6,476
494
-288
-2,404
4,355
-12
581
-975
27
2
-376
802
286
-1,190
13
38
-51
-9
1,103
-2,045
75
21
-856
-328
-97
-2,630
46
55
-2,954
228
-100
-2,572
52
-229
-2,621
71
-16
-3,009
1,647
-293
-34
-1,634
-561
-109
-2,176
43
-2
-2,805
-400
-249
209
-1,341
8
5
-1,768
-1,050
183
-147
-1,139
10
-11
-2,154
-1,796
51
-337
-1,400
92
-307
73
-3,624
-525
-779
807
-1,924
20
37
-2,364
-61
744
-49
-1,247
30
-14
-597
Financial cash flow
Change in short term debt
375
Change in long term debt
-931
Purchase of treasury stock
-13
Income from the retirement of treasury stock
Cash dividends paid
-448
Cash dividends paid to minority shareholders
-73
Proceeds from share issuance to minority shareholde
Others
-4
Financial cash flow
-1,094
1,686
50
-23
1
-517
-131
-3
1,063
-448
570
-19
1
-517
-113
76
-4
-454
5,101
-130
-20
0
-517
-131
71
-6
4,368
41
-130
-55
0
-1,099
-295
127
-8
-1,419
423
-33
-41
8
-893
-213
77
-39
-711
-4,503
-149
-7
0
-892
-262
76
-53
-5,790
-471
67
-6
-893
-312
-56
-1,671
4,419
-147
-3
0
-893
-229
-53
3,094
-2,694
424
-975
0
-884
-275
-51
-4,455
-3,150
-50
-4
-860
-427
94
-23
-4,420
-2,536
-58
-8
-861
-413
-24
-3,900
Effect of exchange rate on cash and cash equivalents
Change in cash and cash equivalents
Cash and cash equivalents (year-start)
Cash and cash equivalents (year-end)
-43
1,821
6,088
7,910
393
1,737
7,910
9,647
393
-1,894
9,647
7,752
-710
95
7,752
7,858
-994
733
7,858
8,591
260
5,955
8,591
14,547
-535
-2,721
14,547
11,825
-267
4,349
11,825
16,174
1,095
1,734
16,174
17,908
1,828
5,128
17,908
23,037
1,503
1,362
23,037
24,400
Change in time deposits
Change in securities
Change in investment securities
Acquisition of fixed assets
Proceeds from sales of fixed assets
Purchase of investments in subsidiaries
Others
-275
1,160
4,928
6,088
In FY03/07 sales rose by 30% YoY to JPY20.4bn. Operating cash flow has been positive since FY03/99. Excluding
investment for production capacity increases, capital investment has annual demand for renewal of about JPY1.0bn.
Operating cash flow continues to exceed investment cash flow, underpinning debt repayment. FY03/14 was
cash-positive, and this trend has continued.
Cash flow (JPYbn) and capital investment (JPYmn)
Operating CF
Financial CF
Cash and equivalents (right axis)
25
20
Investment CF
Dept (right axis)
35 3,500
Capital investments
30 3,000
Depreciation
15
25 2,500
10
20 2,000
5
15 1,500
0
10 1,000
-5
5
500
-10
0
0
FY03/00
(JPYbn)
FY03/05
FY03/10
FY03/15
FY03/00
(JPYmn)
FY03/05
FY03/10
FY03/15
48/52
R
Chugoku Marine Paints ＞ Other information
Other information
Corporate governance
The company has a board of directors and board of corporate auditors, with an executive officer system in place to
increase transparency. A management meeting for directors and executive officers is held periodically. In June 2015, CMP
had five directors (including one outside director) and four corporate auditors (including two outside corporate
auditors). Six of these directors and auditors also serve as executive officers. Outside director Koji Ueda is a CPA, professor
of management strategy at the Kwansei Gakuin University Professional Graduate School Institute of Business and
Accounting, and representative partner at Nexus Audit Company. The two outside corporate auditors both established
tax office practices after retiring from the Japanese National Tax Agency.
Top management
President Masataka Uetake (born January 12, 1945)
Uetake joined CMP in 1968. In 1997 he became director and general manager of the marine paints division. In 2003 he
became a managing director and president of the marine coatings division. In 2007 he became a senior managing
director, overseeing sales and overseas operations. In April 2010, he was appointed president. At end March 2015,
Uetake held 162,000 CMP shares.
Dividend policy
The company aims to provide stable dividends, based on company performance (see table).
Shareholder returns
Shareholder returns
(JPYmn)
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Est.
DPS
(JPY)
8
8
10
13
13
13
13
13
13
13
15
15
Total dividends
a)
516
516
688
894
894
893
893
866
893
860
993
993
Total treasury stock acquired
b)
23
19
20
55
41
7
6
3
975
4
8
Total returns to shareholders c) = a) + b)
539
535
708
949
935
900
899
869
1,868
864
1,001
Net income
d)
2,704
2,633
4,853
5,117
5,031
5,422
5,701
3,067
2,978
3,269
4,748
6,000
Payout ratio
Total shareholder payout ratio
a) / d)
c) / d)
19.1%
19.9%
19.6%
20.3%
14.2%
14.6%
17.5%
18.5%
17.8%
18.6%
16.5%
16.6%
15.7%
15.8%
28.2%
28.3%
30.0%
62.7%
26.3%
26.4%
20.9%
21.1%
16.6%
-
DOE
f)
a) / f)
29,326
1.8%
33,142
1.6%
38,575
1.8%
38,818
2.3%
37,851
2.4%
43,488
2.1%
45,744
2.0%
47,307
1.8%
52,820
1.7%
62,487
1.4%
72,480
1.4%
-
Shareholder composition
Entity
Japan Trustee Services Bank,Ltd．(Trust account)
The Hiroshima Bank, Ltd.
The Master Trust Bank of Japan, Ltd. (Trust account)
Meiji Yasuda Life Insurance Company
Mitsubishi Corporation
STATE STREET BANK AND TRUST COMPANY
The Bank of Tokyo-Mitsubishi UFJ, Ltd .
Japan Trustee Services Bank, Ltd．(Trust account #9 )
JP MORGAN CHASE BANK 385632
Mitsubishi UFJ Trust and Banking Corporation
Treasury shares
Total shares outstanding
Shares
('000)
5,919
3,294
2,405
2,000
1,858
1,657
1,553
1,474
1,310
1,280
2,855
69,069
% of
outstanding
shares
8.6%
4.8%
3.5%
2.9%
2.7%
2.4%
2.2%
2.1%
1.9%
1.9%
4.1%
100.0%
Source: Shared Research based on company data (as of end March 2015)
49/52
R
Number of employees
2008
Mar
number of employee
2241
Shiga
23
Shiga
43
Kyushu
16
Otake research center
93
Kinki service center
0
Ohters
198
Otake Meishin Chemiica
61
Kobe Paint
58
Other domestic factorie 162
2009
Mar
2353
23
47
19
93
0
203
67
58
176
2010
Mar
2337
32
35
21
100
0
210
59
58
180
2011
Mar
2432
40
37
28
103
0
215
58
57
166
2012
Mar
2438
42
35
62
102
0
207
60
56
166
2013
Mar
2386
42
36
59
99
0
189
60
54
158
2014
Mar
2286
38
35
58
100
0
183
56
49
160
2015
Mar
2356
37
34
55
93
0
176
56
45
166
Shanghai
Guangdong
Korea
Singapore
Malaysia
Indoneasia
Thai
US
the Netherlands
Other overseas
2008
Mar
590
212
138
102
135
107
172
29
63
39
2009
Mar
677
168
166
104
144
103
176
28
74
27
2010
Mar
748
100
163
106
130
103
176
28
63
25
2011
Mar
799
129
159
110
133
104
176
27
65
26
2012
Mar
781
104
167
96
142
106
177
25
68
42
2013
Mar
749
105
157
96
128
108
201
21
78
46
2014
Mar
682
79
159
96
121
112
207
21
88
42
2015
Mar
715
80
180
97
121
120
221
28
86
46
About paints
Characteristics of paint industry
These include:
▶
▶
▶
Broad user base;
Specialized safety and environmental awareness;
Low barriers to entry, so small companies can enter the market—leading to many manufacturers.
However, in the company’s mainstay marine paints sector or heavy anti-corrosion sector, development and manufacture
for specialized uses and a global supply network (marine paints) is essential. Regulatory approval needs to be acquired for
each country and customers like strong track records. As such, new entrants struggle.
Paint products in these sectors are “products” and “half products”. For coatings to work, correct application is key and so
CMP conducts application training onsite.
Composition of paints
Paints contain resins, pigments, additives, and solvents. Resins are a key ingredient for coatings, and determine the
properties of the coating. Pigments add color, and can act as a determinant in coating thickness, or as a protective layer.
Additives improve coating functionality. Solvents adjust the density of resins. Solvents evaporate, so are not part of
coatings.
Composition of coatings
Coatings are separated into lower, middle, and upper layers. Development is ongoing to formulate a single coating that
incorporates the features of each layer. Lower layer coatings protect the underlying material. Middle layer coatings aid in
the function of the finished product and bond the lower and upper layers. The upper layer coatings have either cosmetic
or functional roles, like anti-fouling.
50/52
R
Profile
Company
Head office
Tokyo club building
3-2-6 Kasumigaseki,
Chiyoda-ku, Tokyo 100-0013
Phone
Listed on
+81-3-3506-3951
Tokyo Stock Exchange 1st Section
Established
Exchange listing
May 1917
October 2, 1961
Audit firm
Fiscal year-end
Ernst & Young ShinNihon LLC
March
Website
IR web
http://www.cmp.co.jp/global.html
http://www.cmp.co.jp/global/financial_results.html
51/52
R
About Shared Research Inc.
We offer corporate clients comprehensive report coverage, a service that allows them to better inform investors and other stakeholders by
presenting a continuously updated third-party view of business fundamentals, independent of investment biases. Shared Research can be found on
the web at http://www.sharedresearch.jp.
Current Client Coverage of Shared Research Inc.
Accretive Co., Ltd.
Gamecard-Joyco Holdings, Inc.
Nisshinbo Holdings Inc.
AEON DELIGHT Co.
GCA Savvian Corporation
Onward Holdings Co., Inc.
Ai Holdings Corp.
Grandy House Corp.
Paris Miki Holdings Inc.
Aiming Inc.
Gulliver International Co., Ltd.
NS Tool Co.
AnGes MG Inc.
Hakuto Co., Ltd.
NTT Urban Development Corporation
Anicom Holdings, Inc.
Happinet Corporation
Pigeon Corp.
Anritsu Corporation
Harmonic Drive Systems Inc.
Resorttrust, Inc.
Apamanshop Holdings Co., Ltd.
Hearts United Group Co., Ltd.
Round One Corp.
ArtSpark Holdings Inc.
Heiwa Real Estate Co., Ltd.
Ryohin Keikaku Co., Ltd.
AS ONE Corporation
IID, Inc.
Sanix Incorporated
Axell Corporation
Infomart Corp.
Sanrio Co., Ltd.
Azbil Corporation
Intelligent Wave Inc.
SATO Holdings Corp.
Bell-Park Co., Ltd.
istyle Inc.
SBS Holdings, Inc.
Benefit One Inc.
Itochu Enex Co., Ltd.
Ship Healthcare Holdings Inc.
Canon Marketing Japan Inc.
ITO EN, Ltd.
SMS Co., Ltd.
Carna Biosciences, Inc.
J Trust Co., Ltd
SOURCENEXT Corporation
Chiyoda Co., Ltd.
Japan Best Rescue System Co., Ltd.
Star Mica Co., Ltd.
JIN Co., Ltd.
SymBio Pharmaceuticals Limited
Cocokara Fine, Inc.
Kameda Seika Co., Ltd.
Takashimaya Co., Ltd.
Comsys Holdings Corporation
Kenedix, Inc.
Takihyo Co., Ltd.
CRE, Inc.
KLab Inc.
Tamagawa Holdings Co., Ltd
Creek & River Co., Ltd.
LAC Co., Ltd.
TEAR Corporation
Daiseki Corp.
Lasertec Corp.
3-D Matrix, Ltd.
DIC Corporation
MAC-HOUSE Co.
TOKAI Holdings Corp.
Digital Garage Inc.
Matsui Securities Co., Ltd.
Verite Co., Ltd.
Don Qijote Holdings Co., Ltd.
Medinet Co., Ltd.
WirelessGate, Inc.
Dream Incubator Inc.
Megane Super Co., Ltd.
Yellow Hat Ltd.
Elecom Co.
MIRAIT Holdings Corp.
Yumeshin Holdings
EMERGENCY ASSISTANCE JAPAN Co.
MONEY SQUARE HOLDINGS, INC.
VOYAGE GROUP, Inc.
en-Japan Inc.
NAGASE & CO., LTD
ZAPPALLAS, INC.
FerroTec Corp.
NAIGAI TRANS LINE LTD.
ZIGExN Co., Ltd.
Fields Corp.
NanoCarrier Ltd.
FreeBit Co., Ltd.
Nippon Parking Development Co., Ltd.
Attention: If you would like to see companies you invest in on this list, ask them to become our client, or sponsor a report yourself.
Disclaimer
This document is provided for informational purposes only. No investment opinion or advice is provided, intended, or solicited. Shared Research
Inc. offers no warranty, either expressed or implied, regarding the veracity of data or interpretations of data included in this report. Shared Research
Inc. shall not be held responsible for any damage caused by the use of this report.
The copyright of this report and the rights regarding the creation and exploitation of the derivative work of this and other Shared Research Reports
belong to Shared Research Inc. This report may be reproduced or modified for personal use; distribution, transfer, or other uses of this report are
strictly prohibited and a violation of the copyright of this report. SR Inc. officers and employees may currently, or in the future, have a position in
securities of the companies mentioned in this report, which may affect this report’s objectivity.
Japanese Financial Instruments and Exchange Law (FIEL) Disclaimer
The report has been prepared by Shared Research Inc. (“SR”) under a contract with the company described in this report (“the Company”).
Opinions and views presented are SR’s where so stated. Such opinions and views attributed to the Company are interpretations made by SR. SR
represents that if this report is deemed to include an opinion by SR that could influence investment decisions in the Company, such opinion may be
in exchange for consideration or promise of consideration from the Company to SR.
Contact Details
Shared Research.inc
3-31-12 Sendagi Bunkyo-ku Tokyo, Japan
http://www.sharedresearch.jp
Phone: +81 (0)3 5834-8787
Email: [email protected]

Chugoku Marine Paints | 4617 |

Transcription

Similar documents

Management Outlook and Growth Strategy

FY03/2010

Where Women Create - Geri Lindsey`s website. A native of the

September - Andrea Miniatures

MFCU Scholarship Application - Marine Federal Credit Union

Results of Operations Six Months Ended September 30, 2015

Expanding from East to West

1500+* - Asian Paints

xtreme metal - AK Interactive

Visual Quotations