Full Year 2019 AGC Inc Earnings Presentation
Tokyo Feb 11, 2020 (Thomson StreetEvents) -- Edited Transcript of AGC Inc earnings conference call or presentation Wednesday, February 5, 2020 at 8:00:00am GMT
TEXT version of Transcript
* Shinji Miyaji
AGC Inc. - CFO, CCO, GM of Corporate Planning General Division & Director
* Takuya Shimamura
AGC Inc. - President, CEO & Representative Director
Shinji Miyaji, AGC Inc. - CFO, CCO, GM of Corporate Planning General Division & Director 
I am Shinji Miyaji, CFO. I would like to go over the financial results for fiscal year 2019. Please turn to Page 5. Here are the highlights of the financial results for the fiscal year ending December 2019. Net sales declined by JPY 4.9 billion year-on-year at JPY 1.518 trillion. Contribution of newly consolidated companies had a positive impact of JPY 22.3 billion, but sales decreased year-on-year due to negative foreign exchange impact of JPY 30.4 billion, such as the depreciation of the euro.
Operating profit declined by JPY 18.9 billion at JPY 101.6 billion due to lower selling prices of glass for display applications and chlor-alkali products in Southeast Asia as well as factors for temporary manufacturing cost increase such as the startup of new facilities in domestic automotive glass business and architectural glass business in Southeast Asia. Profit before tax was JPY 76.2 billion, down JPY 52.2 billion year-on-year. This was due to the recording of impairment loss on fixed assets related to the automotive glass business in North America.
Please turn to Page 6, which shows the consolidated statements of profit or loss.
Please turn to Page 7, performance comparison by business segment. Glass and Chemicals posted lower sales and profits while Electronics, Ceramics and Others achieved higher sales and profits. Factors were explained on the following pages in operating profit various (sic) [variance] analysis.
Please turn to Page 8. First, year-on-year comparison of full year operating profit for 2019. Operating profit in 2019 decreased by JPY 18.9 billion at JPY 101.6 billion; sales volume and product mix, plus JPY 17.9 billion. While shipments of automotive glass decreased, shipments of other products increased; selling price, minus JPY 16.1 billion. While architectural glass prices increased in Japan, prices decreased for LCD glass substrates and caustic soda in Southeast Asia; purchase price fuels, raw materials, plus JPY 1.1 billion, owing to lower natural gas prices in Europe; cost reduction and others, minus JPY 21.9 billion. Main factors included increase in depreciation due to: the startup of a new LCD glass substrates facility in China; implementation of facilities, repairs and production issues in domestic automotive glass operation; capacity adjustment of architectural glass in regions other than Japan and Asia; increase in manufacturing costs due to the startup of new facilities in Southeast Asia large-scale maintenance turnaround in chemicals operation in Japan and the deterioration of manufacturing costs in Chemicals operation.
Please turn to Page 9, year-on-year comparison of the fourth quarter operating profit. In the fourth quarter of 2019, profit decreased by JPY 5.5 billion at JPY 28 billion; sales volume and product mix, plus JPY 2.8 billion. This was owing to an increase in shipments of optoelectronic materials, semiconductor-related electronic materials and glass for display applications; selling price, minus JPY 5.8 billion. This was due to lower prices of LCD glass substrates, architectural glass in Europe and caustic soda in Southeast Asia; purchase price fuels, raw materials, plus JPY 3.6 billion. This was due to the decline in natural gas prices in Europe and the valuation gain on oil hedge operation in the Glass segment; cost reduction and others, minus JPY 6.2 billion. While specialty glass for display applications and life science improved, depreciation expenses increased due to the startup of the new LCD glass substrates facility in China, and there also were impact of capacity adjustment in architectural glass in regions other than Japan and Asia and an increase in manufacturing costs in Chemicals.
Please turn to Page 10, consolidated statement of financial position comparing to the cost of -- comparing to the end of December 2018. Total assets were JPY 2,335.4 billion, an increase of JPY 99.6 billion from December 2018. The effective exchange rate was minus JPY 17.7 billion. Inventories increased by JPY 14.2 billion of which approximately JPY 6 billion was due to new consolidation. Part of inventory increase was due to an increase in inventory buildup of fluorine-related products following capacity enhancement.
Please turn to Page 11 for the full year of 2019 consolidated statement of cash flow. Net cash from operating activities was positive JPY 191.9 billion. Net cash used for investing activities was JPY 182.6 billion and free cash flow was a positive JPY 9.3 billion.
Please turn to Page 12, CapEx, depreciation and R&D expenses in 2019. CapEx totaled JPY 207.7 billion in 2019. Main investments were the LCD glass substrates manufacturing facilities, power generation facilities and chemicals operation in Indonesia, cold repair in Europe and new furnace in Brazil and life science facilities. Depreciation in 2019 increased by JPY 21.7 billion to JPY 143.4 billion due to the startup of LCD glass substrates in China and architectural glass facilities and chemicals, power generation facilities in Southeast Asia.
Next, segment overview. Please turn to Page 14. Let me explain the Glass segment. Net sales in FY 2019 were JPY 742.9 billion, operating profit was JPY 9.3 billion and they were down by JPY 26.9 billion in sales and down by JPY 13.6 billion in profit year-on-year, respectively. As for architectural glass, despite the selling price improvement in Japan due to depreciation of euro, sales went down JPY 6.2 billion to JPY 352.7 billion. As for automotive glass, in addition to depreciation of euro, demand declines in areas except Russia. Sales decreased JPY 21.4 billion to JPY 388.3 billion. Operating profit decreased by JPY 13.6 billion to JPY 9.3 billion due to extended repair of domestic automotive glass furnace, worsened production efficiency, manufacturing cost deterioration with the launch of a new facility in Southeast Asia for architectural glass and capacity adjustment in areas, except Japan and Asia.
As for the fourth quarter FY '19, operating profit was minus JPY 0.4 billion, down JPY 4.9 billion year-on-year. Manufacturing costs increased by capacity adjustment in areas except Japan and Asia. In architectural glass, selling price decline in Europe and also reduced shipment of automotive glass in Japan affected the business.
Skipping one page, please turn to Page 16. Net sales in FY 2019 were JPY 276.7 billion, operating profit was JPY 25.6 billion and they were up JPY 28.8 billion in sales and up JPY 1.9 billion in profit year-on-year, respectively. As for display, sales volume increased, both in LCD glass substrate and the specialty glass for display applications. The selling price of LCD glass substrate declined, and depreciation cost increased with the launch of new facility in China. And as a result, sales increased but profit decreased. As for electronic materials, compared with the previous year, shipment of optoelectronic materials and semiconductor-related products increased. And printed circuit board material business of Park Electrochemical and Taconic was consolidated from this fiscal year, and both of sales and profit increased. Operating profit of the fourth quarter FY '19 was JPY 8.7 billion, up JPY 0.9 billion year-on-year. Despite selling price decline in LCD glass substrate and the depreciation cost increase with the launch of the new facility in China, shipment of glass for display and electronic materials increased and profit went up. Regarding the volume and price trend of LCD glass substrate, in the fourth quarter FY '19, volume was up in low single-digit percent quarter-on-quarter, and price remained flat quarter-on-quarter.
Skipping a page, please turn to Page 18. Let me explain Chemicals segment. Net sales in FY '19 were JPY 475.8 billion, operating profit was JPY 63 billion and they were down JPY 8.6 billion in sales and down JPY 8.2 billion in profit year-on-year, respectively. As for chlor-alkali and urethane, decrease of selling price of caustic soda in Southeast Asia, manufacturing costs increased due to large-scale facility maintenance and typhoon impact in Japan and rising electricity costs resulted in decreased both in sales and profit. As for fluorochemicals and specialty, due to demand decline in semiconductor-related products, large-scale facility maintenance in Japan and manufacturing cost increase, profit decreased. As for life science, in addition to increasing number of CDMO contract in biopharmaceuticals, Spanish synthetic active ingredient manufacturing maker, Malgrat Pharma Chemicals, was newly consolidated as of March 2019 and both of sales and profit increased. Operating profit in the fourth quarter FY '19 was JPY 19.1 billion, down by JPY 1.8 billion year-on-year. It is due to manufacturing cost increase caused by fluorochemical-related cost increase despite the increase in number of CDMO contracts in biopharmaceuticals.
Skipping a page, please turn to Page 20. This slide shows performance by geographic segment. Let me explain Americas and Europe with a comparison of FY '19 and '18. The Americas, net sales increased JPY 6.4 billion to JPY 172.6 billion. Shipment of automotive glass decreased, but PCB material business of Park Electrochemical was consolidated and sales increased. OP went down by JPY 1.2 billion to JPY 5.5 billion with a decrease of shipment of automotive glass despite the increase in number of CDMO contracts in biopharmaceuticals.
In Europe, net sales was JPY 338.7 billion. Shipment of automotive glass decreased, but sales of architectural glass continue to be firm and the number of CDMO contracts in biopharmaceuticals increased. However, depreciation of euro negatively affected by JPY 23 billion, and the sales decreased by JPY 12.2 billion. Operating profit went down by JPY 1.1 billion to JPY 15.1 billion due to shipment decline of automotive glass despite the fall of natural gas price and increased number of CDMO contracts in biopharmaceuticals.
Let me explain operating profit in the fourth quarter and the year-on-year comparison. In Americas, both of sales and profit decreased year-on-year due to shipment decline in architectural glass and biopharmaceuticals. In Europe, profit decreased due to selling price decline of architectural glass and the capacity adjustment.
For quarterly performance comparison by geographic segment, please turn to Page 21. Comparing Q4 versus Q3 of FY '19 by geographical segment, operating profit in the United States was JPY 10 billion, JPY 300 million up despite the reduced shipment of automotive glass in North America, helped by the reduction of amortization of impairment. In Europe, operating profit was down by JPY 2.2 billion due to lower price of architectural glass, operational adjustment and reduced shipment in automotive glass.
Please turn to Page 23 for full year outlook. I would like to explain the outlook of FY '20 for the full year. Net sales is expected to be JPY 1.55 trillion, up by JPY 32 billion year-on-year due to increased shipment in optoelectronics materials, semiconductor products and life science products. Operating profit is expected at JPY 120 billion, up by JPY 18.4 billion year-on-year due to the absence of the onetime manufacturing cost increase which occurred last year. Profit before tax is expected at JPY 107 billion, up by JPY 30.8 billion year-on-year, and the profit for the year attributable to owners of the parent is expected at JPY 69 billion, which is an increase of JPY 24.6 billion year-on-year. The factors will be explained in the following pages. And regarding this outlook, since it is not possible for us to estimate the impact of new coronavirus, we have decided not to include this impact in our estimate. Please understand that the numbers are calculated that way.
Please turn to Page 24. Profit and loss statement was explained already in the previous pages. For the exchange rate, the assumption is JPY 110 per dollar and JPY 120 per euro and by crude oil is assumed at $60 per barrel. FY '20 ethylene, Southeast Asian CFR, estimated price is $800 per tonne.
Please turn to Page 25. This is net sales and operating profit by segment. For Glass, lower revenue and gross profit; for Electronics and Chemicals, increased revenue and gross profit are expected. The factors will be explained later on.
I would like to use the next page to explain the outlook by subsegment. Please turn to Page 26. This is a simple explanation of the outlook of each business, starting with Glass. With the architectural glass, we expect a drop in sales price due to lower shipment in Europe as well as oversupply. For automotive glass, we expect the cost of manufacturing to improve due to productivity improvement in Japan as well as completion of the furnace repair. And depreciation cost is expected to go down by JPY 3 billion for the full year, pushing up the revenue. This is due to the impairment of automotive glass business in North America, which was booked in the previous quarter. As a result, we will expect to see lower revenue and higher profit for the Glass segment compared to the previous term.
Please turn to Page 27. This is the outlook for Electronics. FY '20 shipment for LCD substrates is expected to grow faster than the market due to an increase of demand for G11 in China. Sales price for the full year is expected to go down by lower to mid-single digit. Display glass, shipment is expected to be the same level as the previous year. Electronics materials, shipment is expected to increase both for optoelectronics materials as well as semiconductor-related products. For FY '20 first quarter, LCD, we are expecting the volume to go down by low single digit and the price go down by low single digit as well compared to the fourth quarter of FY '19.
Please turn to Page 28. I would like to give you an outlook on the Chemicals segment. For chlor-alkali, urethane business, shipment is expected to increase due to healthy demand in Southeast Asia. For fluorochemicals, specialty business, shipment of semiconductor-related fluorochemical products is expected to increase. For life science, shipment is expected to increase on the back of capacity enhancement, both inside, outside of Japan, and shipment for agrochemical is also expected due to the recovery in the market.
Please turn to Page 29, last page. FY '20 CapEx is expected at JPY 220 billion, up by JPY 12.3 billion; depreciation, JPY 150 billion, up by JPY 6.6 billion; and R&D, JPY 53 billion, which is an increase of JPY 5.5 billion.
That concludes my explanation. Thank you.
Takuya Shimamura, AGC Inc. - President, CEO & Representative Director 
Good evening. Takuya Shimamura. 2020 represents the final year of the second medium-term management plan since I became the President. And as has just been reported, unfortunately, operating results for 2019 posted a year-on-year decline. But today, I'd like to stress that starting 2020, we expect to be back on the profit increase trend, and I also would like to give you an update on businesses we've been focusing on as strategic businesses. In a nutshell, they are all making steady progress. Those are the 2 main messages I'd like to convey to you today.
As you are aware, we have core businesses and strategic businesses. As for core businesses, we are focusing on improvement in productivity and asset efficiency through which we are to deepen the business opportunities so as to brush up overall. For strategic businesses, use potential technologies to explore opportunities. We are running our business taking those 2 approaches, deepening and exploration. That's our management style. It so happens that Professor Charles O'Reilly at Stanford Graduate School of Business writes in his book, entitled Lead and Disrupt: How to Solve the Innovator's Dilemma, about ambio -- or ambidexterity or ambidextrous approach in management. And he showed keen interest in our management style, and he did a case study on AGC Inc. at Stanford Graduate School of Business, and you can find that case study in their website. So I think it strongly underscores that this deepen and explore or exploit and explore approach, as he calls it, is an important way forward in business management.
As you're aware, we have products subject to market fluctuations. So of course, we need to improve efficiency of those products as much as possible and change the product portfolio so as to increase the portion of value-added products. And in addition, in terms of exploration, allocate more resources to strategic businesses to make them growth drivers. And as for commodity businesses, be it geographical regions or whatnot, strategy of pursuing greater market share broadly based on mass production is no longer valid today. Rather, we need to focus on regions and areas where we enjoy strength and comparative advantage rather than aiming at top line growth. And that's the approach we have been taking, and we will continue to take. And so as to increase strategic areas for growth, even in core businesses, if we can leverage our strength, aggressively pursue merger and acquisition opportunities so as to expedite the process and increase the speed of ensuring expansion, that's what we have been doing, and I would like to cite some examples.
The management target, the numerical target for 2020: operating profit of JPY 160 billion or higher; ROE, 8%; strategic businesses, accounting for 25% of operating profit; and debt-to-equity ratio, 0.5. Achieve these targets while maintaining the sound and healthy financial position, that's what we envision in medium-term management plan, AGC plus-2020. But unfortunately, that's not likely. JPY 160 billion is not likely in 2020, frankly speaking. I will elaborate on ways forward later. Still, you can see the figures here, strategic business accounting for 29%, and we are expecting JPY 35 billion in operating profit in 2020. 25% of JPY 160 billion meant JPY 40 billion in operating income. So in that sense, while the percentage is higher, the amount itself is more or less in line with the original target. Now aspiration for 2025 towards JPY 230 billion target, we are continuing with deepening and exploration approach. We will take up the challenges to achieve this.
And you can see in this graph that in 2014, ROE was 1.4% and operating profit dipped to JPY 62.1 billion. But we have implemented various measures, and we are seeing the results. We saw steady improvement up to 2018, operating profit having improved each year, but then 2019 proved to be rather difficult year. And this reminded us of the need take -- to take a more realistic look. But we recorded impairment loss in automotive glass business in North America to change the basic structure.
And so we would like to lay a solid ground for the next round of growth. And this graph is rather vague, but 2021 expects to see concrete results from investments made over the last 3 years. And we expect to get close to JPY 160 billion. Over the last 3 years, investments exceeded depreciation expenses. These have been the investments for growth. And specific investment themes have been set for each segment. In the Glass segment, major investments have all but completed. And in the growth areas of Electronics and Chemicals, we will continue to make investments for the sake of market expansion and enhancement of our position in the market. As mentioned earlier, up to 2020 investment for growth towards 2025 will continue, and we will start to see the results in 2020 for a result to be felt on a full-scale basis in 2021.
I would like to describe the business from the perspective shown on this slide. Conventionally, we've been talking about ROE as one of the key performance indicators. But in actual business management, we are using ROCE and EBITDA. That has been our style. AGC plus-2020 targets ROE of 8%, which translates into ROCE of about 10%. So ROCE of 10%, for the time being, would be a main point of reference.
As you can see, in the 3 Glass areas, operating assets are large and asset efficiency is low. That's a challenge. That's clear. So going forward, by improving profitability and reducing operating assets, we would like to achieve ROCE of over 10%.
Now as you can see, for Electronic materials, fluorochemicals and specialty, chlor-alkali and urethane and Life science, ROCE already is over 10%. Many people say chlor-alkali business is highly volatile and is risky. But in the first quarter of 2018, caustic soda price in Southeast Asia hit the high mark of $700. The price has been falling to the current range of -- from $300 to $400. Historically, the price range from $300 to $400 has been sustained long. We assumed $700 was rather a fluke, temporary high price, and the current price is the normalized level. And I'd like to inform you that even with the price drop to $300 and including Japan, chlor-alkali business has already achieved the ROCE of more than 10%. We have been expanding life science business through aggressive M&A. And this business has also achieved more than 10% of ROCE, and it will achieve even higher ROCE when the initial depreciation is over.
On shareholders' return, our current policy will remain unchanged. We will maintain the consolidated total return of 50% or more, including share buyback while dividend payment is to be not less than the current annual payment per share. We plan to increase dividend for 4 years in a row since FY '17. As Miyaji explained before, for this fiscal year, we plan to pay JPY 130 per share. Dividend ratio is 42%.
Another point is strategic shareholdings, on which we receive comments. In the last few years, we have been proactively divesting strategic shareholdings, and that is still ongoing. Cash generated from the divestment is allocated to the investment for growth and return to shareholders, as shown on the right.
Now let me explain core business or strategic business. Regarding architectural glass, we announced the business integration with Central Glass. It is expected that domestic glass demand will be shrinking in the long run, as shown in the chart, and supply structure needs to be aligned with that change. Previously, each company was trying to accommodate independently, but now we need to accommodate a more integrated manner to pursue business rationale. And we need to be approved by Fair Trade Commission for the content of the agreement. And we have in discussion with Central Glass on specifics on the assumption that it would be approved.
Regarding automotive glass, due to troubles and market contraction of automobile, it has been tough but we observed the rising demand for high value-added products. First, we like to improve production efficiency and the shift to high value-added products, monitoring varied demand by region.
On Display, as we are already aware of considerable proportion of panel production is shifting to China. As shown in the chart, about 50% is already made in China as of today. And within the growth, the growth of G11 is notable, and we will catch up with that growth. And total number of furnace will remain the same by shifting some furnaces from South Korea, Taiwan and Japan and improve the manufacturing process to meet the growing demand of G11, improving efficiency. We were able to conclude exclusive long-term contract with a Chinese large panel maker to supply G11 rolled glass, and we set up a joint venture with the company. So we will not make all investment by ourselves, but our spending will be reduced by sharing investment.
In Chemicals, as mentioned before, regarding overseas chlor-alkali business, a chart on the left shows caustic soda and on the right shows PVC. The chart show the market demand continues to grow steadily. Generally, it is said that these basic materials grow in line with GDP's growth. In the case of PVC, as it is used for infrastructure pipes, its growth tends to be slightly even higher than GDP. In Southeast Asia, both of caustic soda and PVC demand maintained a stable growth. Horizontal line in the chart indicates our company's capacity. Our capacity cannot fully meet the demand growth, and import will be required to balance supply/demand in this market. Based on these 2 conditions, we expect to increase our presence there by enhancing capacities, and we see the great potential there. To be more specific, capacity enhancement in Vinythai in Thailand, around 2022, is raising our scope. We are working on the environmental assessment as a part of preparation.
This slide shows market condition of caustic soda and PVC. Left chart shows market price of caustic soda in Southeast Asia. As you can see here, in the first quarter 2018, the price soared to $700. And after that, it plunged drastically. But as I said at the beginning, historically, the range of $300 to $400 would be more reasonable price of caustic soda. In this sense, current price is already within the stable price range. When you refer to the dark blue line in the chart on the left (sic) [right], that shows the price of PVC in Southeast Asia. Compared with the caustic soda price fluctuation is much less, and you can see the price is more stable with PVC.
Light blue line shows the ethylene market price in Southeast Asia. It fluctuates widely due to supply demand, among others, and shows great volatility. In the first quarter 2018, it was over $1,200, very high price, but it plummeted after that as shown in the chart. Shale gas in the United States, once it begins a full scale production, ethylene derivatives that come from the U.S. shale would be flowing in into Southeastern Asian countries, pushing down the ethylene prices. And this was fully anticipated when we increased the capacity in Southeast Asia and made the acquisitions. In the beginning of 2018, the number was higher. This was not expected, but ethylene prices are coming down in line with our expectations, as you can see from the slide.
Now if you subtract the ethylene price from the PVC cost, that would translate into the spread, which is shown on the bottom right graph. So this is the spread, our revenue. And as you can see, even when the ethylene prices are high, our spread is quite stable. And now the ethylene prices are coming down, we are seeing a definite increase in the spread. Although there is volatility in caustic soda, when it's combined with PVC, the demand increase in this geography is helping us. Chlor-alkali may be commodity, but it still has room for growth.
Now for the Chemicals, the demand is expanding, due to semiconductor and next-generation high-speed communications, faster than expected. JPY 70 billion was spent in order to increase the capacity, including the materials system, and this capacity increase work is currently ongoing. Once this is completed, from around 2021, we will begin to see contribution to the profit. Demand was expanding faster than expected, and the supply has been short for a while. And it was actually fortunate for us that the semiconductor industry slowed down the growth somewhat, and we expect further growth in the future.
Moving on to the next page. I would like to talk about mobility, electronics and life science. These are 3 business areas. In 2020, revenue from these 3 areas is expected to be JPY 200 billion, and they would generate, in total, JPY 35 billion of operating profit. In 2020, total operating profit was JPY 120 billion. So the number that I have mentioned is about 30%. Originally, in our midterm plan, AGC plus-2020, we said that 2020, operating profit would be JPY 160 billion and the 25% would come from strategic business which is about JPY 40 billion. According to the current situation, we may not reach this JPY 40 billion, but we have already achieved about JPY 35 billion. So if the situation turns positive, we can expect some more upside, which means that for our strategic businesses, we can definitely expect an increase in contribution and further growth.
Mobility, electronics, Life science, these are the strategic businesses, and I would like to show you some of the products that have been launched already. For mobility, autonomous driving would enter its full-scale implementation in 2025 or 2030. So we are not providing a lot of materials for real products yet, but we expect growth in the future. For electronics, EUV mask blanks. This is what we have. And also for optoelectronics, we have materials and also CCL that would support high-speed communication. We definitely expect growth in these areas. And for life science, both synthetic agrochemicals and the biopharmaceuticals are expected to grow.
One example for automotive display cover glass. Demand is expanding, centering around Europe, and currently, we are leading this segment. We have the advantage. And our cover glass is already used in more than 100 different vehicle models, which means that our market share in this segment is probably higher than 70%. And our products are used for luxury vehicles, not common vehicles, which means that we can expect bigger contribution to our profit. And going forward, the trend would be: shift from 2D to 3D glass with a curvature. And in order to produce 3D glass, we are currently building a factory in China, which will start full-scale production from around 2022.
Moving on to the semiconductor processing materials and EUV mask blanks. Compared to the original expectation, a customer ramp-up is slower, which means that the whole initiative is slightly lagging behind to the original plan. But we are confident that by 2025, we can achieve JPY 40 billion higher in net sales and market share of 50%.
In terms of 5G, next generation high-speed communication, we have launched something that's very unique. Even with the existing 4G system, base station capacities are running out. Together with NTT DOCOMO, we have provided glass antenna, which can be attached to the interior of the buildings in order to increase the capacity of base stations, and glass development is currently ongoing to deal with the full-scale implementation of 5G technology. 5G will start with Sub6 in the beginning, but once it reaches the full-scale milli wave, 28 gigs is going to be very significant. And the development for this is going very smoothly, and we are even developing something that is flexible. This is one of our development projects.
Moving on to life science. JPY 60 billion of net sales in 2020 was the plan, but we are very likely to reach JPY 65 billion or higher. We also mentioned the number JPY 100 billion by 2025, but we are confident that we can achieve this number several years in advance.
As I have mentioned to you earlier, architectural glass, automotive glass and displays, in these areas, we would like to drill down on manufacturing processes even further in order to increase the asset efficiency and productivity, and we want to allocate resources to what is unique and what is our strength, for example, chlor-alkali. And cash generated from these initiatives would be invested into strategic businesses, and I have shared with you some of those specific themes, where we are seeing steady progress.
That's all for me. Thank you very much.