The scheduled time has arrived. We will now begin the Mitsubishi Chemical Group Management Policy Briefing Session. My name is Chihara. I will be serving as the moderator in today's event. Let me introduce today's speakers first. Mr. Chikumoto, Mitsubishi Chemical Group President and CEO. Executive Officer, CFO, Kida. Executive Officer, Chief Strategy Officer, Yabe. Today, other officers in charge of each business are present today. Let me introduce them. Basic Materials and Polymers, Shimodaira. MMA and Derivatives, Kurokawa. Pharma Business, Tsujimura. Advanced Films and Polymers, Egawa. Advanced Solutions, Wakabayashi. Advanced Composites and Shapes, Franck Ruel. Portfolio Transformation Promotion, Araki. Mr. Chikumoto will start his presentation. The Q&A session will take place after the presentation. The presentation and a Q&A session by the president will be conducted in Japanese, and Franck Ruel's comments during Q&A session will be in English.
Please use the simultaneous interpretation equipment if you need. For online participants, you can select the audio by clicking on the interpreter button. The video and audio, including Q&A session, will be posted on our website at a later date. Let's get started. Chikumoto-san, please.
Thank you. I'm President Chikumoto. Thank you very much for this opportunity. I would like to take off my jacket. It's going to be a long session, so please feel relaxed. If you want, please take off your jacket and tie as well. Thank you. Because of the facility setup, I have to stand here giving my presentation. Sorry for that. "We lead with innovative solutions for achieving KAITEKI, the wellbeing of people and the planet." This is the purpose of our company. Today, first, I will cover KAITEKI Vision 35, what we want to do in 10 years.
Next, I will cover a new medium-term management plan 2029. In the new mid-term management plan, we will describe what we are going to do in the next five years. Towards 2050, 2030 is 10 years in the future. This is our image of the milestones in 2035. The vision is for 2035, which I will discuss later. The world is becoming more complex. The pace of change is relentless. Our customers are expecting and demanding more. Our way forward is clear. As a green specialty company, we are committed to solving social problems and to delivering impressive results to customers with the power of materials. This is our vision. Why the 2035 vision was formulated newly at this time. Actually, six years ago, we came up with KAITEKI Vision 30. That is for 2030.
The team which was formulating this was management planning, where I belonged, of Mitsubishi Chemical Holdings at that time. Later on, there was more speed and change in the world and the dynamic change in our environment after that. Another reason is that one of the things we explained was a selective focus on key businesses. To be honest, we couldn't do that. Over the last few years, because of the confusion of the management, there is a gap today between the management team and the employees. That's why we reestablish the vision and reformulate the five-year plan and showed this to you so that the management and employees can reunite themselves and do a good job in the next five years. For 2035, after KV 30, the world has changed, especially in those five areas. We have identified those five social issues.
They are unchanged from KV 30: energy use and decarbonization, sustainable resource management, digital technology advancement, food and water resource optimization, and extension of healthy life expectancy. For those social issues, as a business, what we should be doing, we have set some areas: green chemical, effective energy use and decarbonization, sustainable resource management, digital technology advancement, food and water resource optimization, and extension of healthy life expectancy. This chart shows you the values that we can provide in each of these areas for us. As the foundation, we are leading the green transformation of the chemical industry globally. This is the stable supply platform for green chemicals. This is what we want to realize. When we talk about these things, people ask, "How can we make money out of green chemicals?" Already, that's happening with the PET bottle.
It used to cost JPY 130, it went to JPY 140, JPY 150 today. The price includes that PET bottles was crystal clear in the past. It was transparent. This bottle and the bottles recently are more opaque. If you look at the lid part of PET bottles, it's brownish already. It is because recycled materials are used today in the PET bottles. Actually, already, you are paying for the cost of green transformation and a circular economy. Consumers are already paying for that. Globally, more than we think, carbon neutral and circular economy, the access has already expanded more than we thought. Consumers are already beginning to pay for those.
Based on that green chemical mobility, eco-conscious mobility we have, we are enabling advanced data processing and telecommunication, we are supporting the society by food quality preservation and technology and equipment for new therapeutics. Without green chemical, probably in these areas, those products would not be able to be supplied in the future. Stable supply platform, green chemicals. As you know, this is driven by the regulatory responses to global climate change, chemical industry is facing a turning point. Carbon circular, we are promoting and commercializing carbon and material cycles, establishing reliability and traceability for environmental-related disclosure data. As you know, in Masdar company in Abu Dhabi, with INPEX, we are conducting a feasibility study in Abu Dhabi. This is for e-methanol, the lowest cost, solar power-based e-fuel, water and hydrogen.
Hydrogen will be created by decomposing water from the CO2 and O2. Propylene and methanol, we can produce them. When we operate this facility, how much is the running cost? We are investigating those things in the feasibility study. From methanol, generating propylene, we have come up with basic technology, already depreciated, the joint technology with Nikki-Universal or JGC. Also chemical cycle. The new recycling, we are now realizing this in the Kashima plant.
Just a few days ago, we have completed the construction. Therefore, we are going to have a trial stage. As I have mentioned, well, because we need to generate revenue. Without that, we are not going to pursue this business. Of course, we have received support from the government. However, or because, we are determined that we are able to generate profit out of this business. Bio-naphtha and also SAF. For the project, we would like to implement new projects going forward. Also eco-conscious mobility. Therefore, the positioning of mobility will change and will have a diverse usage, not only being used on the surface. There will be a greater demand for the diverse material. For automated driving, there will be less accidents. Therefore, there will be a greater demand for the resiliency and also enhancement.
Therefore, according to the requirements of the clients, we are going to accommodate to their new demands. Therefore, for the eco-friendly, we are going to have a recycle and also more carbon neutrality in order to have those products in the market. That will be our value. In the semiconductor industry, well, because we are envisioning an increase of data. Therefore, well, because thinking about the water recycle and also the data management, we are going to have a high precision. Therefore, for the semiconductor material, we are going to provide that. For the main, because we are going to have a recycling of the water. Therefore, we are going to provide that to the semiconductor manufacturing, for example. Cleaning the equipment.
For the semiconductor industry, we are going to work and create an ecosystem for the semiconductor markets as well. For the food quality preservation due to the climate change, also the population increase, the food loss issue is becoming more peculiar. Therefore, because we are going to provide support for the processing and also for the collecting, we are going to provide more easy-to-use recycling system. Therefore, we are going to provide and propose this value to the market. For the new therapeutics, for the technology and equipment, because we are going to have a longer longevity. There will be more formats that will be related to bio.
Also, for example, there will be more high functionality material being required and also contributing to the sustainability, recycling the material. Therefore, we would like to create that cycle in order to provide a market value. Therefore, by taking those steps, by 2035, we would like to achieve JPY 900 billion. For the FY 2024, we are going to have a forecast of JPY 290 billion. There will be a huge increase for the chemical business and looking at the group business. For the group business, we only have JPY 55 billion. However, it's going to increase to JPY 550 billion. For the group business, it's going to increase to JPY 350 billion. For the chemical business, the ratio in the COI will increase drastically. For the former business, I'm going to explain in detail later.
We are going to search for the best partner, and for the industrial gases, we are going to expand our business arena. Our keyword is connect. As I have mentioned, in order to generate this kind of huge profit, why it's achievable? This is a very simplified model. There is a demand and also there is a solution, and therefore, we are going to connect them with agility in order to provide higher value. With the salespeople, technology, R&D, manufacturing, and also we are going to invite an external business partner, and by connecting them, that will be the key. Therefore, we are going to provide our human talents, market cultivator, technology integrator, manufacturing enabler.
We are going to nurture, and also we are going to invite the external human talent, and therefore, we are going to change our human talent management as well. Already in the manufacturing, we do have a diverse manufacturing capability. We do have high-skill employees, and also we do have a process and designing, and also the commercialization capability. Therefore, if those areas will be connected, we are able to provide innovative manufacturing technology and commercialize that. Also with AI, we are able to have a evolution of manufacturing. However, currently we are not being connected. Those areas are not being connected. However, by connecting those areas, on the right-hand side, we are going to achieve those targets. That is the vision we have, and therefore, by implementing this connect, I think we are able to achieve that.
For the human talents, we are going to allocate responsibility and clarify the responsibility and also their tasks, and therefore, in order to create those tasks, they need to create a team, and therefore, by team building, we are able to have the connectivity. For example, supporting expos and also the R&D development and manufacturing. By connecting them, we are going to have innovative manufacturing technology, as well as the manufacturing processes. For example, we do have these kind of supervisor meeting. We are going to have a national supervisor meeting, and also we are going to have a global manufacturing meeting, and we are going to create a new business department accordingly, if necessary. Those are the technologies. This is only one example of our technology.
For example, in the manufacturing and also the analysis and simulation technology and scale-up technology, we do have that, and therefore, we are the largest in Japan. Thinking about those technologies, they will be the basic technology supporting them. Also because we are not able to include all of those technologies in one list. However, the issue is that we are not able to connect those technology, and without that, we are not able to implement innovation, and we cannot provide solution to the customers. On the other hand So, for example, talking about the lunar rover YAOKI. Because in producing this YAOKI, we had provided material design technology and analysis simulation technology and scale-up technology. By connecting those technologies, we are able to be selected as a partner for developing lunar rover.
For the lightweight battery pack, we are able to connect four business areas in order to materialize and produce a product. In order to connect with the society, as I have said, Abu Dhabi Masdar and also INPEX and ourselves. We are able to provide e-methanol, propylene, and also the polyolefin. Also with Nikki, we are able to have a joint development of the technology, and therefore, we are able to provide low carbon derivatives in those areas. By connecting them, we are going to use the human challenge, and therefore, the market cultivator, the system has already started. Of course, the leader is the United States. However, in all the regions, we are going to allocate the market cultivator, they are going to connect with all the products. For example, for eco-friendly mobility, they are able to work horizontally.
This kind of organization will be allocated within our business management department. For the regional and global strategies, we are going to implement according to the regions. Americas is having a driving growth. Within five, six years, we are going to create a manufacturing plant. It takes five to six years, we are going to have a decision-making process.
In China, at the moment, people say the risks are too high, the money we make in China will be invested in China, in China, demand is still growing. We are not giving up on China. For talent, we want to be selected, we want to select good talent. The types of talent we want has a distinct strength and sense of ownership, the technology, able to learn the technology and collaborate with other companies. These are the people we want. A human resources system will be started to evaluate them. The company can provide the environment to those employees, to work in a very liberal manner and connect with others. That is how we would like to select good talent and be selected by them. That is how we would like to achieve the vision.
In terms of sustainability, towards carbon neutrality 2050, this is a must. For 2030, we have a target of GHG reduction, 29% from 2019. In 2035, this is just a milestone towards 2050. We will set our target based on the government's target for 2035. I talked about 10-year plan and the vision for 2035. Probably in your mind, you may be wondering whether we can achieve this, maybe it is too much talk for the content. We would like to explain to you what we are going to do in the next 10 years or next five years, we can convince you that we can do this. Let us see if I can convince you. For the next five years, how are we going to spend our time? First, I would have to review the past three years.
Sales did not grow. Profit did not grow. In chemicals, this is the briefly very poor situation. Why did we fall into such a poor situation? When I became president more than six months ago, I have been considering what happened. I came out with a conclusion, that is the lack of discipline. There was a discipline, but the people could not follow. People could not follow the process. Based on the principle and rules, we couldn't make decision. That's why we set these things. These are the three criteria for business selection. First is consistency with the vision and purpose. Second is competitive advantage. Third is potential for growth. Growth potential means whether we can make money or not, whether customers like our value, based on the value, whether they're willing to pay or not.
Growth potential going forward, is the business sustainable, is the market growing? Can we take more share in the market? Whether there is such a viability or not. Those are the three criteria. Based on those three criteria, if any business cannot satisfy them, they will be put under close monitoring, almost automatically, they will be divested or exited. Those three criteria, we want to make decision based on those three, in a very rigorous manner. In terms of the disciplined approaches in business operation, one is price policy, where whether we are setting price for the value that the customer recognized. Are we setting the price right way? In the product mix for high value-added products, are we moving up into the high-value products in the portfolio?
For commodity in order to avoid volatility, do we have a clear formula-based pricing? For investment decision, we will have a rigorous selection process. Number one, whether we can make money or not, that's the most important. Also, whether we have the commitment from customers in terms of the volume and the price acceptance, we will see this first and foremost. Process management and the review means that once we approve something, we are not leaving it to the business. The steering committee will check the progress every month, how much money each business is spending, and whether they are delivering on the promise or not. If they are not delivering what they have promised, we are not going to give any money to that business anymore, because those are the people who are bad at spending money.
We are not letting them spend any more money. We will have such a rigorous process. Having said that, we don't mean to be too stringent. We want to grow top line and profit at the same time. When there is an opportunity, we will take a bold decision and make an investment. Asset optimization, we are rationalizing excess capacity. This is something we are already doing. We are also already optimizing business tasks and personnel. This is a company as a result of merger of different companies. We are working on this. In terms of the scale and action, we cannot give you the plan yet, we will optimize more. Corporate functions, we have to rationalize this. Clearly, we need to do this. For many years, we have left it behind without solving the problem.
According to global standards, our expenses, we will benchmark and see whether we are spending too much or not. That's how we are making decision. In terms of collaboration with other companies, this is something we are already doing, but the biggest one is Asahi Kasei and Mitsui Chemicals collaboration. Other than that, we have several different projects going on. Next is reevaluation of IPs. This is something that we found invaluable because we may have some tangible assets which we didn't realize that they had the value, but we want to review their values and utilize them. The management targets JPY 290 billion. We want to increase this to JPY 270 billion. That's core OP. OP margin is 12% and the ROIC is 8%. That's the target.
How can we do that is maybe your natural question, but let me take you through the details. Major growth driver is specialty materials, which is this year, JPY 34 billion in profit this year. In five years, it will increase to JPY 144 billion. Polymer and carbon and petrochemical, a JPY -21 billion, but we want to make it profitable to JPY 44 billion. It's not such a big profit, but for a basic chemical business, that's so-so. Towards 2035, first and foremost, we want to turn around the business and make up JPY 44 billion. This is a commitment we can make so far. Shimodaira-san say this is a commitment. This is something we want to deliver. The main drivers are rationalization and optimization of assets and growth investment. With those, we think we can really achieve this. Business portfolio management.
There are three criteria, as I explained. Based on that, already from 2021 to 2023, we have 10 projects and JPY 200 billion. Going forward, JPY 400 billion and 30 projects. That's what we want to do from 2024 to 2029. I can't disclose the list, but we already have a list of items to do this. It's dynamically reviewed and changing, and these numbers may change in the future based on our progress. This is from FY 2021 to first half this year, the rationalization we have already taken on. In 2024, actually, some of the core businesses are listed up as candidates. We have no sacred area, no sanctuary in doing this, rationalizing the business. Next, those are the three principles for business operations. With these three principles, approximately JPY 140 billion profit increase is what we want to achieve.
For barrier films and resin, for barrier film, the market is already on the growth trajectory, and we have already made a decision on a major investment there. Therefore, for the barrier films, we are going to increase the production in U.K. For polyester films, the concern is that because the LCD panel, because the pricing went down, however, the size is increasing. We are not able to improve the profitability, and therefore, we are going to change to high value-added business.
For example, the mobility and semiconductor is our target, and also we have already implemented a shift to those business areas. For the display, for the OLED, that polyester film, it occupies around 90% of the market share. Especially, for the bending, and the flexibility, and also the low reflection for the high efficiency, we are able to utilize our technology in order to provide a high value-added product. With the semiconductor materials and solutions, you may not know.
The major products that we do occupy number one or number two position in the market. For example, synthetic silica, and also the GaN wafer, and the Resomax, and also the polymer product. This is a polymer. The CMP post-cleaning agents, and also the [MSC resin] . We are number one or number two position. For the semiconductor manufacturing, the cleaning solutions in Asia, in Japan, and also in Europe, we are number one. For the wastewater recycling, we are making it as a business, and currently we are number three. We would like to achieve number one or number two position. For the semiconductor, we do have the main and also the other areas, and therefore, we are going to support from both sides, and that will be our value.
For the food business, we are going to enhance the product mix and provide more localization in order to propose our product. Our product mix is not able to achieve the branding power for us, and therefore, having a strategic investment, we are going to increase our product mix and provide more solution to the customer. For example, if you would like to extend three days, providing a certain film and certain additive. If you would like to extend by 10 days, you're able to combine a different product. Therefore, we would like to provide such kinds of solution to the customer demands. Carbon fibers and composites. The issue is clear. As you can see from the carbon fibers and composites, and also the composite growth, we are not able to have a diversification.
Asset , so utilizing CPC, invested JPY 100 billion in Italy, and we have made an investment of JPY 100 billion. They are producing automobile and also at the engine. We are the only company within the carbon fiber industry that is able to complete our automobile by ourselves. However, asset optimization, and also we are not able to have the optimization of the product, and therefore, we were not able to achieve the pricing that we wanted to get. Sometimes our product have been used in the lower stream, and therefore, we are not able to generate that profit. We are going to focus more investment in this area in order to generate more profit. For the recycling, we already have that capability for the mobility.
For example, from the completed automobile, so until the recycling, we are the only company which is able to provide such kind of capability. High-performance engineering plastics. Globally, we do have 25 manufacturing sites. Why is that? Well, because they have a stock shape, and also after M&A, we have those many sites. It seems that we have too much manufacturing sites, and therefore, we are not able to concentrate, and therefore, we are going to provide rationalization as well as the consolidation in order to have an optimal producing process. For the MMA, so within five years, we didn't include the investment in the United States. However, because we are the only company which have these kind of producing policies, and also we do have the less CO2 emission, and therefore, the market share is the global number one.
In six months, we are able to generate this much profit, and this is the only company which is able to generate this profit. The existing MMA equipment have been antiquated, and therefore, we are waiting for the EOL, end of life, of those equipments. Basic Materials and Polymers As I have mentioned, so with Asahi Kasei and also Mitsui Chemicals , we are going to jointly work together and therefore using this basic raw material joint platform, we are going to invest in this platform. In Kashima, there is a chemical recycling plant, and within six months, we are able to start the commercialization. Collaborating with big brand, we are going to have more profitability.
Because without this, so if we are not able to provide the basic raw material, then in the chemical industry, they are not able to continue their chemical business. We are going to face squarely in order to cope with this issue. For the pharma, those are the major three products. With the FDA, we have concluded the discussion with FDA, and therefore, we are going to have the approval of ND0612 and for the [paunto] and also for the anti-obesity drug. The market will increase, and also we are going to implement rationalization, and therefore, we are going to get the full result or the full fruit out of this process. Within the pipeline, within the R&D, we are able to implement thoroughly.
For the CNS disease and rare diseases and also for the immunology and for the inflammation and cancer, we do have the strength. Against the cancer, we do have a very competitive edge, and there is no concern for us. We are going to enhance our pipeline, that is inevitable. For example, the patent for the RADICAVA, we are able to have that patent measure against that. We are going to enhance our pipeline going forward, we are going to search for our best partner. Thinking about the future of our pharma business, we need to have a good partner who is going to invest in this area more. For the rationalization, we are going to have an improvement of the business operation as well as the FTE.
We are consolidating ERP, we are going to allocate JPY 335 billion. We are a joint company, for example, we do have different systems, it requires more cost. Data management is not easy, we are going to implement ERP. For the supply chain, we are going to have the rationalization. FY 2029, we would like to allocate that rationalization merit of JPY 50 billion by FY 2029. For sustainability, we are going to reduce by GHG emission by FY 2030, -29% reduction always, -50% water resources, -310 tons. For the human talent, as a measure, we are going to promote diversity, we are going to nurture those kind of global manners. We have invited 30 top talents, next top talents, 30% each, we are going to nurture those human talents.
As I talked about earlier, the keyword, connecting. The people who can connect will be highly evaluated, we will reward them by the new HR system we are going to implement that is based on the merit and merit-based HR system. For employee engagement, 69% is the score today, we want to increase it to 80%. For diversity, we want to increase the score from 29% to 40%. For capital allocation, about JPY 3 trillion cash income we have. Out of that, 20% will be allocated to shareholder and debt repayment. Dividend payout is a benchmark, is 35%. The ratio 0.8x or less. For chemicals business, strategic investment, growth investment, and maintenance CapEx, these are the ratios. For growth investment, already based on the growth strategy of five-year plan, this is already part of it. Specific projects are listed up.
I can't show you, but we have a list. For strategic investment, it's like assortment enhancement in foods and investment in semiconductors, and the stock and shape business major investment. Those are included in the strategic investment category. Enhancement of shareholder value, growth, ROIC, and shareholder return. Those are the three main drivers. Top-line growth is important. More than that, we have to focus on specific areas. Growth investment and strategic investment will be made there so that we can increase profits. Also, ROIC should go up from 5% to 8%. Shareholder return, as I said, 35% is the benchmark. We will pay out dividends based on that. Lastly, commitment from management. We will instill management policies and maximize contribution of all employees, and we will build the best management team based on experience, a proven track record, and ability to execute with mutual trust.
Right now, there are several team members there. When I became president, other than my position, we replaced eight positions. At the moment, after 6 months or more, I really feel that it was a good decision. I put all the specialists in each of the positions. Each one of them is a unique talent. In each area, they are professional people and have experience of management. The strong management team is what we have today. This year, the race, we want to win the race this year. If we need, for example, someone like Araki-san, if we can find from outside, we would like to positively recruit those types of talent. Next year, we want to go to Major League, and we need talent and organization, which is living up to the Major League.
The year after that, in the Major League, we want to win the championship. We want to have the strong enough team to win. Even during the team, we may replace members and the team members, and if there are good talent out there, we don't hesitate to recruit from outside. We have shown you the five-year midterm plan. As I just said, in the first year, we will put a seed, and we will grow the seed in the second year, and harvest in the third year. When we harvest in the third year, are we going to sow the seed, or are we going to eat the seed? That's the question. In our mind, we want to plant the seed so that we can harvest continuously.
After three years, I will come back to you once again, so that you can evaluate what the management team has done. We will secure the trust of shareholders with results, link shareholder value with management team compensation. Our purpose is listed up once again here. With this, I would like to conclude my presentation. Thank you for your attention.
We would like to start the Q&A session. Morgan Stanley.
Watabe is my name. Congratulations on the disclosure of the midterm plan. I want to ask you about the major championship winner plan you talked about at the last part. You are aiming at the top largest market cap globally in chemical industry. JPY 570 billion is not enough. When you say major league championship winner, what do you mean by that quantitatively?
We were not jumping to there at once. In three years, we would like to be successful enough to aim at that. That's the kind of profit we would like to achieve in three years.
Given that JPY 570 billion to go towards that level, your vision is understandable. For example, for Pharma, in 2029, RADICAVA IP is expiring. The specialty, this is the kind of profit you need, probably you can do this. On the other hand, for basic, well, this is never achieved with [methyl methacrylate MMA]. Well, MMA is now gone. What do you do to achieve this? With MMA, with the flat level, are you still doing business in the U.S.? The U.S. investment, many people are worried about the investment level in the United States. What is your image? Is it going to be your standalone investment or JV? Towards JPY 570 billion, please give us probably more explanation.
We have managers in charge of each business, I would like to let them explain. Shimodaira-san, first, please.
This is Shimodaira. Thank you. First of all, in our area, 2029 target is JPY 44 billion. That's the commitment number. This year, we are running losses, most of it, or almost all are from carbon fiber. Petrochemical is profitable, but carbon fiber is negative. Last year in autumn, on a continuous basis, the raw material prices declined. There was an inventory loss we had to record. Well, because for the coking coal, transportation distance is very long, we have to always have a stock of certain inventory. There was an inventory loss because of that. We had to record. Because of that's the situation. We are reducing our production capacity at the moment, because that way we can reduce the exposure by the market fluctuation.
That's how we are controlling the risk, also the fact that we have to sell, or if we try to sell more than we need, we will undermine the pricing. Therefore, we want to resist the risk of the market, we'll have a pricing strategy to hedge the market fluctuation. That's how we are reducing the losses in carbon fiber. Reducing the non-profitable business, this is going to be the most important thing in improving profitability. We just talked about the carbon fiber, for the petrochemical domestic demand, we want to commercialize with the domestic demand. We want to have a new commodity model, the multi general purpose product. That includes downsizing of facilities and assets. Also, for the growth areas, we have mobility, what we have is compounds there, general purpose polyolefin. It's no longer general purpose.
We want to do the high-performance polyolefin, there are some already, we want to grow them also come up with new products in this category. On top of that, we want to promote rationalization. There is a company-wide movement, in our basic material, there are specific rationalization as well. In the next three years or next five years, that's how we would like to achieve the commitment number for the next five years. That's all.
This is Kurokawa. I'd like to explain about MMA. Under this MTMP, we would like to have the accuracy with the figure, the U.S. project is not included. However, from 2030 to 2035, we have included the figure because as an initial target. We would like to have a stable and also utilizing the natural gas from the U.S. and have a most carbon neutral MMA, also results. With the Chinese players, there is too much over capacity in China. However, we would like to provide and look into the areas where we are able to generate a stable profitability, the European and also the old equipments will be suspended in the near future for the ACH.
We are going to and when there will be changes for the carbon tax, we think we are able to have additional profit. Talking about Asia, this is the most demanded area, looking at the current situation, there is oversupply, we are not able to have a very good business. However, within that, we need to maintain our presence, because we do have a track record of 20 years, as the price rise against the major players, we are able to get a higher price. However, we are not able to achieve this future target, we are going to have that downstream technology. Until now, because we have provided and sold the product that have been produced in our site.
However, utilizing our downstream technologies, we are going to supply to the customers, especially with the large companies and also with the companies who are able to generate the new market, new business. Utilizing our technology, we would like to create a new demand to the supply. We are going to introduce the measures, which is being able to compensate the supply and demand area. For our technology, not only providing a stable MMA product, we are going to have a more technology value, for the clients, they are able to understand the benefits of being engaged with us and create more profit in order to achieve this target. That's our idea.
For the investment amount, of course, it's increasing, we are taking some measures in order to manage this investment amount, investment amount is increasing because we are not able to collect our ROI with a certain pricing, providing this value of low carbon footprint. Because we are not able to convince the stakeholders with a good pricing with the customers, we are having a negotiation with the customers right now as a person in charge. We have already started negotiation with the customers, we would like to contribute and have a discussion within our company, and I hope that I can provide material as soon as possible for the discussion.
Thank you very much. This is Tsujimura. Talking about RADICAVA, 2029 May.
This is the exclusive timeline. Therefore, for the patent, for RADICAVA, for the formulation, and also there are some different patents that we hold. Therefore, we do have a long period for those patents, and therefore for the authority, it's been set as at in May of 2029. However, for the generic sale, therefore, we are taking some kind of measures not to be taken over by generic products. Therefore, because this exclusive period for the generic drugs, we do have some measures. Therefore, we are able to have the exclusive period for RADICAVA until May of 2029. Therefore, we are able to prolong this exclusivity for a longer period, and therefore, we are optimistic about this position.
Mr. Miyamoto from SMBC.
SMBC, Miyamoto. Therefore, because for the Basic Materials & Polymers, it's page 56. Mr. Chikumoto had explained for the green value. You have mentioned about the PET bottles and recycled material and, for example, the bio-naphtha. Therefore, the competitors are not able to have a good sale of the petrochemical product. Therefore, this green value takes time for the market to accept that or the petrochemical related product. How are you going to secure the profitability in this area? For example, for the national security, well, because this is a public business and therefore whether you are able to utilize a subsidy from the government or not.
Also, they're having a collaboration with three companies and are in order to enhance this kind of collaboration, how are you going to implement? Therefore, you have mentioned in 2029, this figure that I was not able to advance, envision. Therefore, whether the ROIC is going to surpass this level and therefore for the Basic Materials & Polymers, please explain more about the profitability for this business.
Thank you very much. This collaboration with three companies. FY 2029 midterm plan, this prerequisite is not included. Because green ethylene and propylene, we are focusing in those areas. Therefore, the downstream should be green products as well. Therefore, we believe it is important to pursue this position. However, for this business, so propylene and ethylene, so selling them as a product, we are not able to sell that. We are going to create the derivatives. Therefore, we are going to create the business.
Therefore, having that figure, this collaboration with and partnership with three companies, we are going to focus more on the green technology. However, this is the area where we can provide more additional green value.
How much will that be?
Therefore, because FY 2025, we are going to have the carbon neutrality around that time. Therefore, we need to have a higher value in order to pursue with the investment. For that, we need to have support from the government. However, well, because without the value product, we are not able to continue with our investment. Therefore, we are going to prioritize our higher value products. Therefore, we're looking at the carbon tax. Therefore, within that trend, I think the situation will change and evolve accordingly. Talking about the petrochemical basic material and also the capital efficiency and for the ROIC. Because I don't have that figure. Kida-san do you have that?
We do appreciate your concern. For FY 2029, the capital cost for us is 3%-4% in terms of CAPM. Of course, the spread with ROIC is what we are monitoring. By FY 2029, in basic material, we can exceed that. Compared with other businesses, it is still lower, but we can have 6%, high 6% range, or 7%, low 7% range. We may have some aggressive aspiration, but with the measures he talked about with petrochemical, we are going to increase the ROIC that is included in the plan.
Talking about green area. If I could add another point, the customers who can recognize the value in green can be brand owner. Even today, for their products, which is emitting emissions, CO2, in our case, it's plastic, they are trying to recycle and reuse those products and materials. We are getting those inquiries. In Kashima, 20,000 ton plant, which is completed. In the plant, we think that it is profitable. With the 2029 plan, in terms of the value, it is still small, but we are counting their positive contribution from Kashima in that sense. In terms of the economic security, this has a very public nature, high public nature, and at the moment, the petrochemical business is less than half the rate.
We think that a national government fund should be injected. JPY 1.3 trillion budget of METI talked about the ethylene facilities as well. They mentioned it. With this collaboration, could you talk about the possibility of having access to that fund?
Of course, we are in discussion with the national government regarding carbon neutral and circular economy. The level that is acceptable to consumers, there is a limit. In terms of recycling, it's not as costly as bio-naphtha. That is the important point. As far as I know, bio-naphtha, there is a six-month waiting time. It's like a Ferrari of naphtha. It is very expensive. It's very difficult to get stock. The cost may be too high. In our case, with the brand owners, we are in discussion with them, and it's quite feasible as a business already. Some of this feasibility include government subsidies.
That is something that we are doing while we are trying to secure the profitability. Unless we can secure profitability, Japan cannot promote circular economy or carbon neutral. We would like to convince the government on that point, and we would like to come up with a good mechanism in that sense.
Yes, we are counting on you. Thank you.
We would like to invite next, from JPMorgan Securities, Nakada-san, please.
Thank you very much for the presentation from JPMorgan. My name is Nakada. One question, and therefore this might be rather ambiguous. Listening to your presentation, so therefore providing solution to the society, so therefore I fully agree with that vision. However, as a listed company, I'm being perplexed whether you are going to follow at that. With Asahi Kasei and Mitsui Chemicals, I think you're able to expand your business platform. However, it may, well, because you mentioned about no synergy. However, it seems you're going to pursue those projects as well. From external view, in the previous midterm plan, for example, you're going to focus on the operational excellence like Shin-Etsu Chemical.
However, it seems more diverse for this MTMP like BASF like that. Are you going to follow that suit, or using the three-year solution, are you going to focus more like a 3M Company? Could you clarify what kind of vision, so therefore as a Mitsubishi Chemical, could you explain more clearly what will be your future view? However, it seems that with the MMA, so therefore if that is Mitsubishi MMA Company, if that is the case, you're going to invest more, and therefore, however, if it's incorporated into a whole, it seems that much more improved our technology.
Well, because we do have a diverse technology, and therefore we do have the largest number of technologies. Therefore, the keyword is to connect.
Recently, well, because I have been engaged with the major top management and their demands are very difficult, and what they are expecting to us is our comprehensive power. Well, because how much technology do you have? Therefore, maybe we individually don't think it's an excellent technology. However, the external business partners will think that we have excellent technologies. Therefore we need to directly connect to those customers. Therefore, having those kind of technologies, until now, we have those kind of technologies. We have paid so much cost in order to keep competent. However, now with the complexity increasing, I think our values have been really accepted. Therefore we need to have a volume in those technologies. Therefore, in the upstream, we are not able to considerate and consolidate. Until now, we do have these kind of green technology.
Without green technology, we are not able to continue those four business areas, because it is required to pursue carbon neutrality and circular economy. Therefore, in those areas, we are going to provide our green chemical. Therefore, because we are not going to be dependent on others for the technologies. The reason why it's been divided into four areas. I have focused on our expertise. Therefore we are going to focus on those key areas. For example, in the facility area is something that we are going to allocate more asset investment. At the beginning, industrial gas and also the Pharma was really sinking. For the industrial gas, for the food, and semiconductor, we do have a synergy. Even now, because, we are having a negotiation with other business partners.
For the time being, I think the business style will not change. For Pharma, as I have explained, thinking about the future of Pharma, I think it is very important to think about our future. Because as Pharma, talking about the patents, we do have a very strong patent. Also rather than you think, we do have a high profitability in this area. Therefore, this kind of good business, how we are able to grow this area. Thinking about that, we need to look for our best match as a partner.
Thank you very much. Now, going to the next question. Mizuho Securities, Yamada-san, please start your question.
Thank you for the explanation. Mizuho Securities, Yamada. May I ask two questions?
Yes.
First question. This time, unlike the past three years, the numbers match with each other. If we can make profit, then I can anticipate the scenario. What you can make profit is important. In the last 20 years, I've been watching the company. There are several sources of profit. Because of the lack of investment, or according to the management, the investment overrun happens. It's not like Tokyo Olympics from JPY 3.5 million to JPY 44 million. We have to realize that the investment, anyways. You are in the decision-making position. It's important to focus on the people. The merit system is what you need, I think, in HR.
Also once a business fails, then you don't let them use the fund anymore. For the next three years, we have to make sure that these mistakes do not happen. What kind of HR system motivation so that you don't have those failures anymore with the businesses?
As I said, discipline has to be in place. That's the principle we have to follow. In our case, even if we decide on the investment, we will not just let the business go on their own. Every month in the steering committee, we are watching the progress so that we can see there is no cost overrun, and they're on the schedule. We will watch that. If there is any delay or cost overrun, we will support the business with the rest of the organization. Today, that was difficult. From other divisions, we injected people already. Personnel change and organizational change are already happening. We are already making decisions on that. That's how speedy we are in responding to those problems. We didn't have such a capability in the past. We just let things with the business or each segment or each business group.
After the results come out, they come to the management and say sorry. They had a cost overrun. That was what happened in the past. At the end of the day, the divisions who cannot make effective use of funds would not be able to get the investment money anymore. That's how serious we are for the new investment decision we are making.
In the past, that discipline did not work. On top of that, ideally, the divisions or businesses who had to spend more money or investment because of the lenient decision. Gallium nitride thermal I-V, I've been expecting something coming out of that for 10 years, but nothing. I think that there is an underinvestment situation there. How can you address such a problem?
Gallium nitride, together with JSW, we are jointly developing this at the moment. Facilities for the development, to be honest, are not enough, are not adequate. They only have one plant. Maybe it takes five years. If they have five, then they can develop in one year. Then you may need five times the investment, but whether it's possible or not, one-year development is much better than a five-year development period. If they continue for five years, they keep spending money. At this point in time, five years is too long. That's why we would like to change the approach so that they can develop in one year. In that sense, we are investing in many things. Today, I cannot announce all of the things, but in the near future, we would like to disclose these details. Please wait.
Yes, I'm counting on it. Thank you very much. I have another question regarding capital allocation. Page 62. In the group business, cash out is 34%. This is Nippon Sanso Holdings, maybe JPY 1 trillion they will spend in five years on their own. That's the most of it. That means pharma's pipeline purchase in order to accelerate growth. This doesn't seem to be included there. Is that the correct answer? Also, shareholder return 20%, and the shareholder return, non-cash depreciation loss. After this, if you think about profit before impairment, probably out of all the cash inflow, maybe 40%-50% is profit.
Given that, you have to have a certain impairment, otherwise, all of the shareholder return will be allocated to shareholder return. This 20% will be allocated to shareholder return. Is that correct understanding? Also, chemicals, disciplined growth investment is what we are expecting, as you just said. Please answer the two questions I asked. Thank you very much.
Talking about the group business, your understanding is right. You have provided a right answer. For the CapEx, for the pharma, we didn't have. We are going to purchase from outside the pipeline. However, it's not included in our plan. I fully agree with your comment. Talking about the impairment loss, well, because if I'm going to explain, it takes full one night in order to explain in detail. We are going to provide a dividend to the shareholders, and therefore, in the next five years, we think so. 35% is not so low. I personally think, well, because our share price, it's being supported by the dividend yield right now.
Currently, if we are going to maintain the current dividend payout ratio, we are going to return to shareholders according to our profit. Talking about the CapEx, we are going to utilize the shareholder return, whether we are going to have our share buyback. However, for that, I personally have a different notion, we need to conduct that in a long range, and also whether it's being accepted by the shareholders or not. I personally still believe that dividends, keeping this dividend payout ratio of 35% is really important. The cash out, you're going to repay the debt. Well, because according to the calculation, you are not able to allocate more.
Whether if you are not going to conduct an impairment loss, or because I'm sure that you're going to pay the dividends. Other than that, it seems you're not able to allocate to other areas. For example, the share buyback, you are not able to achieve the share buyback of 100 billion and 200 billion. Within that, we haven't included our share buyback in our plan. We are going to pay a return to shareholders with our dividends. In case we might think about the share buyback going for future, or because you're going to allocate 200 billion to the shareholder return to debt repayment. We have Mr. Wakabayashi, and Yamada-san have mentioned that we didn't allocate to necessary areas. Wakabayashi-san, please.
Well, because we are going to go back to the previous question, or because there are some semiconductor product, this is the first time that we have provided this figure to outside. By 2020, we have created a semiconductor headquarter. Until then, we have diverse business groups. However, we have consolidated into one area, there is a keyword of connect. By connecting that, the team members are able to understand what's our strength and what kind of measures we need to take. 700 billion to 100 billion, we are going to have that. From 70 billion to 100 billion, well, because, we are able to create products based on our strength.
The semiconductors, we are not providing a chip. Therefore, in which area we can contribute, therefore, we made analysis accordingly. For example, for the synthetic goods, therefore, thinking about the internal goods and the flicker, well, because we are able to think about the upper stream, and without that, we are not able to circulate this chain. Therefore, those equipment or the structure have been created internally. Therefore, the number one products have a better understanding. Therefore, because there is a comment about the cancer previously, therefore based on our long track record, therefore thinking about the reducing integrated energy, therefore there is again and again. I think this is very important for that. Therefore, as president have mentioned, we are going to focus on our strength areas.
Thank you very much.
Thank you very much. Okazaki-san from Nomura Securities, please.
Okazaki from Nomura. Thank you very much for the presentation today. First question is about page 44, selective focus on businesses. In your plan for the next five years until 2029, JPY 400 billion is identified. Chikumoto-san, you emphasized speed. Because of 2029 number, it seems that it's too long to wait. What do you think about this 2029 number? Because you have customers and employees, it's difficult to make such a decision. But what is your thinking behind JPY 400 billion in 2029?
Well, in my case, I'm a type of person who deal with the things that we can do first, whether it's investment or selective focus on businesses, rationalization. We are starting with the things that we can do first. I don't think it will take until 2029. I will expedite.
Well, you talked about the first three years importance earlier.
In one or two years, we have to do everything.
Well, that's what the investors can expect?
It's not only the numbers, but we will do more rationalization, I think, as we discussed. We have to focus on the real strength of the company. That's important. What are the advantages we have? That's the group of those technologies that we have, I showed you earlier. We want to realize those integration as soon as possible.
It says on top of current plan, we will consider additional cases based on regular business review process. That's something that we can expect?
Yes.
On page 39, three factors you showed us for discipline today. That is very important. Earlier, the past management people were saying basically the same things at a glance. That is my impression. Please tell me if I am wrong. On a monthly basis, you said you are going to do the project check. Before three years, in order to accelerate and expedite, what kind of discussions are you having today, as far as you can share? You talked about the monthly check for investment. If you could give us a couple of more examples, that would be helpful.
As I said earlier, for projects of certain size, every month we are reviewing. For the projects which are already executed, we are also reviewing, and if necessary, we are making necessary modifications. For pricing strategy, Kida-san is responsible for this.
Well, in our case, first, we are trying to increase ROIC, as we explained today. Also already in the company, we have started taking actions, various actions to achieve this, because ROIC, we should work on PL first in order to increase ROIC. From customers' perspective, maybe they appreciate this. In our case, because of the nature of the products, we tend to maintain a stable and safe supply. Sometimes gross loss. Sometimes we are selling at loss in many of the products because of the long-term contracts. Every month when we do the business review, if you review item by item with a specific customer name one by one. We are looking at the SKU level by customer today.
We are asking the salespeople, "Why are you continuing with this business?" To each business leader, we are asking these direct questions as part of the pricing review. Sometimes we say, "Maybe we should stop this business all at once." This is the process we are going through today. Well, on the surface, we have been always talking about discipline in the past. Today what we are doing is more proactive. This is not something that we have done in the past with the previous management. We are starting this process today. This is just one of the examples. We have been changing a lot. That is the feeling of someone internal. Thank you. Pricing optimization is very important. Please proceed. Thank you.
From Daiwa Securities. Please, Mr. Umebayashi.
Thank you very much. From Daiwa Securities. Page 74. For the advanced film polymers and also the Advanced Composite Shapes, the reason for increase of the profitability based on those three policies, you're going to implement that and contribute to the increase. Actually speaking, what kind of measures are you going to take following those three policies? Please explain in detail.
This is Egawa. Thank you very much for the question. I'm in charge of the advanced films and polymers. In short, we are going to execute the right things with agility. We provide our specialty materials. What is the definition of specialty?
As a conclusion, not only a semiconductor, food package products, it's whether it's a non-specialty, however they are. For us, the specialty material is that from the market and to the society, it's been regarded as a special material. We think we call it as a specialty materials. Specialty materials. We do have our competitive edge, and that is something we only can do. We are going to focus on that area. However, talking about the specialty, so-called the specialty area, we think that some of the materials are not a specialty. We are going to focus on that and segregate our business, whether we are going to structure divestiture or exit. We need to have a strength finding.
By doing that, I think we are able to improve our profitability. As a result, in certain business, we have put our cost and resources in human talent. We are going to focus and will have more focus on our expertise consolidating the strength area. For example, there are some proposals for the M&A. Everybody would explain about the EBITDA, it's an excellent company. However, looking at those products, they don't have any specialty products. EBITDA 20%. If they are able to strengthen the business and reduce the cost, if with, it seems they're having asset light management.
However, with that, if we are able to implement that policy, we are able to generate more profit. We are going to allocate in right areas where we can generate the profit.
Afternoon. Franck Ruel, leading ACS&D domain. Basically, covering these three disciplines, for instance, we already identified 23 projects that will be launched over the next five years, 80% on the first two years. That is covering divestiture, closing, covering as well consolidation, organic growth, and as well M&A. That is one of the key activities to expedite where we are not making profit on site, on facilities, on product line, on business. This is ongoing, covering as well the carbon fiber chain, but as well the ESS activities.
Okay. Thank you very much. The second question is about MMA. Talking about the strategy, there are some antiquated equipment, and therefore you are going to wait for the EOL of those equipment and increase. You are going to wait for the increase of your profitability. However, in the plant, there are some production sites that you have closed, for example, in Hiroshima. However, well, because for the time being, you are able to survive. However, well, because, talking about the new facility in the United States, it is going in some areas. Whether in other sites, do you have any plan for other sites in different regions? Listening to your presentation, you do have a share of 40%, and why you are not able to become a price leader.
According to each location, there are different positioning, that is what I felt listening to your presentation. For example, do you have any regions where you can exercise your pricing power?
Talking about the facility, because from my predecessor, the global asset management, in order to conduct that, we are able to execute that. As a result, we have decided to close some facilities or some sites. Whether we are going to have the same cases in the future or because society will change. In the past, having a global process center for having a global connectivity, that was our strength. However, because of the geopolitics, the regions are being separated, it is going to become our weakness going forward. Having the regional locations only connecting with our sites.
Maybe if we are able to connect with other business partners in each region and have that kind of connection, we are able to optimize the localized optimized business in local areas. As I have mentioned, well, because we do have our downstream technologies and utilizing that core technologies, we are going to connect with the downstream, therefore, we are going to increase our presence in that area. By doing that, for example, if there will be some efficient facility, if we are able to connect with those business partners, then if we have an old facility or if we do not have good progress on the carbon footprint, that could be one idea to close our site in that local area. We are going to monitor what will happen in the society, that could happen in the future. That is one thing.
What is one more question? For the pricing power you asked about. In the first half of this year, when there is a huge shortage of products, yes, we can have a certain pricing power. Otherwise, to a certain extent, balance has to be in place. In our case, compared with other companies, quality stability and supply stability is something that the customers really like and appreciate. We have a mutual trust. When there is a balance and then they will give us priority and select our products over others. Even if there is a lack of balance, customers try to buy our products so that they can stock up just in case. That's the kind of mutual trust that we have established over the years. Compared with other companies, we can charge a higher price. That is a fact.
As a total market, can we control the pricing in the market? Even though we have a high share, for each region, the situation is different. Sometimes, we were affected by those situations in the past. In the American project, we are hoping to break away with that because, in trade terms, it's closed, sort of. Therefore, in America, we want to have an overwhelmingly good cost and carbon neutral products. That way, we believe that we can attain a kind of price control like you are asking about. Thank you. We are very sorry, but we would like to entertain only one more question.
Nakahara-san, please. From Tokyo Intelligence Lab.
Well, because my name is Tokai Tokyo Intelligence Laboratory. My name is Nakahara. Therefore, in order to encourage, therefore, you're going to pursue the normal thing, and therefore, you're going to eliminate unprofitable business and secure more profit. You're going to focus on the first two years, and after the rehabilitation, you're going to take global measures. That was a message that I have received for the initial two years. Well, because in order to normalize your business, I think you're able to have an improvement of JPY 100 billion, and therefore, for this fiscal year, you're able to secure 50%, and therefore, COI of JPY 400 billion. That is the target that you're going to achieve for the next year. Is my image okay?
This JPY 400 billion, I cannot disclose that figure. However, we do provide only the conservative figure, Mr. Kurokawa is very aggressive, and therefore, he doesn't provide any conservative figure. However, generally speaking, we do provide only a conservative figure. However, maybe you don't trust us, therefore, we are becoming too conservative in a sense, and therefore, in this fiscal year, we are going to achieve our target. Following that trend, we would like to become more aggressive next year. We are going to eliminate unprofitable business in comparison to this year, and therefore, we hope that we can improve our figure.
Second question. JPY 550 billion of cost reduction, and therefore, what meaning do you have for that? You're going to align and streamline 30 businesses, and are you going to focus on that? Other than that, do you have any major target you envision? For the rationalization and for the segmentation, maybe carbon is set, other than carbon, petrochemical and functional business, do you have this kind of segmentation for that?
Yabe-san is the main person responsible for the rationalization.
Yes. This is Yabe speaking. You pointed out the impact of divestiture. It's in the small letter, but this is excluded from this impact number. Organically, as Chikumoto-san said earlier, the leftover job of PMI is something we are trying to do. This is JPY 50 billion per year as of 2029. That's the target. This is against 2024. Compared with 2024, as of 2029, we want to have JPY 50 billion fixed cost reduction per year. That's the organic cost reduction only that we are including here.
After clean up, even after the clean up of JPY 10 billion per year is realized?
It's not even, so the impact may be heavier in a later year, but eventually JPY 50 billion net impact is what we want to realize.
When I saw the material, I thought that the carbon fiber is included, but it's not included here?
Within carbon fiber, the organic reduction part is included, but the impact of divestiture in the exits are not included here.
I see. I understood. Thank you.
Thank you.
With this, we would like to conclude Mitsubishi Chemical Group management presentation meeting. Thank you very much for your participation today.