Management Policy

Chairman’s Message


Chihiro Kanagawa

Creating New Products and Services
To Support Next-Generation Businesses.
In Addition, Providing Society with the
Materials to Respond Issues Facing
Our Planet Earth.





I would like to take this opportunity to express my heartfelt gratitude to all of our stakeholders, including our shareholders and investors, who have extended their deep understanding and support to the Shin-Etsu Group’s businesses and management.


During the fiscal year ended March 31, 2019, in pursuit of our declared management objective of achieving high earnings, we actively promoted our businesses while aiming to be the world’s top company on a variety of fronts through always placing priority on sales, proactive investments, timely and quick work and risk management. As a result of these efforts, we secured a large profit increase of 22% compared with the previous fiscal year, setting a record high for our Company.
We at the Shin-Etsu Group believe that it is stable growth that leads to increase of corporate value. For this reason, we will not rest contented with only a single fiscal year’s performance and will actively promote investments aimed at further growth.


At Shintech, which forms the core of our PVC operations, we have resolved to establish a new integrated plant to produce polyvinyl chloride (PVC) from raw materials, and are currently moving forward with its construction. With the completion of this new plant, Shintech’s annual production capacity will increase about 10%, expanding to 3,240,000 tons, thus further strengthening its position as the world’s largest PVC manufacturer.


We are also undertaking expansion to increase production capacity in the Silicones and Photomask Blanks businesses. In our other businesses, we are investing in a timely and appropriate manner based on business conditions and customers’ feedbacks. In addition to this type of investments in our existing businesses, we are conducting active research and development while taking serious heed of the needs of both customers and society, so that we can create new products and services that will support next-generation businesses.
In parallel with this steady and consistent reinforcement of our foundations for future business growth, we are turning our eyes toward challenges on a global scale. The world we live in is confronted with a variety of serious issues, and companies like ours are now required to engage in business activities that are conducive to the attainment of the Sustainable Development Goals (SDGs). By providing society with the materials it needs and through other activities, the Shin-Etsu Group is contributing to the solution of issues facing the world today and to the overall future of our irreplaceable planet Earth.


Today, the global economy is at a significant turning point. For our company to pursue steady growth in a daily-changing business environment, it is of paramount importance to make optimal decisions based on current conditions and accumulate favorable results. By continuing to enhance the Group’s advantage in the future, we will establish an unwavering position in the ever-changing global market and will seek to achieve sustainable growth.


I would be most grateful for your continued understanding and further support to our businesses and management.


Chihiro Kanagawa Chairman

Chihiro Kanagawa



President’s Message


Yasuhiko Saitoh

Our Efforts and Initiatives to Meet
Our Customers’ Increasing
Requirements Contributed to
the Record Earnings.






FY2018 was a remarkable year for our company. We again renewed the record earnings and exceeded a ¥400 billion mark for profit before tax for the first time. We declared an annual dividend of ¥200 per share, which is the highest mark in the company’s dividend history, as well. We announced a couple of major capital projects, as I will review below. And last but not least, we implemented a 100 billion yen’s worth of share repurchase. We passed a significant milestone in the FY2018.


In this fiscal year, we grew the sales turnover by 10.7% over the year before (FY2017) on a local currency basis and 10.6% on a Japanese yen denominated basis. Each of the business segments achieved top-line and bottom-line growth to renew its records. We worked very diligently to meet our customers’ increasing requirements for availability, quality and product advancement throughout our operations. The efforts and initiatives certainly contributed to strong rise in earnings segmentally and companywide. We increased the operating income by 19.9% to ¥403.7 billion, income before income taxes 22.0% to ¥415.3 billion and net income by 16.1% to ¥309.1 billion. This result marks the ninth consecutive year of growth in the earnings. Since March, 2010, the cumulative growth in earnings was ¥288.3 billion on a pretax basis and ¥225.3 billion on an after tax basis, which equates a compound annual growth rate of 14.1% and 15.6%, respectively.


The record earnings and the implemented share repurchase reflect in the key indices. We succeeded in raising return on invested capital (ROIC) by 3.3 percent point to 21.5% and return on equity (ROE) by 0.9 percent point to 12.8%. These numbers are all good ones and we will strive to maintain them at these levels.


We are leveraging what we accomplished in this last fiscal year to advance the revenue and earnings. It is not an easy task but we must do so. The objective is not necessarily to build a bigger company but rather build a stronger and more resilient one, so that we can serve our customers better, innovate well and reward our shareholders.


We are vigorously and attentively serving our customers’ growing needs for our products. To this end, we initiated a number of capital projects last year. Among them, we have $1.49 billion project at Shintech, ¥110 billion investments in silicone facilities and ¥14 billion investment in photomask blanks capacity. We forecast the amount of capital investments will be 300 billion yen in the FY2019, about 20% greater than last fiscal year.


We have been busy running all the plants worldwide. We do so with our strong commitment to safety and quality. We have 21,000 motivated and dedicated people working day in day out to deliver our commitments. We invest in our employees through managerial interactions, various training programs and career development opportunities. Our technical and engineering expertise is the backbone of our operation. Coupled with our employees’ commitment to safety and quality, it enables us to deliver quality products consistently in a timely manner.


Our research and development activities are on the rise. We invested ¥56.4 billion or 3.5% of the yearly sales in the FY2018. Roughly five thousand new products were introduced and 1,779 patents were granted. More than thirty percent of our revenue comes from patent-advantaged product sales. Our researchers are eager to devise solutions for customers and industries. The R&D investment efficiency measured by ratio of operating income for the recent five year period to R&D expenses for five year period prior to the period is very high among peers.


Our product portfolio and developmental direction are in line with SDGs. We are mindful of SDGs. We believe that our product offerings facilitate the achievement thereof and SDGs will facilitate our business in turn. For the sustainable development of human society and the improvement of its quality, it is vital to greatly lessen burden on the environment caused by human activities. To this end, we believe that it is essential to maximize efficiency. Technologies such as processing of proliferating data, IoT, 5G and AI are being utilized and continue to evolve for the purposes. We commit to apply, improve and innovate what we have and produce throughout our operation in this endeavor. It is our daily goal to provide materials of value which will be regarded in a way that it is owing to our products that human life has been enhanced and problems markets and customers experienced have been solved.


We pay great attention to shareholders return. Thus, we increased the annual dividend by more than 40% last year and proceeded with the major share repurchase. We consider share repurchase as a part of our capital deployment strategy.


In order for this great company to continue to do what it has been able to do for our customers, our shareholders and communities we are in, the company will have to grow. We are working on various initiatives to broaden our business portfolio and expand our footprints. We will remain focused on our customers and their needs to be relevant to them, will remain committed to governance to be relevant to our shareholders and will remain responsible to be relevant to our communities.


I sincerely thank our shareholders for your confidence, our customers for their partnership and our Shin-Etsu team for their dedication to our operations.


Yasuhiko Saitoh President

Yasuhiko Saitoh

Business and Other Risks

Listed below are the risks that may affect the operations of the Shin-Etsu Chemical Group (the Company and its consolidated subsidiaries and affiliates which are accounted for using the equity method, hereinafter referred to as “the Group”), including its business results, financial position, and cash flows.
The Group strives to prevent, disperse, and hedge potential risks and thereby mitigates risks. However, there is a possibility that the operating performance of the Group may be impacted significantly should any unforeseeable circumstances arise.

Indicated are principal matters that are considered to likely be risk factors based on the Group’s judgment as of March 31, 2019, and do not cover all risks related to the Group.

1. Risks related to Economic Situation and Market Conditions
The economic situation in the countries and regions where the principal markets of the products handled by the Group are located may significantly impact the operating performance of the Group. Further, some of the main products handled by the Group may be subject to significant price fluctuations due to changes in global supply and demand conditions. The Group hedges potential risks by promoting diversification and globalization of businesses. However, a decrease in demand or an intensified price competition related to a Group’s product may have a significant impact on the operating performance of the Group.

2. Risks related to Foreign Exchange Market Fluctuations
In the fiscal year ended March 31, 2019, overseas sales accounted for 74% of consolidated net sales of the Shin-Etsu Chemical Group. The Company expects the ratio to remain at a high level going forward. Significant exchange rate fluctuations can affect the results when converting overseas group companies’ business results on financial statements into Japanese yen and consequently have a significant impact on the operating performance of the Group. Significant exchange rate fluctuations can similarly affect foreign currency-denominated transactions, although the Group takes risk-mitigating measures such as making use of foreign exchange contracts.

3. Risks related to Natural Disasters and Unpredictable Events
The Group strengthens countermeasures to ensure damage from any unforeseen interruption in production activities are kept to a minimum, such as regularly conducting inspections and maintenance activities for disaster prevention, and making capital investments to ensure safety. The Group also strives to operate at multiple production sites. However, unpredictable events and natural disasters can cause physical damages to the Group’s production facilities and other properties, which may have a significant impact on the operating performance of the Group.

4. Risks related to Laws and Public Regulations
Countries and regions in which the Group conducts its business activities are subject to various laws and regulations, including investment permits, import and export, commercial trade, labor, patent, taxation and foreign exchange. Modifications to such laws and regulations can have a significant impact on the operating performance of the Group.

5. Risks related to Procurement
The Group’s production activities depend on various raw materials and the Group strives to ensure stable procurement of raw materials by avoiding dependence on specific sources for such. However, a lack of or delay in the supply of raw materials, or a price hike caused by such circumstances, can have a significant impact on the operating performance of the Group.

6. Risks related to Development of New Products
Technological advances are remarkable in the electronics market, which is one of the main industries to which the Group distributes its products. As such, the Group makes ongoing efforts to develop cutting-edge materials that can readily respond to technological innovation. However, if the Group faces difficulty in appropriately responding to changes in the industry and related markets, this may have a significant impact on the operating performance of the Group.

7. Risks related to Environmental Issues
As a business entity that handles various chemical substances, the Group complies with various laws and regulations relating to the environment, as well as proactively implementing energy-saving measures to prevent global warming and taking steps to restrain the emission of substances that affect the environment. However, if a need arises to newly pursue a major capital investment due to a strengthening of environment-related regulations beyond expectation, this may have a significant impact on the operating performance of the Group.

8. Risks related to Product Liability
The Group is fully committed to ensuring optimal product quality in accordance with the characteristics of each product. However, should an unforeseeable quality issue arise, such may significantly impact the operating performance of the Group.

IR Policy

Shin-Etsu Chemical Co., Ltd. conducts IR activities to provide all stakeholders with a better understanding of the Company’s business and management. The Company listens to the views of shareholders and investors through dialogue and make use of their views to management.

Information Disclosure Policy

1. Basic Policy
We ensure fair and transparent disclosure to our shareholders and investors in accordance with Financial Instruments and Exchange Act and the Securities Listing Regulations stipulated by the Stock Exchange on which our stocks are listed. This is based on our understanding that timely and accurate disclosure of the Company’s corporate information to the shareholders and investors facilitates the understanding of the Company and brings appropriate evaluation from the market.

2. Information Disclosure Policy
The Company discloses information corresponding to material facts prescribed under the Securities Listing Regulations via the Timely Disclosure Network (TDnet) system of the Tokyo Stock Exchange, the Company’s website, and announcements made at relevant press clubs.
In addition to the aforesaid disclosure, the Company strives to disclose information that is considered to have a substantial impact on the investment decisions of shareholders and investors, and information that is likely to be useful for shareholders and investors to deepen their understanding of the Company via the corporate website in a fair and timely manner.

3. Matters Concerning Operating Performance Forecast
The information disclosed by the Company may contain forward-looking statements. These statements, such as operating performance forecasts, include risks and uncertainties since they are based on management’s judgment and assumptions in light of the information available at the time of disclosure of such information. The reader, therefore, should be aware that actual results may differ from any forecasts expressed due to various factors. Material factors affecting actual results may include overall economic conditions in which the businesses of the Company and its group companies are involved, the relevant market trends and fluctuations in foreign exchange rates. However, factors that may affect operating performance are not limited to those enumerated above.

4. Quiet Period
The Company observes a quiet period from the day following the financial closing date of each quarter until the day of announcement of financial results in order to prevent leakage of financial information and ensure fair disclosure. During this period, the Company refrains from making comments or answering questions regarding its financial results. However, if any event requiring disclosure under the Securities Listing Regulations arises during the quiet period, the Company will disclose information in a prompt and appropriate manner.