Message from the President

To all of our shareholders, here at Kansai Paint and its Group companies, we take the concept of “contributing to society by providing products and services that satisfy our customers” as our fundamental business philosophy.

The coating business, the core business of the Kansai Paint Group, is supported by our customers in a wide range of fields, including various industrial products centering on automobiles, buildings, structures, ships and others. The very foundation of the existence of the Kansai Paint Group is the concept of continuously working to improve our level of customer satisfaction, and through these efforts, we are working to increase the value of our stock, strengthen our operational foundations and contribute widely to society.

Overview of the Fiscal Year Ended March 2011

Detailed figures for the consolidated fiscal year (fiscal year 2010 ended on March 31, 2011) are included in the latter half of this corporate report. To summarize, we achieved consolidated net sales of ¥236,985 million (approx. US$2,850 million, a year-over-year increase of approx. 6.6%), consolidated operating income of ¥21,102 million (approx. US$254 million, a year-over-year increase of approx. 2.9%), and consolidated net income of ¥12,675 million (approx. US$152 million, a year-over-year increase of approx. 7.1%).

US$2,850 million (approx.), a year-over-year increase of approx. 6.6%, consolidated operating income of approx. US$254 million, a year-over-year increase of approx. 2.9%, and consolidated net of approx. US$152 million, a year-over-year increase of approx. 7.1%

Furthermore, for the term under review, annual dividends were ¥10 per share.

Looking at the global economy for the term in review, a gradual recovery is continuing as the economic-stimulus packages implemented by each country reap results. In the Asian region, domestic demand, particularly in India and China continues to grow. In Europe and North America, there are high levels of unemployment and unease about the financial system, but a gradual recovery is also taking hold in these regions. On the other hand, political unrest in the Middle East and North Africa has triggered a steep rise in the price of crude oil and so inflation concerns have come to the fore.

The domestic Japanese economy continues its gradual recovery following the results of a broad range of government policies but at the end of the term, the impact of the Great East Japan Earthquake posed enormous challenges for economic activities.

Amidst these economic conditions, with regard to the consolidated business results of the Kansai Paint Group, sales in India and the Asian region have increased, but in the latter half of the term the price hike in raw materials combined with the continuing strong value of the yen has impacted our results, as has the Great East Japan Earthquake. Despite these impacts, we were able to post gains in both net sales and profit on a consolidated basis.

Outlook for the Fiscal Year Ending March 2012

Looking to the future and an economic forecast, growth in developing nations, especially those in Asia, is expected to continue, but there are concerns that issues such as the rising cost of raw materials and exchange rate fluctuations, etc. may impact our profitability. Moreover, the Great East Japan Earthquake has delivered a huge impact on the domestic and overseas economy over a considerable area and we believe that the long-term, serious effects of this disaster will be felt through difficult economic times ahead.

Under these circumstances, we will develop our business activities in line with the management strategies of the Group as stated below, but for the time being, our first priority is to contribute to the recovery effort following the Great East Japan Earthquake.

As for the outlook for this term (fiscal year 2011), we have set targets as follows: net sales of ¥270,000 million (approx. US$3,247 million), operating income of ¥20,000 million (approx. US$241 million) and a net income of ¥14,000 million (approx. US$168 million) on a consolidated basis.

Management Strategies

Our current three-year mid-term business plan was launched in fiscal year 2010 and the points below indicate important policy areas as we continue to develop our business activities.

  1. Promotion of Globalization

    Our overseas businesses continue to grow apace and to take our business results to another level, with special focus on Asia and developing nations, where the prospects for growth are most positive. As we plan to reinforce the way our business is structured, we continue to advance in developing businesses in new territories and fields, areas that can make a significant contribution to our business performance. Furthermore, as we strive to reinforce our management foundation to meet the needs of globalization, we are planning to improve management efficiency by increasing collaboration between our overseas and domestic businesses.

  2. Strengthen Profitability in Domestic Business

    By acting based upon what the market is indicating and developing products that offer a high degree of added value, we are looking to expand our market share. Through optimizing our business organization we will become more cost competitive and this in turn will lead to stronger profit performance.

In Closing

Kansai Paint and its Group companies, working in the spirit of “profit and fairness”, are entering a new stage in global business activities. To that end, we will build our global manufacturing and sales system and develop our business to meet the needs of customers in every region. By increasing the level of collaboration and working towards improving our business performance, we will continue on the road to company growth.