Top Management Message
To Our Shareholders and Investors
Global economic conditions in the nine months ended December 31, 2018 remained opaque due to an economic slowdown in Europe and the PRC, and trade friction between the U.S. and the PRC, while the U.S. economy saw continued moderate growth. The Japanese economy continued to stage a modest recovery, mainly reflecting firm capital investment and employment conditions.
In this environment, for the nine months ended December 31, 2018, the Teijin Group posted lower earnings on higher sales in the Materials Business Field, mainly reflecting the impact of persistently high price of raw materials and increased costs for the launch of projects in connection with new order intake in the composites business, despite firm sales. In the Healthcare Business Field, the Teijin Group posted lower earnings on higher sales, reflecting the absence of the upfront payment from Merck (¥3.0 billion) recorded in the same period of the previous fiscal year, although growth in sales covered the impact of downward revisions to drug prices and medical fees. Consolidated net sales totaled ¥659.6 billion, an increase of 7.3% year on year. Operating income decreased 14.5% to ¥48.1 billion. Ordinary income decreased 9.7% to ¥51.3 billion. Profit attributable to owners of parent rose 2.6% to ¥40.8 billion, helped by the recording of extraordinary income.
Looking at our consolidated full-term operating results forecasts for FY2018, in light of our business performance for the nine months ended December 31, 2018 and the recent business environment, we have revised our forecast as follows. We are forecasting net sales of ¥890.0 billion, compared with our previous forecast of ¥900.0 billion, operating income of ¥60.0 billion, compared with our previous forecast of ¥65.0 billion, ordinary income of ¥62.0 billion, compared with our previous forecast of ¥67.0 billion, and profit attributable to owners of parent of ¥46.0 billion, compared with our previous forecast of ¥48.0 billion.
We are now in the second half of our medium-term management plan for 2017-2019, "ALWAYS EVOLVING." We will continue striving to invest resources with the optimal balance for strengthening our core earnings power through growth strategies and establishing new core businesses through transformation strategies. In the Materials Business Field, we plan to further expand our business in weight-reducing automotive composites from North America to Europe and the PRC, while also strengthening our integrated structure spanning R&D to manufacturing. In the Healthcare Business Field, we are strengthening the earning power of the pharmaceuticals and home healthcare businesses, and based on these business platforms, we will drive transformation to deliver new values beyond public insurance-based business.
The Teijin Group marked its founding centennial in June 2018, and we have received congratulations and encouragement for our next 100 years from many of our stakeholders. I would like once again to express sincere appreciation for all of your longstanding support and cooperation. In the global message launched on our centennial, "Toward the world we all desire: FUTURE NAVIGATION," we declared our commitment to providing solutions focused on quality of life (QOL) for future humanity, as a company that puts people first in its thinking by exploring chemistry beyond materials and products. We will conscientiously think about how people and societies will be in the future, push the boundaries of imagination, and take initiatives to create new value.
We will pass on the venture spirit and the ambitious DNA that have been in the Teijin Group since its foundation, and continue to work ceaselessly and ambitiously to be "a company that supports the society of the future."
We look forward to the continued understanding and support of our shareholders and investors.
February 4, 2019
President and CEO