Sumitomo Chemical Company (4005) Status Update summary

Strategic direction and growth targets

• FY2025 marks a new start, focusing on transformation and allocating resources to Agro and ICT as growth drivers, targeting JPY 200 billion core operating income, 8% ROE, and 6% ROIC by FY2027, and JPY 350 billion core operating income and over 10% ROIC by 2035.

• The business plan slogan is "Leap Beyond," aiming for sustainable growth through innovation and a reborn organization.

• Management resources will be concentrated on Agro and ICT, with Advanced Medical and environmental impact reduction businesses as future pillars.

• Long-term vision is to become an innovative solution provider leveraging technology to address societal challenges in food, ICT, healthcare, and environment.

• Growth to FY2030 led by Agro & Life and ICT & Mobility, followed by Advanced Medical and Essential & Green Materials.

Financial and operational restructuring

• Immediate-term measures generated JPY 700 billion in cash, reducing interest-bearing debt to JPY 1.27 trillion by FY2024 and improving invested capital mix toward growth sectors.

• Structural reforms include debt forgiveness and share sales in Petro Rabigh, productivity improvements, and rationalization in Singapore and Japan.

• ROIC is projected to improve from 1.5% in 2024 to 5.5% in 2027, with growth driven by Agro and ICT, and further improvement expected by 2035.

• Invested capital was reduced by about 20%, and growth drivers' share in the portfolio increased from 35% to 45%.

• Structural reforms addressed challenges in pharmaceuticals, petrochemicals, and commodity businesses, with continued focus on remaining issues.

Investment and R&D priorities

• JPY 450 billion will be invested over three years, with JPY 230 billion as strategic investments, 80% allocated to Agro and ICT.

• R&D expenses for growth drivers will exceed JPY 220 billion in 2027, focusing on new agents in Agro and next-gen photoresists in ICT.

• R&D investments in growth drivers to increase by 30% compared to 2019–2021, focusing on regenerative agriculture, next-gen semiconductors, and advanced healthcare.

• Group-wide research themes include bioprocesses, disease risk testing kits, regenerative medicine, and advanced semiconductor materials.

• R&D strategy based on GX (Green), BX (Bio), and DX (Digital) to deliver long-term solutions.