As for the global economy surrounding the TOYOBO Group (hereinafter referred to as the “Group”) in the six months ended September 30, 2019, the economic slowdown has intensified due to a sense of uncertainty arising from the intensified trade friction between the United States and China, and from the issue of the United Kingdom’s exit from the EU. In Japan, despite steadily growing domestic demand, business confidence was at a standstill due to the impact of the global economy.

 

 Amid this operating environment, the Group has focused on “Films & Coatings,” “Mobility,” and “Healthcare & Wellness,” which were set as the growth field targets in the 2018 Medium-Term Management Plan. In the six months ended September 30, 2019, for the “Films & Coatings,” the Group expanded the sales of polarizer protective films for LCDs “COSMOSHINE SRF” and mold releasing film for MLCC “COSMOPEEL.” The Group also acquired all stocks of two subsidiaries held by TEIJIN LIMITED, and changed their names to TOYOBO FILM SOLUTIONS LIMITED and PT. INDONESIA TOYOBO FILM SOLUTIONS as of October 1, 2019, aiming at strengthening the capacity to develop and manufacture high-performance films, and further solidifying the foundation of the films business.

 Manufacturing facilities for airbag yarn and functional cushion material “BREATHAIR,” etc., were lost due to the fire accident in September 2018, but the Group continues to conduct sales with replacement materials. From September 2019, the new plant started up and manufacture of “BREATHAIR” resumed.

 

 As a result, consolidated net sales in the six months ended September 30, 2019 increased ¥0.2 billion (0.1%) over the same period of the previous fiscal year, to ¥164.9 billion. Operating profit increased ¥0.5 billion (4.8%), to ¥11.1 billion, ordinary profit increased ¥0.2 billion (2.5%) to ¥9.0 billion, and profit attributable to owners of parent decreased ¥1.3 billion (32.0%), to ¥2.7 billion.

 

 The outlook for the business environment during the fiscal year ending March 31, 2020 is that insecurity in the global economy caused by economic confusion accompanying the trade friction between the United States and China and the UK’s exit from the EU will continue to be a cause for concern and growth will slow. The effect of the overseas economic downturn is also a concern for Japan.

 

 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 contribute to the resolution of social issues and increase its economic value, thereby raising its corporate value (CSV: Creating Shared Value). Also, the Group will aim to build a strong and “good TOYOBO Group” with growth potential and stable profitability.

 

 The performance of the TOYOBO Group in the six months ended September 30, 2019 was generally as forecast. Regarding the forecast for the full fiscal year, there have been no changes to net sales, operating profit and ordinary profit from the original forecast announced on May 9, 2019. However, profit attributable to owners of parent has been revised since expenses due to the fire accident increased in the subject first half period, and expenses accompanying loss on disposal of non-current assets are expected to increase.

 

 The Company considers providing returns to shareholders to be one of its highest priorities. Its basic policy is to continually provide a stable dividend, in a comprehensive consideration of such factors as sustainable profit levels, retention of earnings for future investment, and improving the financial position to provide shareholders returns, including the acquisition of treasury shares, with a target total return ratio (*) of 30%. At this point, the Company plans to pay a year-end dividend for the fiscal year ending March 31, 2020 of \40 per share.

 

(*1)Total return ratio = (total dividend + total amount of share buybacks) ÷ profit attributable to owners of parent

 

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

 

 

September 2019