NITTO DENKO GROUP CSR & Annual Report 2012

CSR & Annual Report 20128To Our StakeholdersFiscal 2012 – “Year to Overcome Challenges”By returning to the origins of our business, we will control ourselves and deal successfully with environmental change to create new value to benefit our customers.Yukio NagiraBoard Member and President, Nitto Denko CorporationI would like to express my appreciation for the understanding and patronage that the Nitto Denko Group continues to receive from our shareholders, investors, customers, business partners and local communities. On behalf of the Nitto Denko Group, this report will outline our fiscal 2011 activities and present our key policies for fiscal 2012.Business Summary for Fiscal 2011The business environment throughout fiscal 2011 was on a track to recovery after the initial downturn caused by the impact of the Great East Japan Earthquake. However, due not only to the escalation of the Euro crisis and the yen’s sharp appreciation, but also the floods in Thailand, the business environment remained uncertain.The Nitto Denko Group considered fiscal 2011 as the “Year to Take on Challenges”, striving towards new growth and the creation of new value by means such as the generation of new products and business models. As to materials for liquid crystal displays, we expanded our sales of differentiated and competitive products for smartphones (multifunctional mobile phones) and tablet PCs, whose markets are growing dramatically. Furthermore, in our industrial tape business, we promoted our “Area Niche Top” strategy in developing countries, such as China and India, enhancing global development. However, because of a decrease in production volume of vehicles in the first half of the fiscal year, a slowdown of demand for, and a decline in prices of products used in the electronics industry, and the appreciation of the yen, business was poor. Overall, sales decreased 4.8% to 607.6 billion yen and operating income declined 33.7% to 56.4 billion yen, when compared to fiscal 2010.Business Performance in Fiscal 2012As to the business environment of fiscal 2012, in spite of the downward economic pressure exerted by factors such as Europe’s ongoing debt crisis, escalation of financial problems in advanced countries and rising oil prices, the economies of developing countries have the potential for growth.Given such circumstances, industrial tape products for the automobile industry are expected to remain strong, in line with a rebound from the impact of the Great East Japan Earthquake and Thailand floods. Our forecasts suggest that our optronics business, centered on our materials for liquid crystal displays, as well as our tapes for liquid crystal and touch panels, will continue to be strong, in line with the anticipated continuing growth in demand for smartphones and tablet PCs.In our medical and membrane businesses, we will improve our earning capacity by focusing on fields where we can capitalize on our strengths.In fiscal 2012 we aim to achieve increases of 8.6% to 660 billion yen in sales and of 25.7% to 71 billion yen in operating income, when compared to fiscal 2011.Approaches for Fiscal 2012The Nitto Denko Group considers fiscal 2012 as the “Year to Overcome Challenges” and will address three challenges.The first of these challenges is the “creation of ample business opportunities”. We will come up with a multitude of ideas aimed at creating value to satisfy our customers, then develop those ideas with the greatest potential into TopMessage