Resolution at the Appointment of the New President and My Vision Toward a Specialty Materials Company

Central Glass was founded in 1936 as a chemical manufacturer to manufacture and sell soda products. Then, we began producing fertilizers based on ammonium chloride produced along with the soda products, and launched into the Glass business, using soda ash as a raw material, and then into the Glass Fiber business. Since the 1980s, we have expanded our business into the field of fine chemicals, our current core business, in which our fluorination technology is applied.
Recently, however, as the Glass business fell into stagnation due to change in its business environment, we took decisive actions including the transfer of our Automotive glass business in Europe and the United States and the fundamental structural reform of our domestic architectural glass business, in an effort to restore profitability. In addition, after integrating our domestic Architectural glass and Automotive glass businesses, we made a fresh start as Central Glass Products Co., Ltd. in April 2023.
In June 2023, when the Company was standing at the turning point, I took the position of Representative Director and President. Feeling tense with the weighty responsibility of taking over the history up until the present, I have reaffirmed my determination to pave a way toward the future for the Company.

Central Glass, which has the Basic Philosophy of “Creating a Better Future Through Monozukuri,” aims to contribute to the establishment of a truly prosperous society through the spirit of Monozukuri. We have also clarified our intention of growing as an R&D-oriented company through the ongoing Medium-Term Management Plan (from FY2022 to FY2024).
After joining Central Glass as a researcher in the field of chemicals, I myself have built my career mainly in the sales and planning department. During that time, I have led the expansion of businesses related to electronic materials for semiconductors and electrolytes for electric vehicle (EV) batteries through launching new businesses in the field of fine chemicals and establishing overseas affiliates.
Regarding the future corporate management, I will continue to move forward with our businesses to realize our Corporate Philosophy with my long experience in Monozukuri. First of all, we will endeavor to further develop our business through enhancing our research and development, particularly by addressing the full-grown three core pillars of chemicals (anesthetic agents, semiconductor materials and electrolytes).

As our vision for the future, we should set a target of transforming the Company into a Specialty Materials Company by 2030 based on the idea of materials including glass. The role of the ongoing Medium-Term Management Plan is to build a solid foundation for the next Medium-Term Management Plan (from FY2025 to FY2027), which will serve as a step toward the realization of a Specialty Materials Company, and we are working with our utmost energy toward achieving the goal.

Securing of a Profit Margin of 5% by the Glass Business for the First Time in 19 Years, and Steady Growth of the Chemicals Business

Looking back on the business environment of FY2022, we can see that there continued to be growing uncertainty about the world economy due to various factors including the soaring raw material and fuel prices due to the prolonged invasion of Ukraine by Russia and the effect of economic sanctions on Russia, concerns over U.S.-China conflict and the Taiwan issue, and the financial system instability caused by a tightening of monetary policy taken against the inflation pressure in European countries and the U.S. In Japan, the movement restrictions due to the COVID-19 pandemic were beginning to be relaxed and the economy started to show mild improvement with the recovery of economic activities and improvement in employment. On the other hand, the domestic economy still found itself in an unstable situation with a rapid depreciation of yen, soaring raw material and fuel prices, and a continuous increase in consumer prices.

Under such circumstances, the sales of the Glass business declined to half compared with the previous fiscal year because of the rearrangement of sales and production bases and the revision of product prices due to soaring raw material and fuel prices; however, the operating profit improved by 5.2 billion yen, resulting in securing an operating profit ratio of 5% for the first time in 19 years.
Regarding the Chemicals business, sales in the semiconductor market slowed down compared with those of the previous fiscal year, when electronic materials sold well, partly due to inventory adjustments by users, which resulted in a decrease in sales. On the other hand, the sales in the energy material business exceeded those in the previous fiscal year, thanks to the EV market growth followed by the rapid expansion of the sales of electrolytes for lithium-ion batteries. In the electrolyte market, where raw material prices and selling prices tend to fluctuate dramatically, the Central Glass Group has established production bases including joint venture companies in Japan, Asia and Europe to create a global supply chain, which enabled stable raw material procurement and in-house production of additives, key materials, leading to the securing of profits. In the field of applied material chemicals, we increased sales by expanding the sales of next-generation blowing agents, products made from hydrofluoroolefins (HFOs) as well as by revising prices of various products.

As a result, the sales of the Chemicals business greatly exceeded those of the previous fiscal year, with its operating profit reaching approximately 14 billion yen, with which the overall operating profit target for the final year (FY2024) of the Medium-Term Management Plan was almost achieved.
In terms of priority areas to be addressed in the future, in the Glass business, we will proceed with discussion and consideration on measures to continuously and stably secure the profit that turned positive by the structural reform as well as future investment policies on a company-wide basis. As for the Glass Fiber business, we will focus our efforts on securing profit by promoting a shift to high value-added products.
Regarding the Chemicals business, as mentioned earlier, we will continue to grow the three core pillars of semiconductor materials, electrolytes for lithium-ion batteries, and fluorine-based general anesthetic Sevoflurane, in order to steadily make profits. As for the Fertilizers business, there are concerns about the environmental burden from coating agents used in a coated fertilizer, Cera-coatR, designed to contribute to the streamlining of agricultural work. In response to this, we will promote the research and development of environment-friendly materials and the commercialization of new fertilizers.

Research and Development Efforts in the Fields Expected to Develop in the Future

In the energy material field, we are working on research and development of sodium ion batteries. Since lithium for lithium-ion batteries, which are now the mainstream of batteries for EVs, is one of the rare metals, there is a concern that its supply conditions might become tight with the widespread of EVs. Accordingly, some companies are working toward the practical use of sodium ion batteries, low-cost ones using earth-abundant sodium, which can be used as a substitute for lithium. Having worked on the research and development of sodium ion batteries for years, we have patents related to materials for such batteries, and also have a plan to have our joint venture companies in China produce and supply sodium hexafluorophosphate serving as main material for electrolytes.

Moreover, regarding the life science business, we will reevaluate conventional pharmaceutical products, and will newly launch new business projects.

Contributing to Solving Social Issues through Initiatives toward Sustainability and Monozukuri

Based on the Basic Philosophy of “Creating a Better Future Through Monozukuri,” the Central Glass Group has developed various businesses with the aim of contributing to the establishment of a truly prosperous society, while making efforts to solve environmental and social issues through the spirit of Monozukuri. Believing that this is the very essence of what sustainability means, we will continue to tackle global environmental issues and various social issues seriously, and work on the realization of a sustainable society as an R&D-oriented company, aiming to improve our corporate value.

As a means of developing a structure to address sustainability, we established the Sustainability Committee, which comprehensively grasps, analyzes and evaluates measures and promotion activities for sustainability, and make a report and a recommendation to the Board of Directors as necessary.
In addition, after identifying materiality that emphasizes sustainability, we established priority issues for 11 items in three areas as well as KPIs for initiatives to tackle them, and then we positioned the provision and development of products that solve social issues as the most important initiatives among them. Considering that many of our businesses leverage the strength of fluorine chemistry, we will contribute to solving social issues by means of fluorine chemicals.
One of the examples is electrolyte for lithium-ion batteries. We also declare in our Basic Policies that we will provide products that are friendly to society and the environment to support various industries, such as by developing hydrofluoroolefin-based foaming agents and solvents whose global warming potential (GWP) is close to one, as well as by promoting a shift from existing high-performance semiconductors with high GWP to products with low GWP

On the other hand, regarding our attitude toward human capital, we have a systematic educational program to support the growth and self-realization of individual employees while making good use of our corporate culture characterized by “amenableness and earnestness” based on the human resources development policy. Our Career Creation Center takes a lead in promoting this program while updating the content of the general education, the Monozukuri education and the career development education every year. As a personnel strategy, with a slogan of “Securing of the Four Things (securing of acceptability, securing of a place to stay, securing of equity, and securing of fairness),” while providing the opportunities and environments, we will contribute to the creation of human resources and corporate culture that always brings smile to all group members’ faces, and promote psychological safety at work.

Efforts to Improve Our Corporate Value for the Stakeholders

We would like to continue to make concerted efforts company-wide to go forward step-by-step as the newly born Central Glass Group under the key phrase of Creation and Challenge. Aiming at transforming ourselves into a Specialty Materials Company by 2030, we will unitedly apply ourselves to the accomplishment of the ongoing Medium-Term Management Plan, and lay groundwork for the next Medium-Term Management Plan.

We sincerely ask our stakeholders for continued support and would like you to look forward to the development of Central Glass Group.

• This message is from Top Message, an integrated report published in September 2023.

Representative Director, President & CEO