As for the global economy surrounding the Toyobo Group (hereinafter the “Group”) in the fiscal year ended March 31, 2019, the economies of the United States, China and Europe continued to grow firmly in the first half of the fiscal year. However, the economy slowed down in the second half of the fiscal year due to anxieties from economic turmoil accompanying the trade friction between the United States and China, the slowdown in the Chinese economy, the issue of the United Kingdom’s exit from the EU and other issues. Likewise in Japan, although the economy recovered at a moderate pace in the first half of the fiscal year ended March 31, 2019, it became sluggish in the second half following a decline in export and slowdown in the growth of capital spending.

 

 Amid this operating environment, the Group has started the 2018 Medium-Term Management Plan setting “Films & Coatings,” “Mobility,” and “Healthcare & Wellness” as the growth fields. In the fiscal year ended March 31, 2019, the first year of the Plan, particularly for the “Films & Coatings,” the Group substantially expanded the sales of polarizer protective films for LCDs “COSMOSHINE SRF” and mold releasing films for MLCC, but on the other hand results were significantly affected by the fluctuations in raw material and fuel prices and the soaring logistics cost.

 In addition, ¥13.8 billion, including the costs related to procurement of replacement materials for airbag yarn, was recorded as extraordinary losses because the manufacturing facilities for airbag yarn were burnt down due to the fire accident.

 

 As a result, consolidated net sales in the fiscal year ended March 31, 2019, increased ¥5.5 billion (1.7%) over the previous fiscal year, to ¥336.7 billion. Operating profit decreased ¥2.2 billion (9.2%), to ¥21.7 billion, ordinary profit decreased ¥2.6 billion (12.9%) to ¥17.8 billion, and loss attributable to owners of parent was ¥0.6 billion (Compared with profit attributable to owners of parent of ¥13.0 billion for the previous fiscal year.).

 

 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, the slowdown of the Chinese economy, and the UK’s exit from the EU will continue to be a cause for concern and growth will slow. In Japan, despite a strong domestic demand, export will grow sluggishly and recovery trend of the economy is expected to weak. Also it will still be necessary to be mindful of trends in raw material and fuel prices as well as fluctuations in exchange rates.

 

 In view of these prospects for the business environment, the Group will aim to build a strong and “good Toyobo Group” with stable profitability and growth potential under its corporate philosophy Jun-Ri-Soku-Yu (acting rationally and realizing prosperity). Furthermore, the Group will promote new product development and business expansion in each of the growth fields of “Films & Coatings,” “Mobility,” and “Healthcare & Wellness” under the “Three part harmony” philosophy, which is an approach to resolve short-term issues, while also tackling medium- to -long-term issues and building business foundations through means such as reforming corporate culture.

 Through these initiatives, the Group will contribute to the resolution of social issues and increase its economic value, thereby raising its corporate value (CSV: Creating Shared Vale).

 

 As a result of these activities, for the fiscal year ending March 31, 2020, the Group is forecasting net sales of ¥350.0 billion (an increase of ¥13.3 billion year on year), operating profit of ¥22.0 billion (an increase of ¥0.3 billion), ordinary profit of ¥18.0 billion (an increase of ¥0.2 billion), and profit attributable to owners of parent of ¥17.0 billion (Compared with loss attributable to owners of parent of ¥0.6 billion for fiscal year ended March 31, 2019.).

 

 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%.

 Toyobo plans to pay a year-end dividend for the subject fiscal year of \40 per share. For fiscal 2020, we currently expect to pay a dividend of \40 per share. However, this will be reviewed in the future based on the policy above.

(*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.

 

May 2019

 Seiji Narahara

 President & Chief Operating Officer