Nippon Light Metal Holdings Company, Ltd.

Message from the CEO

Entering the new normal with the power of Team NLM

Introduction

First, I would like to extend my heartfelt condolences to those who have lost loved ones to COVID-19. I would also like to express my support for the people who are fighting the disease and wish them a complete recovery, the people all over the world who are working hard on the medical front lines, and those who are providing nursing care, as we work together to take on the pandemic.


The Problem of Sedimentation in Amehata Dam

Typhoon Krosa and Typhoon Hagibis, which brought unprecedented torrential rains to Japan last year, severely damaged the area around Amehata Dam, which is one of Nippon Light Metal Co., Ltd.'s hydroelectric power generation facilities. This resulted in flooding in the areas around the dam, causing great problems for local residents and others. On behalf of the NLM Group, I hereby extend my deepest apologies to everyone who was affected.

This problem is reported in detail on pages 8 and 9. We will continue to respond faithfully, making the safety of local communities the highest priority, operating with our belief in working together with local communities to contribute to their development and improvement, which is stated in the Social Contribution Policy of the NLM Group. We have developed a basic plan to address the Amehata Dam sedimentation in consultation with local residents, local municipalities, and representatives from the national government. We would like to implement this plan steadily with the cooperation of those involved.


Progress of the mid-term management plan, COVID-19, and the new normal

Financial results for the first fiscal year of the mid-term management plan (for FY2019 to FY2021) were severe, with a year-on-year decline in both sales and profit. Net sales decreased 34.6 billion yen (6.9%) year on year, to 465.9 billion yen. Net profit declined 13.1 billion yen (63.6%) year on year, to 7.5 billion yen, reflecting special losses of 11.0 billion yen that resulted from the above-mentioned measures to address Amehata Dam sedimentation, in addition to the decline in net sales. While there are various factors, including a slowdown of the market attributed to the US-China trade war and the slump in the aluminum ingot price, I am fully aware that we did not have the power to overcome these factors. I suspect that our strategies and methods are behind global trends. I also suspect that because our profit had continued to increase since our foundation in 2012, we rested content with the status quo or avoided change, believing that the way we do things is right and that after we have passed the bottom of this recession, we would be able to enjoy growth like before. A corporate group which rests content with a little success is destined to move backward and rapidly fall into the abyss. The world is changing with time. We must continue to change by trying new things, and always aim for growth.

In the second half of the fiscal year, COVID-19 struck the world as if it were testing these thoughts of ours. The pandemic only minorly impacted our business performance in FY2019. However, this is attributed to the time gap between the changes in the manufacturing market and their impact on our market. This gap is experienced by companies that mainly deal in materials. I think that the impact will gradually begin to extend.

Regarding the virus's impact on our employees and businesses, one employee in Thailand, two in the United States, and one in Japan were infected as of July 31. However, the scale of the problem was not large enough to affect our businesses directly. While the COVID-19 pandemic has begun to slow down some of our businesses, we continue operating both in Japan and overseas.

We launched a COVID-19 task force in March, with myself as its head, and began measures to control infection. We checked the status of infections within the group, including at overseas sites, and actively took measures, including the establishment of measures to prevent infection, the confirmation of BCP, teleworking, the opening of satellite offices, the improvement of internet environments, and the preparation of necessary equipment such as face masks and disinfecting alcohol. Notably, officers and employees worked as one in their positions and from their own perspectives to prevent infection and continue businesses. As a result, the impact of the pandemic on the group has been minimized to date.

There is another story related to this. In December last year, we relocated our office to Shimbashi for several reasons. One was to strengthen our BCP. While we planned for different disasters, the office relocation initiatives we had executed helped us respond to the COVID-19 pandemic quickly, and enabled us to work from home and advance other measures without major difficulties. The details of the office relocation initiatives are discussed on pages 10 and 11. In addition, we have a strong financial foundation thanks to the initiatives for improving our financial standing that we have been taking over the last ten years. We had cash on hand exceeding 130.0 billion yen, including the commitment line, cash and deposits. While the situation remains unpredictable, I feel that the initiatives we have taken were right on target. This experience has made certain that we will be able to explore and capture new needs, new markets, and new work styles even during the current pandemic and the subsequent post-COVID world.


Selection of material issues

It is said that COVID-19 cleared the cloudy sky because the world's factories and plants shut down, shops and offices were closed, aircraft and automobiles stopped moving, and people stayed at home due to the pandemic. And there are news reports that the world has achieved the reduction of greenhouse gas emissions that it has targeted during the period when economic and social activities had stopped due to the COVID-19 pandemic. This news report reminds us how big and serious the climate change problem is.

Last year, we reported that we had begun to select our own material issues to tackle the problem. Later, we discussed it at various levels, including at meetings of the Board of Directors, the Group Executive Committee, the CSR Committee and others. Unfortunately, however, we have yet to select our material issues because the discussions necessary for reaching a conclusion and the subsequent dialogues with stakeholders have been suspended, another effect of COVID-19. Here, I would like to share the content of the discussions to date, so that you can share your opinions in the future.

We are in the first year of the Decade of Action, when all humans must take action to achieve the SDGs by 2030. Our business domains have increasingly expanded. I believe that this expansion leads to the ability of the group to alleviate the impact crises have on our business performance, including climate change. I also hope that, thinking the other way round, current and future threats can be transformed into great opportunities for the group because of this form of business. At the NLM Group, we are ready to demonstrate our strengths which are enabled by cooperation and to attempt new forms of business globally after the end of COVID-19, or during what is being called the new normal. As Team NLM, we will work to be a groundbreaking innovator of aluminum and beyond. The transition to the new normal will be an opportunity for us to accelerate our efforts to take on new challenges and break new ground that no other material manufacturer has done before.


September 2020
Nippon Light Metal Holdings Company, Ltd.
President and Chief Executive Officer

Nippon Light Metal Co., Ltd Ichiro Okamoto