Nippon Paint : Released Medium-Term Plan Progress Page

Released March 16, 2022

Nippon Paint Group Medium-Term Plan Progress

Outline of Medium-Term Plan (FY2021-2023) Progress

Year 1 of Medium-Term Plan provided the foundation for our "Asset Assembler" model
which combines strong organic and M&A growth.
We will continue to fuel our insatiable appetite for medium- and long-term growth.

Asset Assembler

Nippon Paint is a unique Japan-based "Asset Assembler" with MSV as its sole mission

We have adopted a business model in which we, with a smaller headquarters at the holding company (NPHD), assemble assets focused on attractive markets in the paint and adjacency arena through M&A, while driving autonomous growth of the existing Group partner companies^*, resulting in strong growth with limited risk. We call it the Asset Assembler model.

*Name of consolidated subsidiary companies of Nippon Paint Holdings

1. Focused on paint and adjacencies with significant market opportunities Paint and adjacencies have significant growth opportunities, driven by population growth, per-capita GDP growth, and urbanization. We have considerable expertise and knowledge in these areas. SAF*1(USD60.0 bn*2) and CC*3(USD71.5 bn*4) also have attractive market size.

2. Attractive risk-return profile of paint and adjacency arena Strong brand and high market share raise entry barriers, leading to solidification of leading market position. Paint and adjacencies markets are characterized by local production for local consumption, allowing for our autonomous and decentralized model to minimize PMI risk.

3. Japan domicile enhanced competitive strengths Ability to finance at low interest rates in Japan, which has a stable currency and stable market, based on long-term relationships with banks. Attractive Japanese capital markets, which have stable legal system and high liquidity in TSE.

4. An assembly of talented management and strong brands Management of partner companies have deep understanding of market features in every region and are well versed into MSV, and can fully utilize their capabilities based on our autonomous and decentralized business model.

5. Advanced governance Independent Directors comprise majority of the Board of Directors (8 out of 11 board members). Ensuring protection of minority shareholders interests with MSV as a shared mission with our major shareholder.

*1 SAF: Sealants, Adhesives, Fillers
*2 Source: Fortune Business Insights
*3 CC: Construction Chemicals
*4 Source: ReportLinker

On top of strong organic growth, we assemble assets with strong brand and excellent management through M&A, effectuating accelerated growth with limited risk.

Sustainable Growth Model as Asset Assembler

The key element of this model is that excellent management teams pursue autonomous growth in the Nippon Paint Group and exploit the technological strengths, distribution networks, purchasing capabilities, and financing capabilities of the Nippon Paint Group platform, rather than relying on initiatives of the headquarters. This will allow us to accumulate expertise in various areas and generate synergies as well as to attract new partners to the Nippon Paint Group.
By focusing on the paint and adjacencies markets, which are growth markets with the ability to generate sustainable earnings and cash, the Asset Assembler model allows us to accelerate growth with limited PMI (Post Merger Integration) risk involving M&A.

Strategy By Region And Business

FY2021-2022 Revenue/Growth Rate

FY2022-2023 Actions

*1: Computerized Colour Matching
*2: Brand for adjacencies products such as adhesives and sealants
*3: External Thermal Insulation Composite System

Sustainability Strategy

Progress & Further Plan of Materiality

*1: Scope1 & 2; intensity basis
*2: Disclosed Scope 3 GHG emissions from our operations in Japan in the Integrated Report
*3: Life Cycle Assessment: A method of quantifying the environmental impacts across the entire life cycle of a product
*4: Our unique framework that integrates the sustainability perspective in product development

M&A Strategy

Continue to pursue aggressive M&A strategy by leveraging our autonomous and decentralized business model

Our Asset Assembler model is not based on global standardization and common cost reduction programs, but rather pursues autonomous growth by assembling excellent companies with potential for a sustainable EPS contribution. We encourage collaborations with existing Group partner companies around the world and allow the use of financial resources provided by NPHD. We believe this is the right model to create medium- and long-term value in the paint and adjacencies businesses, which are characterized by local production for local consumption.

*1: Return on invested capital (after one-off expenses)
*2: Weighted average cost of capital

Related Materials of Nippon Paint Group Medium-Term Plan Progress

Links to related pages