Integrated Report 2019

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Strategy18LINTEC INTEGRATED REPORT 2019 Sluggish Results at Acquired Subsidiaries in North AmericaLooking overseas, our biggest pending problem is the sluggish results at MACTAC AMERICAS, which we acquired in 2016. MACTAC AMERICAS had been expected to break even at the operating level in the fiscal year ended December 31, 2018, but prices for raw materials and fuel were higher. As a result of this and other factors, as in the previous year, the company recorded an operat-ing loss of approximately ¥0.5 billion. One reason was amortization of goodwill, which is about ¥3.0 billion a year. However, the fact that we were able to establish a foothold for a full-scale entry into the North American label-related market is extremely important. Moving forward, through further efforts to strengthen sales and increase earning power, we will strive to achieve, as soon as pos-sible, a return to profitability at the operating income level, after the amortization of goodwill. Exchange Rate Fluctuation Risks Accompanying Expansion of Overseas BusinessThrough the acquisition of MACTAC AMERICAS, our over-seas sales increased rapidly, and as a result, in the fiscal year ended March 31, 2019, our overseas sales ratio rose to 47.8%, while foreign exchange fluctuation risk also increased. In addition to the U.S. dollar, we also need to focus on trends in major Asian currencies, such as the Korean won, Chinese yuan, and Taiwan dollar. The LINTEC Group currently has bases in 19 countries and regions, and we are working to reduce foreign exchange fluctuation risks by utilizing forward exchange contracts and currency swaps among Group companies. Global Warming and Other Increasingly Severe Environmental ProblemsAbnormal weather caused by increases in the average global temperature has an effect on the Company’s busi-nesses, and we consider this to be an issue that we must address rapidly. On the other hand, global warming coun-termeasures and trends such as the move away from the use of plastics are also opportunities for the creation of new markets. We are also planning a total of more than ¥10.0 billion in investments, centered on domestic plants, in order to reduce CO2 emissions. We will work to achieve reductions of 30% or more by fiscal 2030 in comparison with fiscal 2013.Aiming for Sustained GrowthWe will advance initiatives targeting further growth while rapidly addressing these issues, risks, and new changes in the business environment in the years ahead. Bolstering R&D CapabilitiesAs a technology-centered company, more than anything else, LINTEC must strengthen its R&D capabilities. I believe that R&D capabilities are connected to a wide range of areas. These include continuing to build new business pillars; proposing products in overseas markets that meet the needs of each region and providing a stable supply of those products; and proposing innova-tive, definite solutions to environmental problems and seizing business opportunities. Moreover, we will also focus on the creation of new businesses through afore-mentioned collaboration between the New Project Planning Office and the Research & Development Div. as well as on the development of new products through the utilization of the original technologies possessed by MACTAC AMERICAS and by VDI, LLC, a U.S. functional film manufacturer that we acquired at about the same time as MACTAC AMERICAS.A Message from the President200320072011201520191209060308060402020.80047.847.838.833.221.813.941.970.680.3119.9 Overseas sales Overseas sales ratio (right)¥ Billion%Overseas Sales / Overseas Sales Ratio(Fiscal year ended March 31)CO2 emissions reduction target (FY2030 targets)Reduce by 30% or more from FY 2013