802018201920202021A Message from the CFO19.312.612.658.64.720.2LINTEC Integrated Report 2021The LINTEC Group is financially sound, with a high equity ratio of 70.2% as of March 31, 2021. The Company has approximately ¥62.0 billion in cash, and only ¥5.0 billion in borrowings. Shareholders and investors often ask how we plan to use this cash going forward. Approximately 60% of this cash is held by overseas consolidated subsidiaries as working capital and funds for equipment, and the remaining 40% is kept at the parent as reserve funds for market fluctuations. At less than two months of non-consolidated net sales, this amount of cash is not unmanageable, in our opinion. We are keen to make the necessary investments from a stable financial foundation. Under the medium-term business plan, LSV 2030-Stage 1, which started in the fiscal year ending March 31, 2022, ¥40.0 billion has been budgeted over the three years of the plan for investments to expand production of electronics-related products likely to see high demand, and environment-related investments that are increasingly expected of a manufacturer. At the same time, LINTEC will consolidate its production facilities and make its plants smarter. In the initial fiscal year of the plan, the Company will target investments of approximately ¥12.0 billion for expanding capacity for release film coating equipment at its Agatsuma Plant (Gunma Prefecture) and release paper coating equip-ment at its Kumagaya Plant (Saitama Prefecture), as well as install equipment to reduce CO2 emissions at all of its plants. deals with an open mind and, if one is found, Administration Division will carefully evaluate profitability and risks. In April Regarding M&A, the LINTEC Group will consider promising One of the Group’s advantages is its stable financial founda-tion, but low levels of profitability and capital efficiency in some businesses have become a serious issue. The Printing and Industrial Materials Products segment, which accounted for about 50% of consolidated net sales, recorded an operating loss of ¥0.2 billion in the fiscal year ended March 31, 2021, as earnings deteriorated during the pandemic. The Company’s countermeasure teams are rebuilding the business with the aim of improving profitability by reviewing raw materials, increasing yields, and reducing fixed costs while collaborating with the Business Administration Div., Production Div., Procurement Div., and Research & Development Div. each business operation, we plan to create balance sheets for each of them starting in the fiscal year ending March 31, 2022. To better understand and manage capital efficiency in 2021, LINTEC acquired DURAMARK PRODUCTS, INC., a maker of adhesive products in the U.S. We believe this acquisition will spur growth in earnings on the stably expanding North American market, anticipating synergies such as cost reductions from the in-house production of graphic film, and the expansion of production capacity in the same business at MACTAC AMERICAS, LLC, which was turned into a subsidiary in 2016. The acquisition of DURAMARK PRODUCTS, INC., generated negative goodwill of approximately ¥0.3 billion, which was booked as an extraordinary profit in the first quarter of the fiscal year ending March 31, 2022.(24.0)This will facilitate the proper management of assets and analysis of reasons for unprofitability. Setting turnover ratios for inventories and fixed assets as KPIs, we intend to create a work environment where all employees are more aware of margins and profitability. objective of improving operations Companywide. In the Administrative Div. that oversees information system-related matters, we are already implementing projects for data visual-ization with business intelligence tools and are digitalizing internal approval processes. However, we must further accel-erate our DX projects going forward. With the cooperation of the Business Process Re-engineering Office, we will evaluate the rollout of new systems to enhance productivity.In addition, it is important to advance DX projects with the Free Cash Flows¥ Billion2416-8-16-24-322017(Fiscal years ended March 31)26Financial Condition and Investment StrategyInitiatives to Increase Profitability and Capital Efficiency
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