Top Management Message

To Our Shareholders and Investors

Global economic conditions in the nine months ended December 31, 2016 tracked a gradual recovery path. However, they still faced an increasingly uncertain geopolitical and economic outlook. Meanwhile, the Japanese economy was not so strong, as could be seen by slowing growth in personal consumption and other factors.

In this environment, for the nine months ended December 31, 2016, consolidated net sales declined 9.5% to ¥535.2 billion. This decline was due in part to the impact of optimizing our production configuration associated with restructuring initiatives in the resin business, in addition to the stronger yen, although sales were generally steady across all businesses on the whole. Operating income decreased 21.4% to ¥43.6 billion, due in part to the impacts of foreign exchange movements and new drug licensing costs, despite efforts to steadily expand the earnings base by driving growth in existing businesses and executing restructuring initiatives. Ordinary income decreased 19.4% to ¥45.8 billion. Meanwhile, profit attributable to owners of parent was held to a decrease of 2.5% to ¥34.1 billion, due in part to a decline in tax expense, reflecting the impact of changes in tax effect accounting, as well as declines in impairment loss and business structure improvement expenses.

In this environment, we are remaining focused on steadily pressing forward with the implementation of various measures centered on the restructuring initiatives and transformation and growth strategies laid out in the revised medium-term management plan announced in November 2014, whose final year is fiscal 2016.

Looking at our consolidated full-term operating results forecasts for fiscal 2016, in light of recent trends in foreign exchange movements and other factors, we have revised our forecast of consolidated net sales to ¥740.0 billion, compared with our previous forecast of ¥730.0 billion, operating income of ¥56.0 billion, compared with our previous forecast of ¥53.0 billion, ordinary income of ¥55.0 billion, compared with our previous forecast of ¥53.0 billion, and profit attributable to owners of parent of ¥37.0 billion, compared with ¥35.0 billion previously.

We have announced Medium-Term Management Plan 2017-2019, which sets forth our new action plans to realize our long-term vision. We aim to be an enterprise that is essential to tomorrow's society by continuously creating the new value that society needs. We will face various social issues in earnest and identify business opportunities that leverage our strengths from those issues, thereby supplying the products and services that society needs. By doing this, we will be able to contribute to society in tandem with achieving our own growth. In an increasingly uncertain external environment, unless we ceaselessly create new value for customers by taking the initiative in driving evolution instead of chasing trends, we cannot expect to achieve sustained growth. The slogan of the new medium-term management plan is “Always Evolving—Ceaseless Evolution and Ambition.” Staying true to this slogan, we will make a concerted effort to further accelerate the transformation of our business portfolio. Without merely relying on the continuation of existing businesses, management and all employees will work together to nurture and develop “new businesses that are not yet contributing to profits at present,” into core earnings sources.

We look forward to the continued understanding and support of our shareholders and investors.

February 6, 2017

Jun Suzuki

Jun Suzuki
President and CEO