2021
INTEGRATED REPORT
Introduction
For more than a century since its establishment in 1918,
the Kansai Paint Group has been providing technologies cultivated in the paint and coating business.
Our founder, Iwai Katsujiro, was a manager with an ESG perspective, someone who emphasized manufacturing and trustworthy relationships, as well as long-term outlooks and social contributions.
Today, the Kansai Paint Group continues to live up to this spirit.
With this as our driving force, we will take on the challenge of creating new value and solving global issues.
Kansai Paint Group Corporate Philosophy
Mission Statement
We leverage superior technology to contribute to our Customers and Society,
in a sustainable manner, with innovative Products and Services, through a competent workforce, built on a culture of Customer Focus, Integrity and Respect to our Stakeholders.
Core Values
CONTENTS
03 Message from the President
05 Corporate Data
Company Profile
Group Companies
06 Materiality of the Kansai Paint Group
- History of Social Contributions and Challenges
- Financial/Non-financialHighlights
- Value Creation Process
13 The 16th Medium-term Business Plan and its Progress
Targets
Progress
Management cycle
Key principles
- Growth Strategy: Good to Great
- Business Overview
24 TOPICS
Development policy
Performance Improvement Committee
Social contributions
27 Coexistence with the Global Environment
Policies and system on environmental conservation Organizational structure of Responsible Care
Top Management audit of Responsible Care
ALES ECO PLAN 2021 (Evaluation of FY2020 targets and results)
Future activities
Responding to global warming
35 Fair Governance
Basic approach to corporate governance Corporate governance organization Composition of Kansai Paint Group's Board of Directors and Audit & Supervisory Board Stakeholder engagement
- Toward New Business Opportunities
- Contribution to a Comfortable and Secure Life
Improving the value of products and services Safety of products and services
Technology development and product development
43 Promoting Supply Chain Management
Green Procurement Guidelines
Legal compliance
Support for business continuity
44 Contribution to Local Community and Industrial Development
Contribution to local community and industrial development: Our approaches
45 Measures for Diversity
Our HR system (basic principles)
Human resource development concept and structure
Systematically organized training system Promotion of motivation/sense of achievement among employees
Promotion of diversity
Ensuring health and safety
Respect for human rights and harmony with the community
We build strong trust with all stakeholders, by doing the right thing, and by taking decisions that enhance the reputation of the organization in Society.
We continuously strive to understand and exceed Customer expectations.
We encourage organization members to take responsibility for their own actions and decisions, show commitment to
We respect diversity and embrace cultural and individual characteristics of organization members, customers and communities by showing empathy and understanding the viewpoints of distinct beliefs, philosophies and cultures. We encourage and foster an environment of learning, teamwork and cooperation, that enables the development of all organization members.
We facilitate the emergence of entrepreneurial ideas that have a long-term perspective, originality in thinking, and practicality of execution, taking responsibility to see these ideas through, with ownership at all times.
We shall continue contributing to People and Society by providing sustainable value to all stakeholders.
We pioneer Innovation by engaging our collective wisdom and knowledge to create new value propositions, and continuously strive to generate original and novel solutions for products, services, and work processes.
Reduction of hazardous chemical substances Biodiversity
Efforts to prevent air pollution Water usage
Monitoring of wastewater quality
Risk management at manufacturing plants for leaks, etc. Waste
Approaches to the management of chemical substances of concern
Fire at our Indonesian subsidiary PT. KANSAI PRAKARSA COATINGS and its aftermath
Materials balance
Management of chemical substances
49 Review and Analysis of Major Consolidated
Business Results
Business environment
Analysis of financial conditions
Business risks
51 10-year Summary of Consolidated Financial Indicators
- Consolidated Balance Sheets
- Consolidated Statements of Income Consolidated Statements of Comprehensive Income
-
Consolidated Statements of Changes in
Net Assets
57 Consolidated Statements of Cash Flows
all stakeholders, and accomplish work in an appropriate and efficient manner.
We experiment in different and groundbreaking ways to deal with value-creation opportunities or challenges, through a deep understanding of the issue at hand.
Editorial policy
Since 2019, the Kansai Paint Group has published an integrated report that provides a comprehensive and easy-to-understand summary of past, present, and future financial and non-financial information as a value creation story, with the aim of helping stakeholders make an overall judgment about the value of the group.
Guidelines and other information used as reference
Corporate Mission (Established January 1967)
- To further build company credibility with the public and to contribute to society by providing products and services that achieve customer satisfaction.
- To build on our knowledge and strive for technological innovations in order to improve the companyʼs performance.
- To harness the collective efforts of all individuals in order to maximize company returns.
Kansai Paint's Corporate Mission is the spiritual backbone of Kansai Paint and has been handed down since
the company's foundation, forming the bedrock of the Kansai Paint Group Corporate Philosophy.
1
●The International Integrated Reporting Framework, published by the International Integrated Reporting Council
●GRI Standards, published by the Global Reporting Initiative
●SASB Standards, published by the Sustainability Accounting Standards Board
Period covered
FY2020 (April 1, 2020 to March 31, 2021), including some contents for FY2021.
Scope of report
Kansai Paint Co., Ltd. and the Kansai Paint Group (consolidated subsidiar- ies) are included in the scope of this report. Matters which fall outside the scope of this report shall be clearly indicated as such.
Disclaimer
This report contains forward-looking statements based on plans, fore- casts, and management plans and policies as of the date of publication. Forward-looking statements are based on judgments made at the time of creating the statements. Changes in various conditions may cause the results of future business activities or events to differ from the forecasts.
2
Message from the President
Good to Great
Returning to the spirit of our foundation and contributing to Earth and society
We are a well-established company with over 100 years of history. We have been expanding our business operation overseas, mainly in the field of automotive paint, and in the 2010s we expanded our scale through a series of mergers and acquisitions to become the eighth largest global paint manufacturer. On the other hand, we have faced various issues and experienced periods of decreases in profitability. In the 16th Medium-term Business Plan that started in FY2019, we have focused on tackling and resolving these issues head-on, and have made significant improvements in our management.
The unprecedented crisis brought on by the COVID-19 pandemic provided us with an opportunity to reconsider the significance and value of our existence. As we formulated our growth strategy, Good to Great, which we announced in November last year, we came to the conclusion that we exist to contribute to the good of Earth and society. This was the very aspiration of our founder, Iwai Katsujiro, who stated that the basis of management is to "contribute to the development of the economy and society while pursuing profits." For our group, sustainability is not about following trends, but about returning to our roots.
Our company is undergoing a major transformation with ESG management at its core, and this involves returning to the spirit in which the company was founded and working to solve social issues in order to benefit the world. We will pursue sustainability by making every effort to help achieve a decarbonized society, circular economy, and a safe and secure society by utilizing technologies and human resources we have cultivated through our paint and coating business.
Summary of results for FY2020
For the fiscal year ending March 31, 2021, sales were greatly affected by the COVID-19 pandemic, but we were able to limit the decline in sales to a 10.4% decrease from the previous year, resulting in sales of
364.6 billion yen. In addition, ordinary income and net income increased due to the effects of the initia- tives in the 16th Medium-term Business Plan, includ- ing the realignment of low-profit assets and structural reforms. Consolidated operating income and ordinary income for the second half of the fiscal year reached record highs.
On March 13, 2020, the day after the WHO declared the pandemic, our group issued two policies: "protect the safety of our employees and their families" and "continue our business." We have been able to make these kinds of achievements as a result of the united efforts of the entire global group.
In November 2020, we announced our new growth
strategy, Good to Great, which sets the company's directions for the future while continuing our business despite the threat of COVID-19.
Forecast for FY2021
In FY2021, we will attempt to achieve our highest ever consolidated operating income and ordinary income by vigorously promoting the structural reforms that we have been working on for the past two years. As for sales, our target is 400 billion yen, the same level as FY2019, due to concerns over the impact of the ongoing COVID-19 pandemic, which shows no signs of abating.
FY2021 is the final year of the 16th Medium-term Business Plan. In addition to firmly accomplishing what we set out to achieve in the 16th Medium-term Business Plan, we will formulate the 17 th Medium -term Business Plan. Our group has regained its earning power over the course of the 16th Medium -term Business Plan, and will enter a new stage by attempting to achieve its highest ever profits in the final year.
For the 17th Medium-term Business Plan, we have set mid-term goals and long-term goals for 2030 and 2050, and this the first three years of the plan will be vital in achieving these goals. During this period, we will undertake fundamental structural reforms, such as by revamping our supply chain in Japan and promoting digital transformation, and will make significant improvements in capital efficiency and profit- ability.
Closing thoughts
With our founding spirit of "pursuing profits and contributing to social development" at the core, our group will continue to take on the challenge of solving problems in order to benefit Earth and society. This challenge means that we will thoroughly refine our strengths, proactively invest in future assets (busi- nesses, communities, and human resources) that will contribute to social development, and create solid management foundations to support our businesses. Through our future challenges and reforms, we will become a truly global company as paint professionals. Although we are still at the beginning of our transfor- mation, we have already begun to change with the idea that Good is the greatest enemy of Great. We hope that this report will convey the essence of our group's efforts and serve as a bridge between our company and you, as partners who share a common goal for the future and are working with us to achieve a sustainable society.
MORI Kunishi
Representative Director and President
3 | 4 |
Corporate Data
Company Profile
Established in 1918, Kansai Paint Co., Ltd. has grown into Japan's most progressive manufacturer in various fields related to coatings.
Today, the company enjoys a well-established position as one of the world's leading paint manufacturers.
The various products provided by the Kansai Paint Group are highly valued and trusted in a broad variety of fields,
Name | Kansai Paint Co., Ltd. |
Head office | 6-14, Imabashi 2-chome,Chuo-ku, Osaka 541-8523, Japan |
Date established | May 17, 1918 |
Capitalization | 25,658 million yen |
Number of employees | 15,908 (consolidated) |
End of term | March 31 |
INTEGRATED REPORT 2021
Materiality of the Kansai Paint Group
Today, the manner in which companies should tackle the issues facing society through their business activities is being called into question once more. In order to contribute to the development of people and society and to achieve sustainable growth in the future, we have identified the following materiality that we should prioritize through our business activities by leveraging our strengths, based on the Group Corporate Philsophy.
Process for specifying materiality | |||
STEP 1 Narrow down items | STEP 2 Prioritize → select | STEP 3 | Review/approve |
→ specify |
due to the important role our coatings play, such as protection, beautification, special functionality, and environmental sensitivity.
Moreover, with Kansai Paint's proprietary research and development capabilities at its core, the company is providing its clients around the world with unparalleled
Principal | Manufacturing and sale of paints |
Design, manufacturing, and sale of coating equipment | |
business lines | Control and undertaking of painting work |
Design of colour schemes | |
Corporate website | https://www.kansai.com/ |
Major Offices
Registry Office 33-1Kanzaki-cho, Amagasaki, Hyogo |
Consider social issues and requests based on our own management policies, plans, strengths, and issues; SDGs and their targets; and survey items from ESG evaluating bodies, and extract issues that we need to tackle from
Evaluate and sort the items extracted during Step 1 from two angles: degree of impact on stakeholders and degree of impact on our group. Narrow down the list to 20 items with the highest impact, group these in terms of similarity of content and select 6 items as materiality.
Gain approval through deliberation at a management meeting and a resolution passed down by the Board of Directors, and specify as "Materiality of the Kansai Paint Group."
customer service by expanding its manufacturing, distribution, and sales activities worldwide.
Head Office | 6-14, Imabashi 2-chome,Chuo-ku, Osaka |
Plants | Amagasaki, Ono, Nagoya, Hiratsuka, Kanuma, Tokyo, Kitakyushu |
R&D Center | Hiratsuka |
the following four perspectives:
⑴ Things that contribute to the |
development of people and |
society |
⑵ Things that lead to a sense |
of motivation or achievement |
stakeholders
on impact of Degree | High |
High |
Degree of impact on the Kansai Paint Group
Things that we should comply with and address as a member of society
Coexistence with the global environment | Fair governance | |
● Responding to global warming | ● Corporate governance | |
● Utilizing natural resources | ● Adhering to labor standards | |
● Water usage | ● Thorough compliance | |
● Taking steps to achieve a | ● Preventing corruption | |
recycling-oriented society | ||
● Promoting waste management |
Group Companies
among employees through |
Things that contribute to the development of people and society
Consolidated subsidiaries
KANSAI PAINT SALES CO., LTD. (Ota-ku, Tokyo) KUBOKO PAINT CO., LTD. (Higashiyodogawa-ku, Osaka) NIPPON KAKO TORYO CO., LTD. (Koza-gun, Kanagawa Prefecture) KANPE HAPIO CO., LTD. (Chuo-ku, Osaka City)
KANPE TRADING CO., LTD. (Ota-ku, Tokyo) KAT CO., LTD. (Ota-ku, Tokyo)
KANSAI PAINT MARINE CO., LTD. (Ota-ku, Tokyo) KANSAI HELIOS COATINGS GMBH (Austria) KANSAI NEROLAC PAINTS LTD. (India)
Unconsolidated subsidiaries and affiliates
OHGI SHOKAI CO., LTD. (Kita-ku, Osaka)
POLISAN KANSAI BOYA SANAYI VE TICARET A.S. (Turkey) HUNAN XIANGJIANG KANSAI PAINT CO., LTD. (China)
COSCO KANSAI PAINT & CHEMICALS (SHANGHAI) CO., LTD. (China) 22 other companies
the realization/practice of ⑴ |
⑶ Things that we should |
obey or comply with as a |
member of society, such as |
laws and ordinances |
⑷ Things based on long-term |
aspirations |
Contribution to a comfortable and secure life | Contribution to local community | |
● Helping improve contentment in life | and industrial development | |
● Improving the value of products | ● Contribution to local community | |
and services | and industrial development | |
● Promoting the spread of paints | ||
● Safety of products and services | ||
Toward new business opportunities | ||
● Promoting supply chain | ||
management | ● Toward new business opportunities |
Things that lead to a sense of motivation or achievement among employees
Measures for diversity | |
● Creating a sense of motivation or | ● Ensuring health and safety |
achievement among employees | ● Respect for human rights and |
● Promoting diversity | harmony with the community |
KANSAI PLASCON EAST AFRICA (PTY) LTD. (Mauritius) PT. KANSAI PRAKARSA COATINGS (Indonesia) KANSAI PAINT ASIA PACIFIC SDN.BHD. (Malaysia) U.S. PAINT CORPORATION (U.S.A.)
KANSAI ALTAN BOYA SANAYI VE TICARET A.S. (Turkey) KANSAI PLASCON AFRICA LTD. (South Africa)
THAI KANSAI PAINT CO., LTD. (Thailand) KANSAI RESIN (THAILAND) CO., LTD. (Thailand) TAIWAN KANSAI PAINT CO., LTD. (Taiwan)
P.T. KANSAI PAINT INDONESIA (Indonesia)
SIME KANSAI PAINTS SDN. BHD. (Malaysia)
KANSAI PAINT (China) INVESTMENT CO., LTD. (China) 80 other companies
Relationship between the values of materiality and the Group Mission Statement and ESG/SDGs
Materiality | Contents of materiality | Core Values | ESG | Relevant SDGs | ||||||||||||||
Coexistence with | ● Responding to global warming | |||||||||||||||||
GOOD HEALTH | CLEAN WATER | AFFORDABLE | SUSTAINABLE | RESPONSIBLE | CLIMATE | |||||||||||||
● | Utilizing natural resources | WELL-BEING | SANITATION | ENERGY | COMMUNITIES | AND PRODUCTION | ACTION | |||||||||||
the global | ● Water usage | Accountability | E | |||||||||||||||
environment | ● Taking steps to achieve a recycling-oriented society | |||||||||||||||||
● Promoting waste management | ||||||||||||||||||
● | Corporate governance | |||||||||||||||||
AND STRONG | ||||||||||||||||||
PEACE, JUSTICE | ||||||||||||||||||
Fair governance | ● Adhering to labor standards | Integrity | G | INSTITUTIONS | ||||||||||||||
● Thorough compliance | ||||||||||||||||||
● Preventing corruption | ||||||||||||||||||
Toward new business | ● Toward new business opportunities | Innovation | ES | AFFORDABLE | INDUSTRY, | CLIMATE | ||||||||||||
AND CLEAN | INNOVATION AND | ACTION | ||||||||||||||||
ENERGY | INFRASTRUCTURE | |||||||||||||||||
opportunities | ||||||||||||||||||
Contribution to | ● Helping improve contentment in life | |||||||||||||||||
Customer | GOOD HEALTH | SUSTAINABLE | RESPONSIBLE | |||||||||||||||
● Improving the value of products and services | WELL-BEING | COMMUNITIES | AND PRODUCTION | |||||||||||||||
a comfortable | ES | AND | CITIES AND | CONSUMPTION | ||||||||||||||
● Safety of products and services | focus | |||||||||||||||||
and secure life | ● Promoting supply chain management | |||||||||||||||||
Contribution to local | Contribution to local community and industrial | |||||||||||||||||
INFRASTRUCTURE | COMMUNITIES | |||||||||||||||||
● | Entrepreneurial | INDUSTRY, | SUSTAINABLE | |||||||||||||||
community and | development | ES | INNOVATION AND | CITIES AND | ||||||||||||||
mindset | ||||||||||||||||||
industrial development | ● Promoting the spread of paints | |||||||||||||||||
● Creating a sense of motivation or achievement among employees | ||||||||||||||||||
GOOD HEALTH | GENDER | DECENT WORK | REDUCED | |||||||||||||||
● Promoting diversity | WELL-BEING | EQUALITY | GROWTH | INEQUALITIES | ||||||||||||||
Measures for diversity | Respect | S | AND | AND ECONOMIC | ||||||||||||||
● Ensuring health and safety | ||||||||||||||||||
● Respect for human rights and harmony with the community | ||||||||||||||||||
5 | 6 |
History of Social Contributions and Challenges
1918-1948: Founding Period | 1949-1986: Postwar Growth Period | 1987-2010: Overseas Expansion Period |
INTEGRATED REPORT 2021
2011-2018: Period of Accelerating Globalization | 2019 Onwards: Carving out the Future for Ourselves |
・In 1918, Iwai Katsujiro founded the company in Kanzaki, Amagasaki with 500,000 yen in capital.
・The company made great progress by contributing to the nationalization of paint production, much to the delight of many customers.
・Management foundations were established with a lineup of leading products, the opening of offices and
・The company overcame difficulties following the war to introduce many new technologies and products, becoming a comprehensive paint manufacturer.
・Listed on the Tokyo and Osaka Stock Exchanges, and established its head office in the commercial center of Osaka.
・Commenced overseas business in
・Kansai Paint began to officially globalize with the overseas expansion of domestic Japanese automobile manufacturers.
・In addition to expanding production capacity overseas, the company endeavored to improve its global price competitiveness and technology development capabilities and establish a technical support system.
・Kansai Paint accelerated the pace of its globalization efforts through M&A, focusing on emerging countries with remarkable economic growth in anticipation of increased demand for paints.
・In Japan and overseas, it developed paints intended to solve specific problems and provide people with a comfortable life-proposing paints,
In the 16th Medium-term Business Plan, which began in FY2019, the company established the following management cycle to enhance corporate value by proceeding with the realignment of low-profit assets, thereby reorganizing management resources.
Management cycle
The speed of the management cycle will determine the scale of future growth and increase our corporate value.
factories in Tokyo, and the establishment of a company song.
1926
Released CELVA, Japan's first domestically produced lacquer
Following on from Japanite, Japan's first spar varnish that created an opportunity for the nationalization of paint production, we launched CELVA in 1926. In addition to pleasing many customers, Kansai Paint's performance for the year achieved significant gains. The Celva Paint Research Laboratory was established to
Singapore, Thailand, Taiwan, and India.
1955
Released Zolacoat, a multi-color design finishing material
The first technology introduced by Kansai Paint was the Zolacoat multi-colour design finishing material. The company hosted roughly 40 information sessions around Japan intended for press organizations, targeting special agents, vendors, paint- ers, and general consumers. Zolacoat
1992
Established Tianjin Kansai Paint & Chemicals Co., Ltd. as a joint venture company in Tianjin, China
The overseas businesses made further progress as internationalization increased. Particularly in Asia, the expansion of overseas joint ventures and the self-reliance due to the management efforts of each company resulted in a strengthening of the
such as anti-mosquito and antiviral paints.
2011
Acquired the shares of Freeworld Coatings (South Africa) and converted it into a consolidated subsidiary (currently Kansai Plascon Africa Ltd.)
The major South African paint manufacturer Freeworld Coatings Ltd. was converted into a consolidated subsidiary to accelerate the development of emerging markets and to establish a
Short-term | |||||||||||||
business recovery | |||||||||||||
Analyze | Realign | ||||||||||||
low profit assets | |||||||||||||
Management resource | |||||||||||||
reorganization | |||||||||||||
Focus on profitable areas | |||||||||||||
Expansion | Reinvestment in growing segments | ||||||||||||
of scale | ・Business ・M&A | ・Alliance | |||||||||||
Improve ability to earn
・Topline growth ・Profit expansion ・Improve efficiency
Maximize cash
provide spray coating technical instruction to company engineers, and hosted events such as paint technique competitions and demonstrations which significantly contributed to popularizing spray coating.
even became a kind of trend in building construction.
management foundation.
business foundation in the growing African market. Acquiring the company enhances Kansai Paint's competitiveness in the architectural field with Freeworld's strengths in architectural coatings.
2021 and beyond
Shift to ESG management based on a long-term perspective
Long-term outlook (our ideal state and roles)
Review of materiality
Financial value, social and environmental value
Value provided (output)
1934
Established the Kansai Paint Young Men's Military Training Center
At the request of the government, we established a private training school for young men within the main factory to provide military training and vocational education. Later, the school was reopened as the private Kansai Paint Boys' School and gained a reputation as one of the best schools in Amagasaki City until it was closed in 1945.
1971
Completed the Kanuma plant Expanded and established a position in the field of automotive coatings
Kansai Paint completed its fifth plant in Kanuma after building plants in Amagasaki, Tokyo, Hiratsuka, and Nagoya. The plant was equipped with modern facilities to establish a system for efficiently producing and supplying highly reliable products. The plant also received an award of excellence in the first Tochigi Prefectural plant greenery contest for its early environmental design consider- ations.
2000
Developed the first water-based coating for use as an auto refinish coating in Japan
The development of a water-based coating for use as an auto refinish coating was a challenge, given that this product required a high level of quick-drying, workability, and excellent finish. However, we were among the first to start development work on these paints, and we continue to refine our technologies to this day.
2018
Global company-wide implementation of group anniversary projects
To commemorate the 100th anniversary of Kansai Paint's founding, we held simultaneous ceremonies around the world via video streaming, introduced a group corporate logo, formulated a corporate philosophy that is easy to understand regardless of culture or language, and distributed original Shikkui Washi Japanese paper fans as commemorative gifts to approximately 18,000 group employees in Japan and overseas. These initiatives were intended to enhance the sense of unity of the group, as well as help increase motivation among employees.
Selection and change of business model
Resource allocation
Execution strategy
17th Medium-term Business Plan (November 2021)
7 | 8 |
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Kansai Paint Co. Ltd. published this content on 10 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 November 2021 16:04:06 UTC.