To maintain and deepen the trust in us by all shareholders and stakeholders well into the future, the Group recognizes that ensuring the soundness and legality of business management and increasing efficiency is one of the highest priority issues of business, and to this end, we are working to enhance and strengthen our corporate governance system.
To provide shareholders, institutional investors, security analysts, and individual investors with a better understanding of the Hodogaya Chemical Group, we engage in extensive communication activities and strive to disclose information in a fair and timely manner. We have been making our Financial Statement, Annual Securities Report, and various IR materials available from the“ IR” section on our website, and we post our Summary of Quarterly Consolidated Financial Results in English starting in FY2017 and the Notice of the Annual General Meeting of Shareholders in English starting from the Annual General Meeting of Shareholders held in June 2018.
We do the following to encourage two-way communication with our shareholders.
Hodogaya Chemical introduced an electronic voting system (through which shareholders can exercise their right to vote either by scanning a QR code or online) for the General Meetings of Shareholders as of June, 2020 for increased convenience. It allows shareholders to exercise their rights in written form, with a smart device, or over the internet.
Smart devices proved particularly popular in the new electronic voting system, and they were used by many individual shareholders. This resulted in an increase in the ratio of shareholders exercising their right to vote year after year.
In addition, since the Ordinary General Meeting of Shareholders held in June 2020, we have been working to further improve the environment for exercising voting rights by introducing an electronic voting platform for institutional investors.
Under the Mid-term Management Plan SPEED 25/30, the Hodogaya Chemical Group aims to achieve return on equity (ROE) of 9% and the plan will reach the end of Phase 1, its midway point, at the close of FY2025 (March 2026). While using cash flow from operating activities obtained over the past four years (21.2 billion JPY) to invest (21.1 billion JPY) in the growth of businesses, primarily the Functional Colorants segment, which is the growth driver of the Group, we have kept the D/E ratio in the 0.2 times range, which demonstrates the Company’s high level of financial soundness and safety.
During this period, based on our dividend policy that focuses on increasing dividend on equity (DOE), we have raised our annual dividend per share from 25 JPY in FY2020 to 45 JPY in FY2024. Furthermore, we aim to raise our dividend for the fifth consecutive year by offering an annual dividend of 50 JPY in the fiscal year ending March 31, 2026.
For FY2025, the final year of Phase 1, our forecast for net sales is at the same level as our initial target, but we expect a significant deviation in operating profit. In light of this situation, we will review Phase 1, identify issues, and reflect these in the formulation of our Phase 2 plan.
Specifically, we will reinforce our management foundation through further allocating resources to growth areas, improving productivity through digital transformation, and stepping up environmental friendliness, with the aim of further strengthening our earning power and increasing ROE.
Going forward, we will continue to aim for highly efficient management that can achieve a high ROE while firmly maintaining a balance between growth investments, shareholder returns, and interest-bearing debt controls. Toward this end, in addition to increasing shareholder returns, we will create new value and accelerate the sustainable growth of the Group by implementing financial and capital strategies, such as making more effective use of net interest-bearing debt, shareholders’ equity, and shareholders’equity ratio, which currently sit at a certain level of safety, in order to create new value and increase future corporate value.
* The Company carried out a 2-for-1 stock split of common shares, effective April 1, 2025. The figures for dividend per share prior to April 1, 2025, reflect the values adjusted for the stock split.
In our capital policy, we prioritize the balance between growth investments, shareholder returns, and retained earnings, aiming to maximize capital efficiency that contributes to enhancing corporate value.
Specifically, we continue to provide stable dividends with a focus on the Dividend on Equity (DOE), while also working on capital optimization with an awareness of the Price-to-Book Ratio (PBR) and the cost of capital.
Regarding treasury shares, we are flexible in considering holding and acquiring them, with an eye toward future compensation systems as well as potential cancellation and disposal.
By fulfilling a clear accountability for our financial strategy, we aim to strengthen our relationship of trust with shareholders and investors and promote a return policy aimed at maximizing corporate value in the medium to long term.
Dividends per share
* The Company carried out a 2-for-1 stock split of common shares, effective April 1, 2025. The figures for dividend per share prior to April 1, 2025, reflect the values adjusted for the stock split.
Our basic policy is to maintain an appropriate balance between allocating profits earned as internal reserves for purposes such as investment to contribute to the growth of the Group, and returning profit to shareholders.
Specifically, we will effectively use our internal reserves to strengthen our mid- to long-term competitive edge through strategic investments to expand our core businesses, R&D efforts leading to the creation of new businesses and products, and to fund projects that could contribute to cost reductions, energy-saving and environmental solutions. Meanwhile, we determine fair returns to shareholders in a stable and continuous manner, taking into full consideration such factors as the business results, future expansion of business, and unforeseen risks, while paying particular attention to the ratio of dividend on equity (DOE).
Based on the above policy, the annual dividend for the fiscal year ended March 2024 has been increased to 75 JPY per share.
Moreover, in aims of increasing the dividend for four consecutive fiscal periods, the Company plans to raise the dividend to 85 JPY for the year ending March 31, 2025 (as disclosed in the financial summary for the year ended March 31, 2024).
In order to secure and enhance the corporate value of Hodogaya Chemical and common interests of our shareholders, since receiving approval at the 156th Annual General Meeting of Shareholders in 2014 for the introduction of our plan for countermeasures against large-scale acquisitions of Hodogaya Chemical shares (takeover defense measures), we have implemented a review of the details of said measures every three years when it is time for renewal. Renewal of the takeover defense measures was again approved at the 165th Annual General Meeting of Shareholders in 2023.
Corporate Planning Department
A.M.
The role of the department responsible for IR activities is to provide appropriate information to shareholders and investors at the appropriate time in order to ensure correct understanding of the company.
In order to make it easier for shareholders to participate, we have taken actions such as holding the General Meeting of Shareholders on days that are easier to schedule and introducing an online voting system.
We hold individual meetings with institutional investors and analysts. I create materials and provide information on the company as is suitable in response to requests for IR interviews after the end of a quarter.
In the future, I want to help shareholders and investors have a better understanding of Hodogaya Chemical Group.
