Contact us(From Annual Report 2026)
President’s Message
President
Yasuhiko Saitoh
We will make steady progress
toward enhancing corporate value
Increase earnings per share,
lower the cost of equity,
and raise the growth ―
In the fiscal year ending March 31, 2026 (FY2025), we extended our growth path in the Electronics Materials segment, while we coped with strong headwinds in the Infrastructure Materials segment. Against our primary performance objective of achieving a year-on-year growth in both sales revenue and earnings, we did not increase the earnings for FY 2025. For the current fiscal year, our priority is to achieve a meaningful growth in the earnings. In this regard, the segmental result for FY2025 tells us what to do.
The markets for polyvinyl chloride, which is a core business line in the Infrastructure Materials segment, experienced a significant price decay last year. Price correction is our No.1 task, and the initiatives that we have been taking since the beginning of this year are bearing fruit. In the Electronics Materials segment, we are capturing every opportunity in the remarkable growth of the semiconductor markets as it is driven by the historic rise of AI. In the Functional Materials segment, increases in our value-added product groups have gained momentum, leveraging our customer-centric technical strength. We will accelerate this progress. In the Processing & Specialized Services segment and throughout our lines of business, we will continue to increase our product offerings, particularly in semiconductor-related applications. We see enormous opportunities as AI proliferates.
In sum, while selling numerous products around the world, we deliver a value set to our customers. We do our business based on the value we deliver.
In FY 2025, we demonstrated our commitment to our shareholders remuneration and capital management. We declared dividends of ¥106 per share and implemented a 500 billion yen’s worth of share buyback. As a matter of reference, the total payout ratio for FY 2025 was 147%. The cash in hand is intended for large-scale growth initiatives, including merger and acquisition, reserves for economic shocks, and shareholders remuneration. We will make good use of the cash for the stated purposes. All these actions represent our sincere appreciation to our shareholders for their understanding and support.
The value of the company comes down to increasing earnings per share, lowering the cost of shareholders’ equity and raising the growth. We will continue to advance our businesses in a manner that supports these three key elements. Going forward, we will further differentiate ourselves in every aspect of our business and operation. To overcome headwinds, differentiation is essential. In doing so, we certainly keep our focus on providing our customers with products which make it attainable for them to do what they pursue. We tirelessly help solve what our customers need to solve. As changes take place fast and what our customers’ needs constantly evolve, opportunities present themselves for us. With a strong market-in mindset and aspiration, we work with our customers more closely than ever. We are determined to be a most reliable supplier to all our customers with best-in-class quality, technology and practice, so that our products will be used more and everywhere.
To extend and expand what we have been able to do for our customers, our shareholders and our communities, I reiterate that we must continue to grow. We will remain focused on our customers and their needs to be relevant to them, will remain committed to good governance to be relevant to our shareholders, and will remain responsible to be relevant to our communities. I sincerely thank our shareholders for their confidence, our customers for their partnership and our entire Shin-Etsu team for their dedication to our operations.
President
Yasuhiko Saitoh
Business and Other Risks
Among the matters relating to the status of business and accounting, etc. described in the Annual Securities Report, the major risks that management recognizes may have a significant impact on the financial position, business results, and cash flow status of the consolidated companies are as follows.
The Group (the Company and its consolidated subsidiaries and affiliates which are accounted for using the equity method, hereinafter referred to as “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, 2020, 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, 2020, overseas sales accounted for 73% of consolidated net sales of the Group. The Company expects the ratio to remain at a high level going forward. Significant exchange rate fluctuations may 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 may similarly affect foreign currency-denominated transactions and there is no guarantee that such risks can be completely avoided, 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 is kept to a minimum, and this includes 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 may cause physical damage to the Group’s production facilities and other properties, or the occurrence of supply chain disruptions, and these 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 may 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 being dependent on specific sources for such. However, a lack of or delay in the supply of raw materials, changes in trade policies in the supplying countries, or a price hike caused by such circumstances, can have a significant impact on the operating performance of the Group.
6. Risks related to Rapid Technological Innovation
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. In addition, the emergence of competitive substitute products may have a similar impact on products for industries other than the above.
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 curb the emission of substances that affect the environment by maximizing efficiency. However, if it is technically difficult to respond to environmental regulations or a need arises to newly pursue a major capital investment due to the strengthening of environmental regulations beyond what the Group had assumed, 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.
9. Impact of the New Coronavirus (COVID-19)
In order to minimize the impact of COVID-19, the Group’s business sites are implementing thorough safety and health measures. However, if the spread of the virus in the future and the policy of curbing economic activity in each country in the aftermath of it significantly reduces demand for the Company’s products and damages the supply chain, including the Company’s business sites, this 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.
