Tokyo, Japan - While the pace of economic growth in developed countries, particularly the United States, saw a gradual return to stability, growth worldwide lacked strength in fiscal 2013, ended March 31, 2014, as conditions in emerging economies, notably the People’s Republic of China (PRC), remained generally weak. In Japan, signs of revival persisted, shored up by firm domestic demand, but a self-sustained recovery remained elusive, owing to a variety of factors, including the weakness of both exports and capital investment.
Other information
Changes in specific subsidiaries involving changes in the scope of consolidation: Yes
Barred consolidated subsidiaries: 2 (Teijin Chemicals Ltd, TS Aromatics Limited)
Shares issued (common stock)
Shares issued (including treasury stock) at end of term
End of fiscal 2013 984,758,665
End of fiscal 2012 984,758,665
Treasury stock
End of fiscal 2013 1,995,089
End of fiscal 2012 1,926,149
Average shares outstanding during the period
Fiscal 2013 982,860,666
Fiscal 2012 983,747,565
Reference: Individual results of FY2013 (April 1, 2013 through March 31, 2014)
Analysis of Consolidated Results of Operations
In this environment, consolidated net sales rose 5.2%, to ¥784.4 billion. Despite sagging results in the Electronics Materials and Performance Polymer Products segment, operating income climbed 46.3%, to ¥18.1 billion, as results in the Advanced Fibers and Composites segment recovered. Ordinary income, at ¥19.9 billion, was approximately double the fiscal 2012 result, an improvement attributable to the positive impact of an adjustment for tax effect accounting on the results of equity method affiliates, among others. Net income amounted to ¥8.4 billion, up from a net loss of ¥29.1 billion in fiscal 2012, owing to the impact of extraordinary items, which included a gain on sales of investment securities and a decrease in impairment loss on fixed assets. Net income per share was ¥8.50.
Business Segment Results
Advanced Fibers and Composites
Sales in the Advanced Fibers and Composites segment totaled ¥123.6 billion, while operating income was ¥5.7 billion.
High-Performance Fibers
Demand recovered, led by that for automotive applications.
Sales of Twaron para-aramid fibers for automotive applications, including tires, recovered in Europe, while sales for infrastructure-related applications, including optical fiber and rope reinforcements, were firm. In contrast, demand for use in ballistic protection products and protective clothing remained lackluster, while pricing competition for all applications intensified. Demand for Technora para-aramid fibers was stable in Japan for automotive applications, while the weakening of the yen enhanced the profitability of exports. Teijinconex meta-aramid fibers benefited from firm demand for industrial applications, while demand for use in filters expanded despite mounting competition. In polyester fibers for industrial applications, solid sales for automotive and certain other applications helped revive income at their subsidiary in Thailand, but profitability in Japan was hampered by rising prices for a number of raw materials.
Under these circumstances, company resolved to commercialize a new type of meta-aramid fiber offering superior heat resistance and dyeability and proceeded with preparations to begin production in Thailand in July 2015. Against a
background of increasingly stringent regulations pertaining to heat-resistant materials and environmental safety, the company will focus on expanding their business in promising Asian markets and emerging economies. In the PRC, their polyester recycling joint venture in Zhejiang Province pushed ahead with the construction of a new facility in preparation for the start of operations in fiscal 2014.
Carbon Fibers and Composites
Sales for principal applications were encouraging.
Demand for TENAX carbon fibers for use in aircraft remained firm, while among general industrial applications demand for use in pressure vessels for natural gas extraction was favorable in North America, supported by the expansion of
shale gas development. However, demand for other applications languished, reflecting the uncertain economic outlook in Europe and the PRC. Sales prices, persistently low in recent years, showed signs of recovering, although the outlook
remained difficult to gauge, owing to sales offensives by other manufacturers, particularly late market entrants overseas.
In this environment, steps aimed at strengthening their operations in promising Asian markets, notably India and the
Association of Southeast Asian Nations (ASEAN) region, proceeded smoothly. These include the establishment in July
2013 of Toho Tenax Singapore Pte. Ltd.
During the period, the Teijin Composites Innovation Center—a facility in Matsuyama, Ehime Prefecture, that spearheads
research in the area of advanced composite materials—sought to cultivate markets for their new thermoplastic carbon
fiber-reinforced plastic (CFRP), which is marketed under the brand name Sereebo, an acronym for “save the earth,
revolutionary and evolutionary carbon.” Efforts focused particularly on carving out markets for automotive and general
industrial applications. Underscoring its revolutionary nature, Sereebo was chosen for use in the structural components
of several new digital single-lens reflex (SLR) cameras. Going forward, we will further capitalize on the ability of CFRP to
reduce the weight of finished products to promote Sereebo’s use in structural components for mass-produced vehicles,
which we see as a significant latent market. To this end, their thermoplastic CFRP pilot plant, situated within the
Matsuyama Plant, and the Teijin Composites Application Center, located in Metro Detroit, in the United States, are
collaborating on multiple projects targeted at developing specific components and establishing mass-production
procedures, and are making steady progress on both fronts.
Electronics Materials and Performance Polymer Products
The Electronics Materials and Performance Polymer Products segment reported sales of ¥179.4 billion and an operating
loss of ¥7.2 billion.
Resin and Plastics Processing
A supply–demand imbalance persisted for polycarbonate resin.
Pricing competition in the market for mainstay polycarbonate resin intensified, owing to sluggish demand—a consequence of decelerating growth in the PRC, among others—and moves by competitors to maintain operating rates
and implement year-end inventories adjustments. Under these circumstances, we sought to preserve sales volumes
through flexible pricing and to reduce costs by suspending production on certain lines at their plant in Singapore.
Despite these actions, profitability was severely undermined.
In the area of specialty polycarbonate resin, sales were steady in Taiwan, the PRC and the Republic of Korea (ROK) for
use in lenses for smartphone and mobile phone cameras and for onboard vehicle cameras. In processed plastics
products, sales of Panlite Sheet were encouraging for use in dummy cans for vending machines, automotive instrument
panels and motorcycle windshields, as were sales of PURE-ACE polycarbonate retardation film for use as antireflective film in vehicle navigation systems. In plastic glazing*, in October 2013 Nissan Motor Company began using Panlite polycarbonate resin for the driver–passenger partition in its NV200 taxicabs, which it markets to taxi operators in New
York City. With the goal of building plastic glazing into a full-scale business, we also took steps to create a dedicated
production configuration. Other highlights included the addition of Fireguard FCX-210, a new phosphorus flame retardant suitable for use in a broad range of resins, to their lineup, which previously centered on brominated products, positioning us to market flame retardants for electronics, automotive and other applications.
Films
The integration of domestic polyethylene terephthalate (PET) film production facilities continued to bolster cost
competitiveness.
We have a number of polyester films joint ventures with E.I. du Pont de Nemours and Company (DuPont) of the United
States around the world. In the area of products for electronics applications, sales of release films for manufacturing
processes remained firm for use in smartphones and tablet computers. In contrast, films for use in liquid crystal display
(LCD) televisions struggled, owing to a glut of LCDs in the market and increasingly fierce competition with overseas films
manufacturers, which have driven down sales prices. Demand for films for specialized packaging and for magnetic
applications tapered, as a result of which profitability waned. In this environment, we suspended operations on the PET
film line at their domestic joint venture’s Ibaraki factory and integrated the company’s other production facilities. Looking ahead, we will focus on further enhancing production line efficiency, with the aim of restoring cost competitiveness. In the area of release films for manufacturing processes and other applications, we will endeavor to fortify collaboration with customers, as well as to broaden marketing.
Overseas, cost reductions were insufficient to offset flagging demand in the United States. In contrast, sales in Europe
were solid for packaging and general industrial applications. With demand in the PRC steady, despite the impact of
facility expansion by local manufacturers, which amplified competition, we sought to maintain profitability by leveraging their superior technological and quality control capabilities.
Healthcare
Sales in the Healthcare segment came to ¥138.4 billion, while operating income was ¥24.5 billion.
Pharmaceuticals
Sales of their novel treatment for hyperuricemia and gout expanded favorably.
Operating conditions for their domestic pharmaceuticals business remained harsh, owing to the launch of rival products,
as well as to rising sales of generic drugs. Despite overall market conditions, sales of hyperuricemia and gout treatment
Feburic (febuxostat) expanded favorably, further boosting their leading share of the Japanese market for such treatments.
They also continued working to achieve further market penetration for osteoporosis treatment Bonalon®† by adding new formulations to their osteoporosis drug lineup, including an intravenous and an oral jelly, both firsts for Japan.
* Made with injection-molded polycarbonate resin, plastic glazing is an attractive alternative to metal and glass for vehicle parts.
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Source: Teijin