As for the business environment for the Group in the fiscal year ended March 31, 2018, in the global economy, the economy in the United States was steady backed by job growth, and the economy in the Euro area expanded supported by favorable business circumstances. However, in China, the economy continued to slow gradually. Meanwhile, in Japan, the economy remained on a recovery trend based on background of strong demand overseas and capital spending. On the other hand, it continued to be necessary to be mindful of rising trends, etc. in raw materials and fuel prices, packing material costs, and logistics costs.

 

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. Also, during the fiscal year ended March 31, 2018, the Group promoted business activities in accordance with the five action plans set forth in the Medium-Term Management Plan, namely “accelerating overseas business development,” “developing new products and creating new businesses,” “increasing competitiveness of domestic businesses,” “improving asset efficiency,” and “strengthening global Group management.”

 

As a result, consolidated net sales in the fiscal year ended March 31, 2018, increased ¥1.7 billion (0.5%) over the previous fiscal year, to ¥331.1 billion. Operating profit increased ¥0.6 billion (2.5%), to ¥23.9 billion, ordinary profit decreased ¥0.2 billion (1.1%) to ¥20.4 billion, and profit attributable to owners of parent increased ¥3.6 billion (38.1%), to ¥13.0 billion.

 

In the fiscal year ended March 31, 2018, the “gain on sales of non-current assets” accompanying the transfer of trust beneficiary right for the Toyobo Building of ¥10.4 billion was recorded under extraordinary income. In addition, with regard to a litigation filed by the U.S. government in association with bulletproof vests that were manufactured and sold by a U.S.-based bulletproof vest maker, a settlement was reached with the plaintiff, and settlement money, etc. of \7.4 billion was recorded under extraordinary losses.

 

The outlook for the business environment during the fiscal year ending March 31, 2019 overseas is that the economy in the United States and the Euro area will remain firm, and the economy in China will show sustainable, stable growth due to fiscal and monetary policies, despite a slowdown in the growth rate. On the other hand, in Japan, the domestic economy is expected to remain steady backed by a continued modest recovery in demand both in Japan and overseas. However, it is still necessary to be mindful of the cost of raw materials and fuels and other price trends as well as fluctuations in exchange rates.

 

In view of the current business environment and while aiming to be a “strong and good Toyobo Group,” with more stable profitability and greater growth potential than before, the Group included the following three key initiatives in the new Medium-term Management Plan for FY2018 to FY2021: “Thoroughly implement business management tailored for each business,” “enhance the development of new products and new businesses in the medium- and long-term,” and “strengthen the business base.” The Group will carry out key initiatives under the “3 piece pie philosophy,” which includes working to resolve short-term issues while also focusing on medium- to long-term issues, in addition to progressing with business base enhancements such as reforming corporate culture.

 

As a result of these activities, for the fiscal year ending March 31, 2019, the Group is forecasting net sales of ¥340.0 billion (an increase of ¥8.9 billion year on year), operating profit of ¥25.0 billion (an increase of ¥1.1 billion), ordinary profit of ¥21.5 billion (an increase of ¥1.1 billion), and profit attributable to owners of parent of ¥13.0 billion (an decrease of ¥0.0 billion).

 

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, 2019 of \40 per share.

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

 

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.

 

May 2018
Seiji Narahara
President & Chief Operating Office