Integrated Report 2020

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4LINTEC Integrated Report 2020Review of the Previous Medium-Term Business PlanLINTEC’s three-year medium-term business plan, LINTEC INNOVATION PLAN 2019 (LIP-2019), was launched in April 2017. In accordance with the basic policy of “deepening innovation aimed at driving new growth,” the numerical targets for the final year of the plan were ¥270.0 billion for net sales, ¥25.0 billion for operating income, and more than 9% for both operating profit margin and ROE. On that basis, we implemented a variety of initiatives.In the fiscal year ended March 31, 2018, which was the first year of the plan, the global economy continued to follow an expansion trend, and in Japan conditions were generally solid. In addition, at the end of 2016 we acquired three companies in the U.S. and Europe, including MACTAC AMERICAS, LLC, of the U.S. As a result of this and other factors, consolidated net sales increased about ¥43.0 billion year on year, to ¥249.0 billion, and operating income increased about ¥3.5 billion, to ¥20.1 billion, due to favorable results in semiconductor and electronic compo-nent related businesses. However, in the fiscal year ended March 31, 2019, which was the second year of the plan, overall conditions were firm in the first six months, but in the second half the Chinese economy decelerated due to U.S.-China trade frictions. In Japan, the influence of the decelerating Chinese economy and a slowdown in IT demand led to reduced exports. Due to these factors, the management environment became challenging. Consequently, consolidated net sales were limited to a small increase, and operating income declined due to lower non-consolidated sales quantity; deterioration of the sales mix; and higher prices for raw materials and fuel, centered on pulp. In the fiscal year ended March 31, 2020, the plan’s final year, our operations were affected by the U.S.-China trade friction and inventory adjustments in electronics-related markets, while in the domestic market unseasonable weather was a major negative factor. Consolidated net sales were ¥240.7 billion, operating income was ¥15.4 billion, operating profit margin was 6.4%, and ROE was 5.0%. Each of these figures was sig-nificantly lower than the final numerical targets in LIP-2019.However, we started management rationalization initiatives at U.S. production subsidiary MADICO, INC., which had continued to post losses for an extended period of time, and we succeeded in restoring the company to profitability at the operating level. In addition, we increased the overseas sales ratio to approximately 50% through such initiatives as strengthening overseas business, cen-tered on Asia, and implementing M&A initiatives in Europe and the U.S. In these ways, we were able to achieve a certain level of results. MACTAC AMERICAS, LLCLooking 10 Years Ahead, Establishing a Foothold for the Next Stage of GrowthA Message from the President