As for the business environment for the Toyobo Group (hereinafter referred to as the “Group”) in the nine months ended December 31, 2018, in the global economy, although the economy in the United States continued to expand gradually amid the favorable employment situation and steady consumer spending, the economy slowed in China due to increasing overcapacity. In the Euro area a slowdown in the economy became stronger as exports and capital spending decreased. Meanwhile in Japan, despite a decline in exports, business sentiment modestly improved backed by a pickup in inbound demand after natural disasters and robust capital spending.

 

Amid this operating environment, the Group continued its activities aimed at becoming “The category leader, continuing to create new value that contributes to society in the environment, healthcare, and high-function products fields.” Accordingly, the Group is expanding its businesses in Japan and overseas markets through developing specialty products. During the nine months ended December 31, 2018, the Group worked on the creation of value that contributes to society in the three growth fields cited in the 2018 Medium-Term Management Plan: “Films & Coatings,” “Mobility,” and “Healthcare & Wellness” as well as in the “Environment” field leading to them.

 

As a result, consolidated net sales in the nine months ended December 31, 2018 increased ¥8.2 billion (3.4%) over the same period of the previous fiscal year, to ¥249.9 billion. Operating profit decreased ¥0.7 billion (4.4%), to ¥15.3 billion, ordinary profit decreased ¥1.1 billion (8.2%) to ¥12.7 billion, and loss attributable to owners of parent was ¥0.3 billion (Compared with profit attribute to owners of parent of ¥15.8 billion for the same period of the previous fiscal year.).

With regard to the costs related to procurement of replacement materials for airbag yarn, etc. due to the fire accident, ¥12.0 billion was recorded as extraordinary losses in the nine months ended December 31, 2018.

 

As for the outlook for the business environment during the fiscal year ending March 31, 2019, with concerns over a further slowdown in the global economy due to the trade friction between the United States and China, the United Kingdom’s exit from the EU and other issues, there was greater uncertainty about the future of the business environment.

 

In view of the current business environment and while positioning the fulfillment of corporate social responsibility (CSR) as the foundation of our business, the Group will strive to resolve social issues and increase corporate value and social value (CSV: Creating Shared Value) by providing socially beneficial products and services. Also, the Group will aim to be a “strong and good Toyobo Group,” with growth potential and stable profitability, that can contribute to societies around the world and that continues to create new technologies and products.

 

The performance of the Toyobo Group in the nine months ended December 31, 2018 was affected by the fire accident and the fluctuations in raw materials and fuel prices. In the forecasts for fiscal year ending March 31, 2019, despite expected sales expansion in industrial film and other business, operating profit and ordinary profit are revised since the sales volume of some products is estimated to decrease, affected by the fire accident as well as the fluctuations in raw material prices and an increase in logistics costs.

 

Moreover, due largely to the expected recording of extraordinary losses on sales of shares of subsidiaries and associates, in addition to the loss caused by the fire accident, profit attributable to owners of parent is estimated to be \0.0 billion.

 

However, there are no changes to the annual dividends forecast based on this revise.

 

I would like to offer my most sincere appreciation to our shareholders and investors, and ask for your continued support.

February 2019

 Seiji Narahara

 President & Chief Operating Officer