Asahi Denka Kogyo KK

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Asahi Denka Kogyo KK

2-3-14 Nihonbashi-Muromachi, Chu
Tokyo
103-8311
Japan
Telephone: ( +81) 3 5255 9002
Fax: ( +81) 3 3246 2090
Web site: http://www.adk.co.jp

Public Company
Incorporated: 1917 as Asahi Denka Kogyo
Employees: 2,135
Sales: ¥104.53 billion ($1.15 billion)(2003)
Stock Exchanges: Tokyo
Ticker Symbol: 4401
NAIC: 325192 Cyclic Crude and Intermediate Manufacturing; 311225 Fats and Oils Refining and Blending; 325211 Plastics Material and Resin Manufacturing; 325998 All Other Miscellaneous Chemical Product Manufacturing

Asahi Denka Kogyo KK (the company uses Asahi Denka Co. Ltd. as an English equivalent) is one of Japan's leading chemicals producers. The company's range in this field is segmented into two categories: basic chemicals and functional chemicals. The basic chemicals Asahi Denka produces are caustic soda, liquid chlorine, hydrochloric acid, propylene glycol, hydrogen peroxide, sodium percarbonate, fatty acid, glycerine, and other related products. The company's functional chemicals consist of surfactants, lubricants, industrial and institutional detergents, polyurethane, sealants, stabilizers, flame retardants, plastic additives and plasticizers. Other functional chemicals include optical storage materials and optical hardening resins, imaging and photographic chemicals, high purity gases for the semiconductor industry, among others. Chemicals account for more than two-thirds of the Asahi Denka's revenues, which topped ¥104.5 billion ($1.15 billion) in 2003. The remainder of the company's sales come from its Foods division, which has developed as an offshoot of its chemical operations. The company produces a variety of foods, including margarine, shortening, lard and related spreads, oil and fat for the production of chocolate, mayonnaise, dressings, fillings, milk products, food additives, frozen pie crusts, and cakes and confectioneries. Listed on the Tokyo Stock Exchange, Asahi Denka has manufacturing facilities in Japan, the United States, France, Germany, Korea, Malaysia, Thailand, Taiwan, and in mainland China. The company is part of the vast Furukawa mining group, which also includes such companies as Furukawa Electric Co., Yokohama Rubber Co., Fuji Electric Co., Fujitsu Limited, Nippon Light Metal Company, and the Dai-Ichi Kangyo Bank. Asahi Denka is led by chairman and CEO Masahiro Iwashita and president and COO Hiroyuki Nakajima.

Chemicals Offshoot in the 1920s

Ichibei Furukawa founded a copper mining company in Kusukura in 1875. Two years later, he added a second mine in Ashio. By the end of the century, Furukawa had expanded into coal mining as well, a move that signaled the start of a long period of diversification for the company, which became known as Furukawa & Co. in 1905.

Furukawa initially expanded into machinery at the turn of the 20th century, setting up its own plant to support its Ashio Copper Mine operations. By the outbreak of World War I, Furukawa had extended its range into power generation. Following the war, Furukawa sought new areas for diversification.

Japans reliance on imports for its chemicals needs made that sector an attractive target for Furukawa, which joined in a national effort to boost the country's industrial self-reliance. In 1915, Furukawa outlined plans to begin production of caustic soda (sodium hydroxide) using the recently developed salt electrolysis process. One of the world's most important base industrial chemicals, the caustic soda production process provided a variety of related chemicals, including chlorine and hydrochloric acid.

Furukawa established Tokyo Denka Kogyo-sho in 1915 and began construction on a new chemicals plant. In 1917, the chemicals subsidiary was restructured and renamed as Asahi Denka Kogyo KK. Production began the following year at the new company's completed Ogu Plant in Tokyo.

Asahi Denka quickly began its own diversification as it developed a wide range of chemical products and specialties, many of which began as offshoots to the company's core production. Such was the case with Asahi Denka's launch of production of hydrogenated oils in 1919, which used the hydrogen generated through the salt electrolysis production process.

Asahi Denka entered the agrochemicals market in the early 1920s, taking over Furukawa's lead arsenate production, itself a byproduct of Furukawa's copper refinery operations. Over the next decade, Asahi Denka expanded its range of agricultural chemicals as well; by 1928, that activity had developed strongly enough to be spun off into a separate company, Nihon Noyaku Co, in a joint venture with Fujii Seiyaku Co. Nihon Noyaku then became Japan's first dedicated agricultural chemicals company.

In the meantime, Asahi Denka had continued expanding its range of products, developing chemicals and products for a variety of industries ranging from paper and textiles to the automotive, shipbuilding, and construction industries. Asahi Denka itself entered a new industry in 1929 when it launched its own Risu brand of margarine. That marked the first of a steadily growing line of food products for the company. Foods grew into a major division of Asahi Denka, accounting for some one-third of its sales by the end of the 21st century.

Postwar Expansion

Emerging from World War II, Asahi Denka prepared to take advantage of the boom in operations during the country's economic and industrial reconstruction. In 1947, Asahi Denka formed a dedicated sales subsidiary, Yoko Sangyo Co. That company also began manufacturing industrial chemicals as well as other chemical products, such as liquids for metalworking. Two years later, Asahi Denka was listed on the Tokyo Stock Exchange's main board. The company remained an important component of the Furukawa group, which had itself gone public earlier in the decade.

At the end of the 1950s, Asahi Denka began a new phase of expansion and diversification, adding new product lines and expanding its production capacity both inside Japan and abroad. In 1959, the group set up a dedicated subsidiary for its hydrogen peroxide production, Tokai Denka Kogyo Co., which emerged as the country's leading producer of this product.

Asahi Denka's expansion took off in the 1960s. The company established its own transportation and leasing subsidiary, Kyokuyu Sangyo, in 1961, then added a real estate division, Kyokuyu Real Estate KK, in the same year. The company also launched its own architectural services operation in 1964.

Meanwhile, Asahi Denka continued adding new chemical operations, such as the launch of plasticizers and plastic stabilizers through a new subsidiary, Adeka Argus, created in 1962. The company also entered fine chemicals production, launching Adeka Swift Chemical Co in 1965.

In 1966, Asahi Denka began expanding its industrial capacity with the building of its new Akashi Plant, in Hyogo. The company also took part in the construction of the Kashami Complex in Ibaraki, backing the formation of a number of companies there, such as Kashima Chlorine & Alkali Co., completing its Kashami Plant in 1970. Asahi Denka then added the Sodegaura Factory in Chiba as part of subsidiary AS Kasei in 1975, as well as a plant in Kuki in 1979.

The company's expanded capacity backed up its entry into a number of new product categories, such as the launch of industrial and domestic-strength detergents and disinfectants in 1973, fatty acids and glycerine in 1979, and plasticizers in 1980.

Continued Growth: Late 1980s and Beyond

Toward the end of the 1980s, Asahi Denka began expanding its geographic focus as well. Food products played a prominent role in the company's international development, starting with the creation of a subsidiary in Singapore in 1988, which began producing edible oils. At the end of the decade, the company, which had diversified its food products offerings to include a wide range of products, including mayonnaise and other dressings, as well as frozen bread dough, pie crusts, and cakes, stepped up expansion of its food products division both abroad and in Japan. In 1994, the company launched a new subsidiary, Asahi Fine Foods, which began producing its own line of mayonnaise and dressings.

The company's primary operations, however, remained in the chemicals industry. Asahi Denka also began developing global chemicals operations in the late 1980s and 1990s. In 1989, the company launched subsidiary Chang Chiang Chemical Co, in Taiwan, where it began manufacturing plastics. Then, in 1991, Asahi Denka formed a new company in Korea, Han-Nong Adeka Corp (renamed as Dongbu Adeka in 1997), which began producing plastic additives. Also in 1991, Asahi Denka joined Mitsui and Company Ltd. and Miyoshi Oil and Fat Company Ltd. to form the Palmoleo Inc. joint venture, which produced fatty acids.

Asahi Denka turned to the United States in the mid-1990s, forming Amfine Chemicals Co. Ltd., which began producing plastic additives in 1994. The company expanded its plastic additives operations again the following year with the launch of a new subsidiary in Thailand. Meanwhile, the company completed its domestic industrial production, opening its Soma factory in Fukushima in 1996.

Company Perspectives:

Asahi Denka Co. Ltd. has the corporate philosophy of "Aim at Becoming Aggressive, Advanced Enterprise Keeping with Changes the Times Offer" and "Live in Harmony with the World", under which the corporation is now accelerating its globalization focusing on its highly competitive and technologically superior product groups in the world market, contributing to the world in its growing fields.

Toward the end of the 1990s, Asahi Denka launched its entry into Europe as well, setting up its first European office in Germany in 1998. The company quickly added its first full-fledged European subsidiary, setting up Asahi Denka Europe in 1999. In that year, the company also began restructuring parts of its operation, merging with Tokai Denka Kogyo. In another restructuring move, the company combined its Yoko Sangyo operation into Asahi Fine Foods in 2000.

Asahi Denka continued its expansion into the 2000s. In 2001, the company acquired Yongo Co, a division of Japan Tobacco that produced edible oil and fat, as well as confectionery ingredients and other foods. The company extended its European operations with the formation of a French joint venture, Adeka Palmarole, in partnership with Switzerland's Palmarole, in 2000. Asahi Denka then targeted an entry into the Chinese market, establishing Asahi Denka Shanghai Co. in 2001. The following year, the company set up the joint venture Kukdo Chemical Kunshan with Korea's Kukdo Chemical Co., then expanded its own Chinese operations with the creation of Adeka Fine Chemical (Shanghai) Co. that same year. In 2003, Asahi Denka acquired full control of its Korean Dongbu joint venture. Then, in 2004, the company established a new subsidiary for its Korean operations, Asahi Denka Korea, based in Seoul.

The difficult economic climate in the early 2000s led Asahi Denka to restructure parts of its operations to conform with an overall medium-range strategy adopted in 2004. As part of the restructuring, the company created a new subsidiary, Asahi Food Sales Co., which took over Yoko Sangyo's food distribution operations. Yoko Sangyo itself was merged into the group's Adeka Fine Chemicals Co. subsidiary. As it moved into the new century, Asahi Denka had grown into one of Japan's most diversified chemicals and foods manufacturers.

Principal Subsidiaries

Nihon Noyaku Co., Ltd.; Yoko Sangyo Co., Ltd.; Kyokuyu Sangyo KK; Kyokuyu Real Estate KK; Asahi Architects Office Co., Ltd.; Oxirane Chemical Corporation; Kashima Chlorine & Alkali Co., Ltd.; Kashima Chemical Co., Ltd.; Kanto Sodium Silicate Glass Co., Ltd.; Adeka Clean Aid Co., Ltd.; Tokyo Environmental Measurement Center Co., Ltd.; CO-OP Clean Co., Ltd.; Chiba Fatty Acids Co., Ltd.; Mizushima Plasticizer Co., Ltd.; Nihon Epoxy Resin Co., Ltd.; Allergen-Free Technology Laboratories Inc.; Asahi Fine Foods Co., Ltd.; Adeka Engineering & Construction Co., Ltd; Adeka Logistics Co., Ltd; Asahi Foods Sales Co., Ltd; Yongo Co., Ltd.

Principal Competitors

BASF AG; Bayer AG; JFE Holdings Inc.; Mitsubishi Chemical Corp.; BP Chemicals Inc.; Occidental Chemical Corp.; Merck KgaA; Clariant International AG; Rhodia Inc., Asahi Kasei Corporation.

Key Dates:

1875:
Ichibei Furukawa establishes a copper mining company in Kusukura, Japan.: 1915:
As part of its diversification, Furukawa begins development of production of caustic soda (sodium hydroxide) using electrolysis process, forming Tokyo Denka Kogyo-sho.: 1917:
Chemicals division is reformed as Asahi Denka Kogyo.: 1918:
Production begins with the completion of Ogu Plant in Tokyo.: 1919:
The company starts producing hydrogenated oil using hydrogen byproduct of electrolysis process.: 1929:
Production and marketing of Risu brand margarine begins.: 1947:
A sales subsidiary, Yoko Sangyo, is set up.: 1949:
Asahi Denka goes public on the Tokyo Stock Exchange.: 1959:
Tokai Denka Kogyo, which produces hydrogen peroxide, is formed.: 1962:
Plasticizers and plastic stablilizers production is launched under Adeka Argus subsidiary.: 1965:
Fine Chemicals division, Adeka Swift Chemical, is formed.: 1970:
Kashima Factory opens in Ibaraki as part of the company's industrial capacity expansion.: 1988:
First international subsidiary is created in Singapore for production of edible oils.: 1991:
Han-Nong Adeka Corporation (later Dongbu Adeka) is formed in Korea.: 1994:
The company enters the United States with the creation of Amfine Chemicals Co.: 1999:
The company's first European subsidiary is established in Germany.: 2001:
The company enters China with it subsidiary Asahi Denka Shanghai.: 2004:
Asahi Food Sales Co. distribution subsidiary is established as part of a restructuring plan.