In September 2020, a major fire accident occurred at the Company’s Inuyama Plant, resulting in the loss of lives of two employees. In addition, misconduct regarding the quality of engineering plastics occurred. We offer our condolences to two employees who lost their lives to rest in peace and sincerely apologize to our shareholders and parties involved in this accident for the considerable inconvenience and great anxiety caused by this accident. We, as the Group, will thoroughly implement disaster prevention measures to ensure that this kind of accident and misconduct concerning quality will never repeat again.
We would like to present the Group’s full-year business results for Fiscal 2021 and full-year forecasts for Fiscal 2022.
As for the business environment surrounding the Toyobo Group (hereinafter the “Group”) in the fiscal year ended March 31, 2021 (hereinafter, “the fiscal year”), the economic activities recovered due to the rapid suppression of the novel coronavirus disease (COVID-19) in China, while the global economy was deeply impacted by this pandemic. In the United States and Japan, economic activities were gradually recovering due to human mobility restrictions and fiscal and monetary policies.
In this business environment, automotive-related products and textiles in the Group were affected by the spread of the COVID-19 infection cases, mainly in the first half of the fiscal year. In the acrylic fiber business, an impairment loss of ¥7.8 billion was recorded on business assets.
On the other hand, while the COVID infection spread, Toyobo has established a system to double the production volume of raw materials and reagents for PCR testing in order to meet the global demand for PCR testing. In addition, sales of mold releasing film for MLCC “COSMOPEEL” improved due to the recovery of automobile production, and sales of polarizer protective films for LCDs “COSMOSHINE SRF” grew due to the commencement of mass production in the new line (Unit 3.)
As a result, consolidated net sales in the fiscal year ended March 31, 2021, decreased ¥2.2 billion (0.6%) over the previous fiscal year, to ¥337.4 billion. Operating profit increased ¥3.9 billion (16.9%) to ¥26.7 billion, ordinary profit increased ¥2.7 billion (14.8 %) to ¥20.7 billion, and profit attributable to owners of parent decreased ¥9.6 billion (69.5 %) to ¥4.2 billion as a result of recording extraordinary loss for impairment loss on business assets in the acrylic fiber business and loss due to the fire at Inuyama Plant.
Regarding the business environment for the fiscal year ending March 31, 2022, as mentioned earlier, it is expected that it will take time for the global economy, including Japan, to normalize due to the effect of shortage of semiconductors and price increase of raw materials and fuel, which became extra factors in the second half of the fiscal year, on top of the resurgence of the COVID-19 infection cases. The speed of economic recovery is likely to be affected by the progress of the COVID-19 vaccine roll-out, the timing of the lifting of restrictions on human mobility, and the recovery status in semiconductor production.
There are concerns that the Group’s businesses will be affected by a delay in the recovery of personal consumption due to restriction on human mobility, a decrease in automobile production due to the shortage of semiconductors, and a rise of raw materials and fuel prices.
Meanwhile, Toyobo will make every effort to offer reagents for PCR testing and provide genetic testing equipment, etc., in order to respond to the public demand for PCR testing. In addition, in order to respond to the strong demand for information equipment, Toyobo plans to increase the production of mold releasing film for MLCC “COSMOPEEL” and polarizer protective films for LCDs “COSMOSHINE SRF.”
Under this environment, for the fiscal year ending March 31, 2022, the Group is forecasting net sales of ¥360.0 billion (an increase of ¥22.6 billion year on year), operating profit of 27.0 (an increase of 0.3 billion), ordinary profit of 22.0 billion (an increase of 1.3 billion), and profit attributable to owners of parent of 11.5 billion (an increase of 7.3 billion).
The Company acknowledges that providing returns to shareholders is one of its highest priorities. Our basic policy is to continually provide a stable dividend, in a full consideration of such factors as sustainable profits 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%.
(*) Total return ratio = (total dividend paid + total amount of the acquisition of treasury shares) ÷ profit attributable to owners of parent.
Following the occurrence of the fire accident and misconduct concerning quality, which will possibly shake the business foundation, the Group has determined to “regain trust” as the top priority issue for Fiscal 2022 and is committed to executing the reform through deep self-reflection under the banner of “rebuilding the business foundation for sustainable growth” as part of its management policy.
We will make company-wide efforts on the prevention of recurrence to recover the trust lost because of the fire accident and quality issue.