100 Stories2003 Emergency Analyst Meeting

In the early 2000s, the violation of the High Pressure Gas Safety Act posed a problem to the chemical industry.
Violations were found in 2003 at Tosoh and listed companies, such as Mitsui Chemicals and Zeon Japan, and in 2004, violations were also discovered at Asahi Kasei Chemicals.

The Ministry of Economy, Trade and Industry (METI) found that the facility inspection performed by Asahi Kasei Chemicals’ Mizushima Plant and Kawasaki Plant based on the High Pressure Gas Safety Act was inadequate. As a result, METI announced the revocation of the self-inspection qualifications from Asahi Kasei Chemicals. From 1997 to 2002, the inspection of some equipment in six facilities, including Mizushima’s ethylene and ammonia and Kawasaki’s synthetic rubber, were not performed. Asahi Kasei had to stop the facilities that produced ethylene—one of the main fundamental chemicals in the petrochemical industry—for reinspection.

Asahi Kasei held an analyst meeting on January 23, 2004—the day they received this announcement. This meeting demonstrated Asahi Kasei’s belief that the IR’s purpose is to be accountable to investors. Asahi Kasei was the only company to hold an emergency meeting on the same day regarding this issue.

The company received its penalty at 3 p.m. The head of the IR group, Ryuji Hashimoto, gave orders to contact the analysts immediately. After just three hours at 6 p.m., 45 analysts were gathered and the meeting was held.

Even though there were no clear notices as to when the company will receive the penalty, making it impossible to inform the analysts in advance, the company insisted on holding the meeting on the day of the penalty.

There is a reason why the company held the meeting separately at the same time as the press conference. It is because Asahi Kasei has two types of corporate values, economic and social values. The factors that support the economic value are the company’s performance and financial condition, while the social value is supported by the observance of laws and local contribution.

This problem had an insignificant impact on the company’s performance, and therefore some employees believed that an apology press conference to the media was enough. However, Hashimoto said, “short-term profit and loss are only related to our economic value. We had to disclose the impact of the problem on our social value.”

Moreover, if the company’s purpose is to only inform the analysts, then it would have been enough to invite them to attend the press conference. However, the reason behind holding a separate meeting was to be accountable to all stakeholders.

It is said that explaining negative factors the wrong way can affect corporate value. However, looking at the stock price transition, the stock price only declined the next working day, but there was no significant deviation from the Nikkei Stock Average after that. This is the opposite of companies whose stock price was behind due to the overall price rise in the market in the previous year.

In fact, this is not the first time Asahi Kasei holds an emergency meeting for analysts. On the day when the results of the post-marketing surveillance of the osteoporosis therapeutic agent, Elcitonin™ showed that it does not help prevent bone fractures, the company also gathered the analysts.

Analysts value Asahi Kasei’s approach to IR. Asahi Kasei ranked first in the chemical sector six times in a row in FY2003 in the Awards for Excellence in Corporate Disclosure given by the Securities Analysts Association of Japan.

Whenever a company’s scandal causes a stir in the newspaper, the word ‘compliance’ comes up. In recent business operations, compliance has become an important factor in management. In 2021, the Mizushima Plant won the Minister of METI “Excellent Plant” Award for High Pressure Gas Safety. Asahi Kasei learned a lesson from its previous violation and further enhanced its compliance to continue operating the company safely and stably.