Nippon Paint : New Midium-Term Plan (FY2021-2023) Presentation SummaryPDF5.9MB

Nippon Paint Group New Medium-Term Plan (FY2021-2023)

Presentation Summary March 5, 2021

Thank you for attending this presentation despite your busy schedule. I am Masaaki Tanaka, President and CEO of Nippon Paint Holdings.

Today I will explain the Nippon Paint Group's new three-yearMedium-Term Plan that started in FY2021.

Due to the COVID-19 pandemic, we decided to hold this presentation as a webinar. Thank you for your understanding.

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Today, I will explain the following seven items.

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Our new Medium-Term Plan is based mainly on the following three policies.

Firstly, the plan was created with the significant involvement of the management teams of our partner companies. The aim is to clarify accountability and enhance the sense of involvement among our partner companies in order to maximize the Group's comprehensive power and increase prospects for the plan's success.

Secondly, we determined our "Purpose" concurrently with the new Medium-Term Plan. The Purpose defines the Nippon Paint Group's shared identity while respecting management autonomy at partner companies based on their own Mission, Vision, and Value. The Nippon Paint Group, which consists of diverse members, is dedicated to conducting business operations based on the shared values ingrained in the Purpose.

Thirdly, the positioning of the Medium-Term Plan. Donald Farquharson of Baillie Gifford, a global

investment management firm, made the following statement in a newspaper interview: "Japanese companies should run their businesses with a longer term perspective. Three-yearmedium-term management plans are too short and rigid. They should always look at the next five years and update their management goals according to the actual business conditions." I totally agree with him. In today's rapidly changing business environment, including the digital revolution and rise of environmental issues, I believe companies should boldly respond to changes in the business environment by always looking ahead five to ten years. Therefore, I believe it is appropriate to position the three-yearMedium-Term Plan as a milestone for three years based on this approach.

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Pages 5 and 6 summarize the review of N-20, our previous Medium-Term Plan covering FY2018-2020. Please look at these pages later.

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Next, I will explain two key components of the new Medium-Term Plan.

First is the regional and business strategy. This strategy is designed to further solidify the foundation for growth established during the previous Medium-Term Plan and includes decisive actions to address challenges that have emerged.

Firstly, in the fast-growing markets of Asia, including China, and Turkey, we will aim to increase earnings through revenue growth while maintain operating profit margins.

Secondly, in Oceania, where stable growth is expected, we will aim for revenue and operating profit growth that outpaces the market's growth.

Thirdly, in Japan, we will make investments to update production facilities and use the digital transformation to streamline operations with a medium- to long-term perspective. Our aim is to translate these efforts to enhancing competitive advantage, increasing productivity, improving our market share, and creating new demand.

Fourthly, in the automotive coatings business, we will leverage the new globally integrated operations structure under NPAC to meet customers' needs around the world. Our goal is to increase our market share and acquire new customers by enhancing technological strengths and our quality assurance system.

Lastly, we will leverage the business experiences of DuluxGroup and Betek Boya in sealants, adhesives, ETICS thermal insulation and other products to launch paint related businesses in China and other Asian regions.

By taking these actions, we will aim to achieve FY2021-2023 revenue growth at a compound annual growth rate (CAGR) of 10% or more in the fast-growing markets of China and Turkey. In addition, we will aim for revenue growth of around 5% in Oceania and Japan and 5-10% in the automotive coatings business worldwide.

Another goal is to maintain operating profit margins that are generally at FY2021 levels or higher.

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