Integrated Report 2019

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22LINTEC INTEGRATED REPORT 2019StrategyU.S. Subsidiaries—Current Status and Future OutlookSolid Results in the North American Label Market Focused on the Creation of Synergies as the Key to a Recovery in ResultsMACTAC AMERICAS, LLCMACTAC AMERICAS, which we acquired in December 2016, has the third largest share of the North American label market, with a customer base of more than 1,000 companies and sales of more than ¥35.0 billion. MACTAC AMERICAS had strengths that the LINTEC Group lacked—hot–melt adhesive formulation technology and sales channels covering the vast North American market. Accordingly, this acquisition was a very large step forward for the Group, which previously had not been able to establish a strong presence in North America in the field of adhesive materials for labels.However, in the fiscal year ended December 31, 2018, MACTAC AMERICAS posted sluggish results due to the amortization of goodwill, higher prices for raw materials and fuel, and price competition in the market. In the fiscal year ending December 31, 2019, the company is expected to register another loss at the operating level. Going forward, we must work to rapidly improve results through the generation of synergies between MACTAC AMERICAS and LINTEC. This has become an urgent management issue for the LINTEC Group.Working to Expand Sales Adhesive Products With a Low Environmental Impact MACTAC AMERICAS produces hot-melt type adhesive products, for which the adhesive is melted with heat for coating on the substrate, and emulsion-type adhesive products for which the adhe-sive is thinned with water for coating on the substrate. Both of these types have the distinctive feature of a low environmental burden because organic solvents are not used in production pro-cesses. The LINTEC Group is aiming to implement aggressive business development initiatives in the Southeast Asian market. Adhesive products made by MACTAC AMERICAS have been very well received in this market, and we are receiving a growing number of inquiries. Currently, LINTEC and MACTAC AMERICAS are working together on R&D to support the use of this hot-melt adhe-sive formula for labelstocks, industrial-use adhesive products, and other products sold in Japan.The LINTEC Group conducted large-scale exhibits at Labelexpo Southeast Asia 2018, which was held in Thailand in May 2018, and at Labelexpo Americas 2018, the largest label event in North America, in September 2018. At each of these exhibitions, labelstocks made by MACTAC AMERICAS using hot-melt adhesives drew considerable attention. These label-stocks realize high levels of adhesion on frozen surfaces and surfaces with condensation, and they are suitable for use with refrigerated and frozen food packaging, as well as the cardboard cases in which those products are distributed/conveyed. Accordingly, we expect to see growth in the use of these materials in markets around the world.In the U.S., the LINTEC Group has implemented a series of initiatives based on major management decisions. In 2016, we acquired MACTAC AMERICAS, a manufacturer of adhesive materials for labels, thereby estab-lishing a foothold for business development in the North American market. In addition, in 2017 we com-menced a full-scale restructuring of MADICO, a window film production subsidiary that had been posting sluggish results. This section introduces the current status and future outlook for U.S. subsidiaries.Special Feature 1Company name:MACTAC AMERICAS, LLCLocation: Ohio, U.S.Number of employees:538 (as of December 31, 2018)Net sales: ¥35.7 billion (fiscal year ended December 31, 2018)Business description:Manufacturing and sales of adhesive materials for labels, industrial adhesive tapes, etc. Cryogenic Labelstocks Suitable Earning Favorable Reviews at Exhibitions Around the World