Mitsui Chemicals Inc (4183) October 15, 2026 Investor Update Transcript

First, I will explain our group's EST promotion and the 100-day plan. This job illustrates our group's EST promotion. We are incorporating EST into our management and pursuing initiatives to bring Vision 2030 to fruition. The triangle on the left illustrates our corporate group vision and corporate target, that is, our corporate vision. It is structured as follows. Vision 2030, our ideal vision for 2030, and our basic strategy for achieving them. On the right is our ideal future society we aim to create. We have identified the materiality topics that are critical to realizing this future society, and we're implementing our initiatives by aligning this materiality topic with our basic strategies. Furthermore, as described below, we review this materiality topic in light of highly uncertain external changes that may affect the achievement of management objectives and strategic goals. We have established KPIs linked to this materiality, and this diagram schematically illustrates how we manage these KPIs. As shown on the left, we check whether the KPI performance aligns with our targets. Moving to the right, we assess the current status. And finally, we verify that we are indeed achieving steady growth. Are we seeing progress on these non-financial KPIs that actually contributes to achieving our overarching goals and we're making steady improvements? We are implementing KPI management to track the status over five core strategies, and as shown in the center of this slide, this illustrates that the ultimate goal of KPI reviews is to enhance corporate value. However, as indicated in the box below, major changes in an external environment are contributing to a degree of delay in progress toward quantitative targets. To accelerate progress toward achieving these targets, it is therefore necessary to further strengthen our business foundation. As a measure to strengthen our foundation, we have developed a 100-day plan. Over the first 100 days, we mobilized the combined knowledge and strengths of the Mitsui Chemicals Groups to put together a robust plan for achieving our ideal state. Our theme is the growth of our customers and the evolution of each individual, as these ultimately lead to the growth and evolution of the Mitsui Chemicals Group. As mentioned earlier in Vision 2030, while our business divisions are addressing various themes, such as business strategy and portfolio transformation, we have been promoting a cross-functional approach to these issues. To this end, we have been forming task forces and teams to address specific challenges, transcending the organizational boundaries shown on the right. To facilitate this cross-functional coordination, a team led by the CEO, including the CXO, CFO, CTO, CHRO, CDO, executive of the Production and Technology Center, executive officer for regional strategy, have been at the center of discussions regarding our ideal future state and has been exploring strategies to achieve it. The four topics discussed are listed on the left. First is a solution strategy, which we are examining in conjunction with research, development and production technology. Next is our plant evolution strategy, that is improving our production technology capabilities. Third is our human resources strategy. And fourth is a DX-driven CX. We have been discussing how DX can not only make various tasks more convenient and faster, but also transform the way we work and the company itself. Here is a 100-way plan summary based on our discussions. We have set ambitious quantitative targets linked to financial value and will push our achievement over KPIs. As I mentioned earlier, after I first discussed the ideal state as a group, we also discussed how to translate non-financial goals into quantitative figures in order to link them to financial goals. For Team A, our vision and core technology continue to evolve through communication with our customers. Rather than focusing on how to develop the core technology we already possess, we are shifting our perspective to ask, what technologies will help our customers grow? And then defining our core technologies as those that enable that growth. We are conducting our discussions from this new perspective. We optimize our R&D sites in terms of their purpose, strategy, functions, staff, and connectivity. Rather than focusing on how to make the most of our existing sites, we are discussing from a global perspective which locations would be most suitable as basis for our research and development. Third is a concurrent development framework in which production engineering is involved from the early stages of research. Rather than adopting the traditional approach, which relies on large-scale manufacturing facilities like those in the petrochemical industry, and uses them as a given for developing catalysts, formulations, and improvement. We believe that future growth areas will require initiatives that accelerate development and R&D using agile, flexible facilities, and then scale those efforts up. From this perspective, we concluded that it was necessary for production engineering, including mass production, to be involved from the early stages of research. Our challenge goals are to bring 10 R&D themes resulting in product launch and 10 billion profit contribution from R&D themes. This does not mean we are revising our current KPIs. Rather, we view these goals as complementary to those KPIs. Team B is focused on the plant evolution strategy. Our vision is to become a sustainable plant that can be trusted by local communities and contribute to the economy and society. We conduct our production activities in these regions. Unless we can provide safety to the local community, we have no right to produce. First, we discussed what we need to do to become a trusted factory. Next is operation and maintenance, a factory where anyone can operate safety and reliability, a factory where both young and experienced workers can operate at a similar level. I believe that tools like AX and DX will be necessary to achieve this. Next is people and technology, a factory where people and technology continue to evolve. As I stated in the second point, if anyone can operate the equipment, what roles will people play? We discussed how, ultimately, it is people who drive progress beyond AI and digital transformation, DX, and that both people and technology must continue to evolve. Our challenge goals are set at the 30% rate of AI use in operations, a 50% standardization rate for key items across all factories, and the implementation of 100 new production technologies. Team C is focused on HR strategy. We outlined a vision for developing the professional workforce necessary for a global specialty company and ensuring diversity, and we established a schedule accordingly. However, in light of the planned split of basic and green materials, we are currently re-evaluating this plan. While we have set a tentative schedule and goals, we are currently refining the details. Team D is achieving DX-driven CX. By leveraging data and digital technologies to enhance company-wide operational efficiency, The company is transforming into one that customers choose. Rather than relying on intuition, experience, and courage, we are accelerating the PDCA cycle based on decision-making grounded in data and value criteria. Based on our experience to date, someone is well aware of this. I don't think this is something we can simply find out by asking someone. Rather, I believe we need to ensure that we thoroughly discuss it based on data. Our challenge goal is to contribute 10 billion yen in profits. In developing this 100-day plan, we've engaged in direct dialogue, including with our plants and overseas operations, to gather everyone's input in our ideas and to incorporate your feedback, and we've used that input to finalize this plan. Our plan is to next schedule out this 100-day plan, set specific goals, and implement action plans on a 100-day cycle. We will implement the action plan in 100-day increments leading up to 2030. In other words, the plan is to continue this as a 100-day action plan. That concludes my explanation. Thank you, President Mr. Ichimura. Next, I would like to ask CTO Mr. Omote to speak. I will explain the solution strategy outlined in a 100-day plan. Regarding research, development, and production technology, as the President mentioned earlier, we have set certain targets for 2030. Since the ideal state for the future was explained earlier, I'll skip this part. But regarding the evolution and growth needed to achieve it, the essence of technology is not simply to drive the finished product forward through technology alone, but rather to grasp what our customers and the market are demanding and identify the points of change. And in that process, our own strong technology is forged. We are currently shifting our mindset toward this way of thinking. Furthermore, through proof of concept, POC, prototyping, and field testing, we intend to continuously refine our technology by applying it to our customers' decision-making and operational processes. However, in this increasingly complex R&D environment, the traditional sequential approach where we first develop the materials, then the process technology, followed by engineering, and finally moved to the factory, is becoming less and less viable going forward. Therefore, we have recently reorganized our corporate research, the development teams within the business divisions, the new business development center, ENVIC, and the processing center, FBEC. Production engineering and intellectual property will work together as a unified team, moving forward with our activities while envisioning the entire process from the early stages of research all the way to delivering products to our future customers. Through these efforts in terms of growth, production technology team will be involved from the outset of the research and we'll design research teams with an eye to scale, quality, cost and regulation. It's not just about stopping at the prototype stage. We'll carefully design the product from the research phase onward considering whether it will truly be useful to customers and worth their purchase when it's delivered, and whether if we continue to develop it over the long term, the scale will continue to grow and will transition this seamlessly into mass production. When it comes to production technology, particularly machining technology, as complexity continues to increase and the level of processing progress of raw materials to components from components to pads and then to modules, we aim to achieve growth by integrating core technologies. So starting last October, we established eight agenda items and have been moving forward with these activities. The areas highlighted in the red are where we've already made significant progress. First, we clarified the roles of research and development and then defined our mission, evaluation criteria, and our goals. We moved development to the business divisions, where research as a corporate function is firmly focused on its medium to long-term role, which we refined our mission statement and our activity pursuing. We are also moving forward in parallel with the globalization of our research and development. We will explain this in more detail later, but we are making steady progress in this area as well. Next is the monetization of the intellectual property. We will explain this later as well, but when it comes to intellectual property, we'll be an organization that thoroughly analyzes and evaluates it from the early stages of research, working together to map out the strategy for how we can continue to succeed. As for right-sizing of research and development expenditure, which ultimately involves visualizing these innovation processes from zero to 100 while also gaining a clear understanding of the actual figures. We are currently exploring ways to more specifically determine what percentage of the capital generated from recurrent cash generating operations should be allocated to R&D. Next, regarding provision of value by blending processing technologies, we have incorporated research unit into FPEC to ensure that processing technology activities are more closely aligned with research. Additionally, regarding the development of a platform that connects to the market, we are accelerating our efforts to enable us to visualize, manage, and effectively steer the value chain in line with our objectives. Regarding our collaboration with startups and accelerators, the New Business Development Center originally established a corporate venture capital fund, and we currently have one fund in Japan and another in the U.S. The second fund was established last year. Investments are currently proceeding smoothly, and in terms of collaboration, we have recently shifted our focus toward investing more in initiatives that show particularly high potential for collaboration with new themes. That leaves the eighth item on strengthening our human capital strategy. Well, as for our management direction, a major strategic policy has been established to pursue a two-pronged approach. managing the petrochemicals business and the three gross domains as separate companies. So we need to firmly define the framework for this end. And when it comes to the talent required to support it, consider exactly what kind of people we need. Given this, it will be quite challenging to rely solely on the same approaches to talent development, staffing and recruitment that we've used for petrochemicals business up until now. As these plans take shape, we're currently preparing various plans so that we can act immediately. We intend to begin implementing these plans as soon as details are finalized. Now, I'd like to explain a bit about the role of research and development, as well as the timeline, specific measures, and the outcomes we aim to achieve. When it comes to research, it's really about identifying the turning points where our future customers and the market are changing. By keeping a close eye on these changes, we will build a technology platform that allows us to deliver our value exactly when it's needed. As for development, our role is to launch new products one after another while maintaining a clear understanding of our customers' objectives and solid vision of what success looks like. In terms of the time horizon, our research is focused on the medium to long term. Specifically, we are pursuing research topics with the long-term goal of yielding results in about 5 to 10 years. As for development, we are focusing on projects that will allow us to launch new products within three years. We began implementing changes to the allocation of these projects and organizational restructions last October, and these changes are already in effect. Next, regarding our approach, while research is a time-consuming endeavor, we will move forward with the goal of ensuring that ultimately becomes a core technology for future business. As for development, I believe our approach will be to maintain a high success rate so that we can continuously bring new products to the market. As for our ultimate research goals, of course, the goal is to create new business ventures. But in the process, we aim to firmly establish the next-generation technology platform. As for development, our objective is to bring products to market, generate sales and revenue, and ensure a steady cash flow by fully leveraging our existing technology to launch new products. We intend to proceed with these projects by clearly separating the research and development department development from the rest of the organization, while ensuring a constant and close exchange of information and keeping a close eye on the customer market. This is what we call the innovation process from zero to 100. It's not about having fragmented organizations where research is handled by one group, development by one another, and new business creation by yet another, each operating in isolation. Instead, it will become the norm of various departments to pull their collective strengths and work across organizational boundaries based on the promise of the seamlessly moving from research stage to the creation of new businesses as a part of the process we evaluate research topics at the very beginning the initial screening stage and to assess whether they will truly develop into ventures with future value we've implemented a system called project tryout we then either commercialize the project or hand them over to the relevant business division Even though it isn't currently at the core of the business division, we are working to clearly visualize a mechanism like this, where we identify areas that will certainly become viable separate businesses in the future and connect them to launch new ventures. And we are currently moving forward to ensure we can dynamically manage this process. In the second half of the fiscal year, we will roll out the first phase of this visualization initiative company-wide. Starting then, we will progressively integrate AI agents to ensure our operations proceed more effectively. So with AI factored in, we will transfer as many of our operational tasks, analysis, and evaluation as possible to AI agents, and we will use the results generated by them to make decisions and carry out our own activities. If we want to work together on these kinds of initiatives, what we need above all else is data, Various types of internal data, not just data for research and development, but also meeting minutes from customer visits, weekly and monthly reports, as well as customer feedback collected by the business units. All of these are sorted a single data lake. We are currently working with the DX team to build the architecture for this so that we can analyze this data as needed through the data warehouse and the data mart. Regarding intellectual property, our approach is actually focused on company-wide optimization and supporting growth areas. While this is a foundational organization, we conduct analysis and evaluation from the early stages of research, and only after carefully considering whether this can truly help us survive and succeed in the marketplace to do proceed with filing application and securing rights, Of course, we'll continue to solidify the intellectual property that protects the technologies we're developing, just as we have in the past, but we will also focus on a more proactive approach, taking into account whether we can intentionally develop business strategies that gives an edge over our competitors. We will move forward with our activities while placing a strong emphasis on this kind of proactive intellectual property. As a result, we plan to transform intellectual property from a cost center into a profit center, aligning it more closely with our business strategy and making our investments and contributions more transparent. We will also build a robust portfolio that balances both offensive and defensive strategies. While maximizing value through diverse activities, we will carefully distinguish between unnecessary assets and those we need and we will divest assets that can get fully utilized by selling them and we intend to transform our intellectual property into profit centers through these and similar measures. Also, one more point, the globalization of our research framework. This involves various aspects such as the position of research and development. First of all, when it comes to research that requires significant assets, for example, research that requires large-scale plants like those used in the petrochemical industry up to now, Our plans needed to conduct this research infrastructure is something that is quite difficult to establish overseas, even if we tried. So in this case, we'll be proceeding with Japan, taking the lead while maintaining the solid foundation here in Japan. However, on the other hand, the technical support team in the development division, which provides technical services close to our customers, will actively deploy to various overseas locations in a timely manner, in line with the business division's direction. And as for us in research specifically, the Corporate Research Division will be heading overseas to acquire the seas of new technologies found around the world, as well as new businesses models that can generate new ventures, and we intend to go overseas to acquire such opportunities. We plan to expand overseas based on our objectives. We'll continue to do this on an ongoing basis. As for now, we've already established a research lab in Cincinnati, Ohio this March, and in In the second half of this fiscal year, we plan to open about two more locations as part of our expansion plans overseas, so I would like to provide more details at that time. This will be my last point, pursuing paths to victory in research and development. Regarding this, we have various approaches to the aim, tactics, and implementation. As for our aim, rather than starting in Japan and expanding globally, we intend to collaborate from the very beginning with global research facilities and external organizations that are already conducting research tailored to specific goals, and we aim to expand our network of partnerships through these collaborations. Furthermore, in terms of our tactics, rather than operating solely on our own using organic methods, we plan to collaborate with external organizations and various stakeholders to establish the most niche position for us. This niche refers to a biological concept, one where we're considered indispensable within the ecosystem, to the point where people say we simply cannot do without them. We aim to identify this niche position and become the kind of mitsui chemicals that embodies it. Now, regarding implementation, as we mentioned several times already, it's not just about our existing materials technology, but also processing technology, production technology, and our swift responsiveness to customers. This is extremely important, and by taking a comprehensive, broad-eyed views of these elements, such as TQRDC, enhancing our competitiveness, we intended to build a system that allows to consistently deliver value to our customers. That concludes my presentation. Thank you, CDO Mr. Omote. Next, CDO Mr. Sanbe, please. I would like to talk about CX driven by DX, in other words, corporate transformation. First, we have formulated four basic strategies as part of a DX vision. The first is improving digital literacy, in other words, thoroughly implementing education. The second is pursuing innovation for our operations, which means that whereas we used to rely on experience intuition to get things done, we will now shift to a data-driven approach. And the third element of our core strategy is bolstering our development capabilities to tap into new markets, develop new products, and attract new customers. Strategy four of our core strategy transforming our business models, which involves using digital technology to provide products based on mechanism aligned with the circular economy, or, in other words, solution-oriented offerings. Furthermore, as the foundational infrastructure supporting all of these initiatives, we have been promoting the strengthening of our IT and data infrastructure as basic strategy zero of our core strategy. Now, I would like to talk about the rebuilding of our IT and data platform. Our SAP core infrastructure, which was originally built 20 years ago, has now been renewed. Based on a clean core concept, which involves using off-the-shelf software as is, we have been working to reduce the number of business-related add-ons from 2000 to just 7. We began full-scale operations in Japan this part April. As you can see on the right, under MDM, we have also been working on master data management, that is, organizing master data in preparation for the coming era of AI. Regarding strengthening our DX personnel base, we aim to train 165 data scientists. We have been moving forward with this initiative with the goal of achieving it by the end of fiscal year 2025. These 165 employees have been assigned to various departments across the entire company, including research, production, business operations, and corporate affairs, and we are currently working to have them serve as the core of our data-driven business transformation. Through these digital initiatives, we aim to contribute an additional 10 billion yen in profit compared to physical year 2025. We want to foster a corporate culture where decision-making is based on data and ROIC-driven thinking and where each individual can rapidly execute the PDCA cycle. In terms of evolution, we will review our business processes from scratch and implement BBL, or business process re-engineering. Furthermore, by applying AI, we carry out operational reforms to eliminate unnecessary burdens and waste. Furthermore, from a growth perspective, we will anticipate changes to gain insights that will help us develop three new, that is, new customers, new markets, and new products. We will then take action to improve our top line and expand our market share. we are currently advancing various digital transformation dx initiatives and today i would like to introduce a few of them first let's talk about the six ai offerings we have prepared six offerings and will complete their rollout across the entire company to every department by the end of this fiscal year. We will prepare core AI assets, such as patent searches, new applications, and QA chat, and roll out these pilot programs to all 60 departments company-wide. Furthermore, by using this approach to enhance our business processes, we can avoid duplicate investments through the horizontal deployment of assets. As a result, we aim to achieve a business workload reduction rate of 30% or more. We plan to shift the resources freed up through this process towards strategic areas or growth sectors. This page illustrates AI analysis in the areas of production and sales. These AI algorithms were originally developed in-house as part of our core business. We perform analysis using 130 AI models tailored to specific applications based on actual production and sales data, as well as external statistical data. By reducing non-core inventory, streamlining inventory levels, and minimizing transfers between locations, we have achieved an 8 billion yen improvement in cash flow and annual cost savings of 300 million yen. Through visibility, AI analysis, and business intelligence in the supply chain and logistics sectors, we simulate factors such as transportation routes and inventory allocation to optimize logistics operations. In terms of financial indicators, we expect cost savings of 300 million yen based on physical 2025 results, with a total of 1 billion yen in cost savings projected over three years. On the right-hand side, in terms of non-financial indicators, we have achieved a 22% reduction in GHG compared to physical 2024. This chart illustrates what we call AI for technology transfer. We will train generative AI on what has traditionally been referred to as tacit knowledge, that is, the know-how possessed by experienced workers. This will allow us to accumulate this knowledge within the company as explicit knowledge. Until now, abnormality detection systems have detected signs of abnormalities, while humans have been responsible for determining the cause and planning a cause of action. Going forward, however, AI will handle everything from determining the cause to planning the cause of the action. This helps reduce the risk of losing know-how even in the event of retirement or employee turnover. We will also work to mitigate risks such as those associated with business disruptions. Furthermore, we will implement these measures by more advanced decision-making through the use of business intelligence. This past April, we launched a service featuring 100 templates, making ROIC based management a personal priority, visualizing algorithms and decision-making, gaining new insights from accumulated data and using these to open up new markets. In other words, by shifting from decision-making based on the traditional KKD experience, intuition and courage to data-driven decision-making, we can, for example, visualize the return on investment for each project. This will also enable the company-wide reallocation of resources. In other words, we aim to transform our corporate culture so that numbers become our common language. As a combined result of these various DX initiatives, we are moving forward with the goal of contributing an additional 10 million yen in profit by physical year 2030 compared to physical year 2025. That concludes my presentation. Thank you very much.