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Message from Top Management

Masafumi Fushihara
President and Representative Director

Aiming to continue our growth and become an outstanding leading company

Our mission is not merely to achieve financial growth, but to also develop business activities that are environmentally sound and make a positive contribution to society. Adhering to that mission, we aim to become a leading company in the Pacific Rim based around our cement business in Japan and our mineral resources, environmental and construction materials businesses.In addition to expanding our businesses globally, we have contributed to the preservation of the global environment and the creation of a recycling-based society via the special characteristics of our cement plants that make it possible to process and recycle large amounts of waste and by-products, and by maximizing the recycling technologies we have cultivated over the years.

We are currently moving forward with various strategies in the three steps of the 17 Medium-Term Management Plan, 20 Medium-Term Management Plan and 23 Medium-Term Management Plan in order to achieve our stated future vision and direction of becoming an enterprise group capable of providing a sense of safety and security to communities in the Pacific Rim by the mid-2020s. As a result of the initiatives in the first two aforementioned medium-term management plans to boost corporate value and establish a solid business foundation, I believe we were able to build an earnings foundation capable of maintaining operating income of 60 billion yen despite the unprecedented business environment created by the COVID-19 pandemic, which even delayed the holding of the Tokyo Olympics and Paralympics.

The 23 Medium-Term Management Plan is the final step towards achieving rapid progress, and I also see this as a period in which not just Taiheiyo Cement but the Japanese cement industry as a whole will be required to display business boldness and a determination to survive and commit to effective initiatives aimed at sustainable growth. In that business environment, the Taiheiyo Cement Group will contribute to the creation of a sustainable society, and lay solid groundwork for our next growth stage.

Results of Our Performance in FY 2021

In addition to achieving operating income of more than 60 billion yen for eight terms in a row, despite the COVID-19 pandemic, the achievement of our 20 Medium-Term Management Plan goals regarding growth investment, the further strengthening of our financial structure, and shareholder returns

In FY2021, factors such as the increase in COVID-19 infections around the world and the declaration of a state of emergency in Japan had a direct impact on sales of cement, concrete and building materials due to reduced demand for construction and project delays. As a result,FY2021 saw the lowest domestic demand for cement in 54 years. In addition, economic activities in general slowed down and there was also extensive stagnation in corporate activities, including in industries which have close links with our Mineral Resources Business and Environmental Business, such as the steel, paper and power industries. Overseas, some of the regions in which we operate were subject to lockdowns due to the impact of the COVID-19 pandemic. In the U.S., however,demand for housing increased due to factors such as lower interest rates on housing loans and the increase in telecommuting. As a result, cement and ready-mixed concrete performed well in terms of sales volume and price. Under these business circumstances the group’s net sales for FY 2021 declined from the previous fiscal year to 863.9 billion yen. However, operating income for FY 2021 increased to 63.6 billion yen.

Furthermore, in FY2021 which was the final year of the 20 Medium-Term Management Plan, we worked on establishing a solid business foundation while maintaining a balance with investing for continued business growth, strengthening our financial structure and enhancing shareholder returns.

Even though there were only limited opportunities to visit and negotiate, we were able to decide on appropriately timed investments for growth, including a capital and business alliance with a state-run group of cement companies in Indonesia and renovation of production lines at our cement plant in Cebu,Philippines.

We had set a net debt/equity ratio (DER) of 0.5 times or less as a guideline for the strengthening of our financial structure, but were able to surpass it by the end of FY2020, one year earlier than planned. The net DER at the end of FY2021 had improved to less than 0.4 times.

With regard to shareholder returns, we continued steady dividend payments of 60 yen per share during the three years of the plan (in FY2019 an additional commemorative dividend meant that the dividend payment per share was 80 yen.) In addition, we purchased 15 billion yen of treasury shares to achieve a total return ratio of around 30% for the period of the 20 Medium-Term Management Plan.

Unfortunately, given the aforementioned business environment, we were unable to achieve the operating income on net sales and ROA we had set as management targets. In particular, issues still remain with regard to reinforcing the earnings foundation of our domestic business. We identify this as a key management challenge that the Taiheiyo Cement Group will continue to tackle under the 23 Medium-Term Management Plan.

Outline of the Medium-Term Management Plan

Establish a business foundation with long-term stability, and aim to become an outstanding leading company

With regard to the business circumstances surrounding the Taiheiyo Cement Group, there are fears the downturn in demand for cement may continue for a certain period given the considerable impact of the growing momentum for CO2 reductions, and also depending on when the COVID-19 pandemic comes to an end. In addition to the issue of the aging workforce on construction sites, the labor shortage is intensifying in the construction and logistics industries since the lengthy impact of the COVID-19 pandemic means that overseas workers cannot re-enter the country. If there are further delays to projects there is the possibility that the recovery of demand for cement will also be delayed.

On the other hand, given that climate change is becoming increasingly obvious in recent years, and it seems that every year major disasters occur, the government has announced a policy of building national resilience by actively promoting measures to prevent or mitigate damage from natural disasters. In Japan we anticipate that the current steady demand for cement will continue for a while due to factors such as redevelopment projects in urban areas, and the fact that construction work related to the Linear Chuo Shinkansen(maglev) is expected to start in earnest. Given that business environment we expect demand to fluctuate by around 40 million tons over the next decade or so.

Bearing in mind that anticipated demand, the Taiheiyo Cement Group has formulated the 23 Medium-Term Management Plan covering the three-year period from FY2022 to FY2024 based on our philosophy of contributing to the creation of safe and stable social infrastructure by continuing to provide essential products and technical services for the development of social infrastructure and for projects to prevent or mitigate damage from natural disasters, and maximizing our corporate value. Under the 23 Medium-Term Management Plan we will aim to construct a business model unique to us, where all businesses in our group function together comprehensively and integrally, with the aim of becoming an outstanding leading company. Our business targets for FY2024, the final year of the plan, are an operating income on net sales of 11% or more, and an ROE of 10% or more. We have adopted the following indicators as guidelines for achieving those targets.

Net sales

Operating income


Net debt/equity ratio (DER)

Net interest-bearing debt/EBITDA

750 billion yen or more

85 billion yen or more

145 billion yen or more

Around 0.4 times

1.5 or less

We plan to generate a cash flow of 330 billion yen over the three-year period of the 23 Medium-Term Management Plan by means of our cash flow, capital gains and so on, and, in principle, carry out new investment aimed at sustainable growth and implement shareholder returns while maintaining a net DER ratio of around 0.4 times.

Aiming to achieve carbon neutrality via sustainablegrowth investments

We plan to implement 280 billion yen of capital expenditure and investment and financing over three years, of which 120 billion yen will be allocated to growth investments. In addition, with the aim of strengthening the business foundation that supports our sustainable growth, we plan to prioritize the following themes: maintaining growth investment; implementing initiatives aimed at achieving carbon neutrality; enhancing our plants, mines and quarries; and restructuring our businesses in Japan. Amongst these themes, we recognize that the achievement of carbon neutrality plays a central role in our growth strategies, since establishing technologies for net zero CO2 emissions is one of the most important challenges for the future of the cement industry, where CO2 emissions from raw materials are unavoidable.

We published the Framework for Our Long-term Vision of Greenhouse Gas Emissions Reduction toward 2050 in March 2020. The goals stated in it were, in addition to an 80% reduction in CO2 emissions in cement production, to contribute to reductions equivalent to 20% of CO2 emissions throughout the cement value chain by 2050. However, in response to the carbon neutrality policy announced by the Japanese government in October 2020, we have revised the wording of that goal to “we aim to achieve carbon neutrality throughout the supply chain by 2050.”

In order to achieve carbon neutrality, in addition to applying and developing existing technologies, it is essential that we develop innovative technologies and raise them to a level where they are practical and viable. We have set up the Carbon-Neutral Technology Development Project Team as a lateral in-house organization responsible for promoting the development of such innovative technologies. With the project team playing a core role, we will aim to establish at an early stage technologies that can feasibly be implemented by society, and to achieve carbon neutrality by 2050.

Aiming for sustainable growth by strengthening corporate governance, promoting diversity and creating a safety oriented culture

In addition to boosting our earnings capacity, we need to strengthen corporate governance, promote workplace diversity and create a safety oriented culture in order that the Taiheiyo Cement Group can achieve sustainable growth.

Recognizing that strengthening corporate governance is essential to boost our corporate value and fulfill our responsibilities to all our stakeholders, as a trusted company we will work even harder to maintain sound management.

Based on our awareness that respect for human rights and diversity are formative principles of a sustainable society, we will engage in various initiatives, such as promoting women’s participation and advancement in the workplace, and adopting measures designed to attract diversity in our recruitment and offer a good work-life balance. We are striving to create employeefriendly workplaces where each employee can achieve professional growth. For example, we have set a ratio of at least 30% female recruits for jobs that have no geographical restrictions as our target in promoting women’s participation and advancement in the workplace. Furthermore, in addition to aiming to create a suitable human resource portfolio with at least a 10% ratio of female employees, we are promoting an initiative aiming to increase the ratio of newly appointed female managers to at least 10%. Moreover, we engage in business activities based upon respect for human rights, and this includes our supply chains.

We consider the health and safety of our employees to be the foundation on which our company exists.We aim to eliminate work-related accidents and create comfortable workplace environments, and constantly engage in systematic health and safety activities. To be more specific, the Taiheiyo Cement Health and Safety Policy sets a target of zero work-related accidents, we have established our Companywide Health & Safety Committee chaired by the officer in charge of safety, and we are strengthening action at all our business sites and group companies that start with ensuring compliance with our safety rules. We are improving our OSHMS*,which was launched in 2002 and has been being rolled out to our cement plants, mines and quarries in Japan since 2003. Going forward, we will continue with our aimof creating a safety oriented culture.

* OSHMS:Occupational Safety and Health Management System: A framework for reducing potential dangers at workplaces and promoting comfortable work sites by autonomously practicing continuous, uninterrupted health and safety management. Prescribed in the guidelines of the Ministry of Health, Labour and Welfare.

A Message to Our Stakeholders

The future envisioned by Taiheiyo Cement

Our business is based on cement. We have continued to grow while emphasizing the cement business and pursuing the potential of cement and concrete. We also contribute to the resolution of various social issues by providing environmentally sound products and working to create a recycling-based society. Securing a stable long-term source of limestone the raw material of cement, could be said to be a matter of life or death for Taiheiyo Cement, as we continue to achieve sustainable growth and contribute to society. We have already secured reserves in Japan of limestone equivalent to the total production volume of cement over the next 100 years. Going forward, we will continue with initiatives to enhance our plant facilities, mines and quarries, and will establish a system capable of ensuring a long-term stable supply of cement.

With regard to our overseas cement business, we will expand our business portfolio via steps such as our capital and business partnership with a state-run group of cement companies in Indonesia and renovation of production lines at our cement plant in Cebu, Philippines, strengthen our global logistics network, and strive to boost our market presence. At our business sites in each region we will deploy the advanced technologies we have nurtured in our Environmental and Mineral Resources businesses in Japan, and will aim to contribute to the development of local communities and to further boost our corporate value.

In addition to contributing to environmental conservation, resource recycling and measures against climate change via our business activities, we will strive to resolve transnational social issues by helping to create a sustainable society. This includes contributing to the protection of human rights and conservation of water resources and biodiversity, which are among the globally shared goals of the SDGs. We appreciate your kind understanding of our activities, and your expectations for our future growth.

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