Kazuhiko Ishimura, President and CEO of Asahi Glass Co. / S. Porter / Vedomosti

1979

joined Asahi Glass Company, in 2006 he headed the company's Kanzai plant (Japan), and in the same year he became the general manager of the electronics and energy division of Asahi Glass Company

2008

Director, President and Chief Operating Officer of Asahi Glass Company

2010

Director, President and Chief Executive Officer of Asahi Glass Company

Unique glass

"We consider ourselves a very innovative group of companies. And we are sure that first of all we should be leaders in terms of technology. We have recently developed a unique product - 0.7 mm thick glass that can withstand a load of 40 kg. It is called Dragontrail. You can easily hit it with a hammer. Phones and other electronics that use such glass are not afraid of falling on a hard floor - it will not break and is almost not scratched," says Ishimura. He does not name the customers of the new glass, saying only that they are manufacturers of smartphones and tablets. Dragontrail will also be used in touch panels of cars.

Asahi Glass Company (AGC)

glass manufacturer. Shareholders: 87.42% of shares in free float, the largest investors are The Master Trust Bank of Japan (5.96%), Japan Trustee Services Bank (5.25%), 2.62% are treasury shares. Capitalization is $7.87 billion. Financial indicators (2012): revenue - $14.9 billion, net profit - $549 million. Founded in 1907 by the son of the second president of Mitsubishi Corporation, Toshiya Iwasaki. Produces glass, monitors for electronics and electrical engineering, plastic optical fiber and other chemical products.

Every third car in the world is equipped with our glass, the president and CEO of the company Kazuhiko Ishimura starts the conversation right away, without even having time to listen to the first question. Asahi Glass is the world's largest manufacturer of architectural and automotive glass. In Russia, as Ishimura says, half of the cars produced are equipped with glass from the Japanese company. Ishimura says that their company was the first foreign glass manufacturer to come to Russia: in 1997, they bought the Borsky Glass Factory, and in 2005, they built a modern plant for the production of architectural glass from scratch near Klin - the largest glass-melting furnace in the world with a capacity of 1,000 tons of sheet glass per day is located there. "The economic situation in Western Europe is quite difficult, and in Russia, economic growth continues, and at a very impressive rate. This makes Russia a very attractive market for us," says Ishimura. In an interview with Vedomosti, he spoke about Asahi Glass's hopes for the Sochi Olympics, the World Cup, and the development of the Far East. Vladimir Shigaev, General Director of AGC Glass Europe for Eastern Europe, took part in the conversation.

– How did the natural disasters that happened in Japan last year affect you?

– One of our factories was damaged by the earthquake, and another was a victim of the tsunami. The greatest damage was done to the Kashima Glass Factory (Ibaraki Prefecture) and its cargo terminal. The production of architectural glass was stopped for a month and a half. But we have many factories in Asia, so we redirected the missing capacity from there. It took us two months to fully restore production in Japan to its previous scale.

– How does the current crisis affect your company?

– We will not talk about specific figures yet. There is an impact, and it is quite noticeable. This is especially true for Western Europe and architectural glass. We have to regulate the balance of supply and demand quite strongly. To do this, we need to reduce production volumes, stop production lines. For example, in Spain. Due to these actions, we managed to balance the balance of supply and demand, but this balance is at a very low level. In the automotive glass sector, we believe that we have suffered less than our competitors: we have managed to increase our market share. For example, in 2009, we became a global supplier to Daimler Chrysler. But still, of course, this is not enough to compensate for the impact of the crisis.

– How much has Asahi Glass invested in Russia?

– Since 1997, the total volume of investments has exceeded $1 billion.

– Have the investments paid off yet?

– The Borsky plant has already paid for itself, and the Klinsky plant only began to fully operate in 2010. We were forced to postpone the launch of some production due to the crisis.

- And what is the expected payback period?

– (Laughs.)

– What is considered a normal payback period?

- It is not a question of one or two years. It is a large volume of investments and work done. Maybe, of course, not 10 years, but less.

– What is Asahi Glass’s share in the Russian market?

– In Russia, Asahi Glass occupies about 30% of the architectural glass market and up to 50% of the auto glass market. That is, every second car coming off the assembly line in Russia is equipped with our glass. Russian AGC companies employ 2,000 people out of 50,000 employees of the group worldwide. All of them are Russians, including senior management; for our group, this is the exception rather than the rule. Innovative products of Asahi Glass are popular in Russia. Especially energy-saving glass, which is used in modern construction. Considering that your country will soon host the Olympics in Sochi and the World Cup, we see great prospects. In addition to regular glass, our ETFE film is in demand during such events. This is a product of the chemical, not glass, division of the company. For example, the tent of the Khan Shatyr shopping and entertainment complex in Astana is made of it. And in Russia, we proposed using it in the construction of one of the stadiums where the World Cup matches will be held.

– In Russia, are you planning to produce only automotive and architectural glass?

- In the coming years, we will focus only on these glasses. There are no customers in Russia who could consume, for example, glasses for smartphones. They are concentrated in Asia.

- Then all my questions will concern auto and architectural glass. Who are your biggest competitors in the world and in Russia?

– In the world in the field of automobile glass the main competitor is Saint Gobain Securit. In the field of architectural glass – Guardian. But in Russia we have very good positions. Although many global companies work in your market, but in Russia it would be worth highlighting strong competition from local manufacturers.

– What share of the architectural glass market in Russia does Asahi Glass’s closest competitor occupy?

– We have about 30%, they have about 26%.

– Do you expect the emergence of new strong competitors in Russia?

- Yes. Russian growth rates are so high that everyone, I think, finds them attractive.

Shigaev: The main threat is the overproduction of construction glass, because unqualified investors who do not have access to modern technologies are entering this business today. Each region wants to build its own glass factory, as it was during the Soviet Union.

– Is the emergence of new competitors, such as the Chinese Fuyao Glass, felt at the sales level?

- Of course, she can become one of our competitors.

– Will you be able to maintain your share of the Russian market when new competitors enter it?

– We believe that we can. Our confidence is based on [our] production capabilities and the fact that we produce high-quality products with a high share of added value.

– Did the 2008 crisis have a strong impact on the glass market?

– The market has already recovered. If we exclude the shock period, then on average the Russian market is growing by 5% per year, as it was in 2012 in the architectural and construction glass segment, and even more in the automotive segment. In Russia, in absolute numbers, the volume of glass consumption is not very high yet. There are about 10 kg of construction glass per Russian per year, and in Western Europe – 18 kg. So Russia’s potential is very high.

– What is Russia’s share in the company’s sales?

– Russian business accounts for up to 10% of the group’s total glass business.

– The largest consumers of your products are probably the USA and China?

– In terms of auto glass – Japan, including cars for export. In second place is Europe, including Russia. Then – Southeast Asia, and then – America.

– What assets in Russia is the company interested in?

- There are many plans, but they are all at the consideration stage. We are still formulating an expansion strategy and have not made any specific decisions. Right now, the most attractive market is the areas around Moscow. We predict the market expansion to the east and south, and we are talking not only about Russia, but also about the CIS.

– What is your strategy – to buy existing factories or build new ones?

- It depends on which regions we decide to enter and on the cost of modernization or construction. In our opinion, existing Russian production facilities have development potential.

Shigaev: We constantly monitor how the infrastructure is developing in a particular region. What is the condition of gas, electricity, roads. In some regions it is impossible to even understand whether the plant can operate in principle – there is no reliable information. So our people are constantly traveling around the country. But this does not mean that we are making a decision to build somewhere. The decision is made in Tokyo, as soon as it is made – it will be immediately published.

– What else hinders business development in Russia?

- I think there are no other obstacles. You have a fairly low cost of energy, and other conditions are quite good. We are optimistic about the Russian market.

– The automobile industry is actively developing in the Far East, and it will be localized. Are you interested in opening your own production there?

- We do not believe that the demand in the Far East will be sufficient to build a separate plant. We already have capacities in Japan and China that will fully satisfy the Far Eastern demand.

– A number of companies like Burger King have decided to conquer Siberia: there is less competition there. Of course, you work in a different field. But how interesting is Siberia to you?

- We consider Siberia as one of the important regions. But for now we are only studying this issue.

– What M&A deals does the company plan for the near future in Russia and around the world?

– There is not a single project that we could talk about today. First of all, [we are] interested in assets in markets that will develop. And Russia is certainly on this list. We are also now entering the South American market, primarily Brazil. There are many opportunities in Southeast Asia. Probably, in the distant future, we will be able to talk about Africa.

– What technologies are you interested in?

– We are interested in areas where we can achieve synergy. We recently acquired the German company Interpane. This deal has two advantages. Firstly, we had a rather weak position in such an attractive market as Germany. Secondly, they had developed technologies for applying coatings to glass, which, with our help, can be used at the global level. In particular, in Russia we also plan to manufacture products based on the synthesis of our and German technologies. Currently, a new line for the production of coated glass is being built in Klin, Moscow Region. The concept of the line includes both Interpane technologies and developments from Asahi Glass research centers.

– What are the specific features of Russia from the point of view of glass manufacturers?

Shigaev: Climate. Russia is located in different climate zones. In some, frosts of 40-50 degrees are not surprising, in others it is hot. Multifunctional glass is required, capable of effectively performing the functions of modern glazing in conditions of large temperature differences. Another feature is the high seasonality of sales. Three-fold cyclical changes in sales volumes during the year are typical for Russia.

– Are factories in Russia now self-sufficient or do they need financial support from Japan?

– There are no additional investments in Russia; everything is supported by reinvestment of profits.

Interview - Kazuhiko Ishimura, President and CEO of Asahi Glass Co.