Functional material related business
We provide various functional materials with high quality and performance that are used in a wide range of areas. Toyo Kohan has developed magnetic disk aluminum substrates and optical functional films by applying the surface treatment techniques and other advanced technologies of its mainstream steel plate related operations, while TOMATEC, another group company, provides pigments, enamelware glazes, gel coats and micro-element fertilizers.
Group Companies of Functional material related business
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Toyo Kohan Co.,Ltd.
Manufactures and sells tin plates, thin plates, and various surface-treated steel sheets and various functional materials
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KOHAN KOGYO CO.,LTD.
Manufactures and sells steel bands, automatic binders, hard alloys and manufactures magnetic disk aluminum substrates
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TOMATEC Co., Ltd.
Manufactures and sells frit products, complex inorganic color pigment, gel coat and composite micronutrient fertilizer
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ISHIKAWA INK CO.,LTD.*
Manufactures synthetic resin and sells FRP materials
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TOMATEC (Shanghai) Fine Materials Co., Ltd.
Manufactures and sells complex inorganic color pigments
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TOMATEC（Xiamen）Fine Material Co., Ltd.
Manufactures and sells frit products
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TOYO-MEMORY TECHNOLOGY SDN.BHD.
Manufactures and sells aluminum substrates for magnetic disks
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PT. TOMATEC INDONESIA
Manufactures and sells frit products and complex inorganic color pigment
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TOMATEC America, Inc.
Imports and sells complex inorganic color pigment and frit products
* Non-consolidated subsidiary
Results
The functional materials related business recorded 39,276 million yen in net sales and 28 million yen in operating income, down 14.1% and 98.6% year on year, respectively.
SWOT Analysis
Competitive advantages
Toyo Kohan
- Track record of developing highly specialized and proprietary technologies of processing, rolling, and surface treatment and applying them to various products and sectors with ingenuity and creativity
TOMATEC
- Supply capabilities for Asian, U.S., and European markets with its domestic and overseas production bases, longestablished production technologies and brands, and stable customer base
Issues
Toyo Kohan
- Sustaining and expanding existing businesses
- Expanding the business domain and cultivating new fields
- Nurturing an organizational culture that supports the talent for taking on challenges
TOMATEC
- Extending sales of high-margin products in growth markets (overseas fertilizer market, specialty functional materials market, existing products in emerging countries)
- Driving optimization, automation, and labor-saving measures at production bases
- Bolstering the ability to respond to laws and regulations in each country
Risks
Toyo Kohan
- Higher quality requirements for existing products and technologies
- Difficulties procuring resources, increased costs
- Economic recession and intensification of market competition (market share falls as competitors increase production capacity, etc.)
TOMATEC
- Domestic decrease in number of housing starts and planted area
- Cost increases in response to environmental regulations in each country
- Fluctuations in raw material and energy costs
Opportunities
Toyo Kohan
- Improved productivity resulting from advancements in AI and progress in digitalization
- Higher revenue from products destined for overseas markets due to the cheaper yen
TOMATEC
- Global increase in demand for infrastructure maintenance
- Increased demand for nutrient solution fertilizers due to shift to plant factories and greenhouse horticulture
- European and U.S. competitors tone down activity or withdraw from the China market
Strategy for continuous growth
- Optimize and expand businesses in line with market conditions
- Pursue innovation and capital efficiency
Toyo Kohan
- Raise presence in the data industry, where long-term growth is expected, from the aspects of supply capacity, quality, and cost of magnetic disk aluminum substrates and reduce the risk of demand volatility by pursuing an omni-directional strategy
- In the acrylic film market, where the shift to large LCD panels has raised growth expectations, especially in China, secure a competitive advantage in quality and cost for optical functional film
TOMATEC
- Redeploy management resources including for the reorganization of production bases
- Secure profits through a review of sales, development, and service strategies in domestic businesses
- Extend sales to overseas and unexplored markets
- Develop next-generation products
Progress and review of FY2023 in measures for continuous growth
1. Continuous growth in existing business domains
Toyo Kohan
- For magnetic disk aluminum substrates, made quality improvements and reduced costs in preparation of a market turnaround in 2024 and beyond
- For optical functional film, secured profits through orders from enhanced relationships with existing and new customers
TOMATEC
- Improved capital efficiency in existing business domains by streamlining production and talent
- Drove sales expansion in new markets overseas
2. Exploring, commercializing, and monetizing new growth opportunities
Toyo Kohan
- Developed the next generation of thin aluminum substrates for magnetic disks
- Developed high-value-added products in optical functional film
TOMATEC
- Quick monetization of the fertilizer, specialty functional materials, and infrastructure maintenance businesses through enhanced initiatives in each domain
3. Enhancing management foundation to support growth
Toyo Kohan
- Advanced human capital management
- Responding to climate change through introduction of solar power generation (offsite PPA, etc.)
TOMATEC
- Reconstruction of domestic infrastructure and review of personnel assignments
4. Toward improvement in capital efficiency
Toyo Kohan
- Responses toward increased demand for a broad range of products in optical functional film
TOMATEC
- Sustaining margins in overseas subsidiaries
Strategy and key measures in FY2024
Toyo Kohan
- For aluminum substrates for magnetic disks, we raised our market presence, moved forward on our omni-directional strategy, and developed thin aluminum substrates
- For optical functional film, captured new customers in the China market
TOMATEC
- Normalized profits by reducing unit costs of raw materials and ensuring optimal production in Japan, and cultivating markets for new uses of glass frits
- For overseas markets, improved profits by expanding sales of high-revenue products starting with micronutrient fertilizers
