Nippon Paint : Updated Management Policy/Management Strategy Page

Purpose: Our Shared Identity

The Nippon Paint Group has set the "Purpose" on the occasion of its 140th anniversary of founding.
We set the Purpose that defines shared identity of the Nippon Paint Group, while respecting the autonomy of our partner companies based on their own Mission, Vision, and Value. Based on the shared values, diverse people at our partner companies around the world will collaborate based on strong bonds toward realizing Maximization of Shareholder Value (MSV).

Prosper Together	We prosper with absolute integrity and fairness by fulfilling our obligations and maximizing our commitments to all stakeholders (consumers, customers, communities, employees, suppliers, governments).
Powerful Partnerships	Our unique approach between our partner companies is based on respect, trust, empowerment and accountability. These partnerships form a powerful catalyst for innovation and growth.
Science + Imagination	The unlimited power of Science + Imagination, leading to ground-breaking technology and useful innovation that preserve, enhance and enrich the world.

Our Ultimate Objective: Maximization of Shareholder Value (MSV)

Our ultimate objective is to create wealth through Maximization of Shareholder Value (MSV)

MSV is the ultimate objective of Nippon Paint Group management. The MSV concept is different from a "shareholder primacy" approach in that we seek to create wealth with the aim of maximizing the residual shareholder value that remains after fulfilling our duties to customers, employees, business partners, and society.

The illustration above shows stakeholder relationships to profit and loss items-customers and revenue, suppliers and SG&A, employees and labor costs, financial institutions and interest expenses, and government and taxes. MSV is predicated on first fulfilling our duties to each stakeholder group. These duties encompass legal contracts and social and ethical responsibilities as well as the concept of sustainability.

MSV seeks to maximize the value that remains after fulfilling these duties, and reward shareholders who accepted the risks and invested in our company. The MSV approach recognizes that our stakeholder duties are finite and that the value we produce beyond that amount belongs to shareholders. MSV focuses on the maximization of medium- and long-term shareholder value, rather than pursuing short-term shareholder value.

*1 PER=Price/Earnings Ratio: Market capitalization/ Profit attributable to owners of parent

Important indicators of our MSV performance are earnings per share (EPS) and the price-to-earnings ratio (PER). As the CEO of the NIPSEA Group, Wee Siew Kim guided the group through annual profit growth of over 10% for 12 years from FY2009. Wee's focus at the Nippon Paint Group will be on overseeing the worldwide operations and to maximize EPS by growing both revenue and profitability. Yuichiro Wakatsuki will apply his wealth of experience and knowledge in the capital markets and M&A to maximize PER by raising expectations in the capital markets. Wakatsuki will be in charge of overall corporate matters and seek to leverage M&A to spur further growth for the Group. As just described, we have a division of responsibilities. However, we will make all executive decisions together and will be jointly responsible for the overall management of the Group.

Our Unique Management Model: Powerful Partnerships

Creating synergies through trust-based collaborations with partner companies

Powerful Partnerships is our unique approach to foster organic collaboration and cooperation among partner companies in Japan and overseas and to promote autonomous business growth based on a decentralized model, guided by the Group's common Purpose.

Our mainstay decorative (architectural) paints business features local production for local consumption. For this reason, NPHD exerting blanket control over the Group's wide palette of businesses would not be effective. Conversely, providing a platform for our Group companies to share and learn from each other is the most effective way to generate Group synergies.

We adopted a Powerful Partnerships approach to foster organic collaboration and cooperation among partner companies in Japan and overseas and to promote autonomous business growth guided by the Group's common Purpose. NPHD plays a governance role for the Group, including appointing and dismissing Group partner company CEOs and overseeing financial strategy, but the individual companies are responsible for executing their own autonomous initiatives to create synergies among the Group's partner companies.

Our aim is to encourage and facilitate our partner companies to create synergies with other Group companies and new additions to the Group to pursue new growth opportunities, reduce costs through joint procurement, acquire human resource talent, and share best practices to improve their businesses.

Four Strengths of the Nippon Paint Group

Value Creation Model: Our Basis for Achieving Maximization of Shareholder Value (MSV)

Pursuing Maximization of Shareholder Value (MSV) based on Powerful Partnerships with Group partner companies around the world

Management Strategy: New Medium-Term Plan (FY2021-2023)

Setting a medium-term milestone towards our long-term goals

Financial plan

The Nippon Paint Group released a three-year New Medium-Term Plan (FY2021-2023) in March 2021.
Our Group's long-term financial targets are to achieve a revenue CAGR in the high single digits beginning in FY2024. Our goal is to exceed the revenue CAGR targets of our major benchmarked competitors of 4-6%. The operating profit and EBITDA CAGR are based on the plan to use additional marginal profit as sales grow in order to increase profit margins, thereby achieving profit growth exceeding revenue growth. Our milestones for FY2023 are revenue of 1,100.0 billion yen, operating profit of 140.0 billion yen, and EPS (before stock split) of 225 yen. Furthermore, our targets are revenue CAGR of more than 10%, an operating profit margin improvement of 2.7 points, and EPS growth of 25%.
We will implement the growth strategies in the New Medium-Term Plan in all our operating regions and businesses by mobilizing the Power of Teamwork with our partner companies with the goal of building a powerful base for sustainable growth.

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