For Investors

Medium-Term Management Plan "ALWAYS EVOLVING" for 2020-2022

On February 5, 2020, Teijin Group announced today its new Medium-Term Management Plan for 2020-2022 "ALWAYS EVOLVING."

The plan outlines Teijin Group's next steps toward becoming a company that supports the society of the future by creating new value through ceaseless evolution and ambition and by offering solutions for sustainability. Under the plan, Teijin Group expects to establish a solid growth platform for group collaboration aimed at realizing the company's long-term vision.

Corporate Vision -Be a Company that Supports the Society of the Future-

Provide value to society toward a sustainable world, through "Three Solutions" based on our corporate philosophy. Be a company that supports the society of the future through ceaseless evolution and ambition.

Policy for initiatives contributing to a Sustainable World

To realize a Sustainable World, our focus is on people, delivering innovative solutions to enhance the Quality of Life, while minimizing the negative impacts of our activities on the environment and society.

Creating Growth Platforms toward Sustainable Growth

Positioning the period of this Medium-Term Management Plan (FY2020 to FY2022) as a period of establishing a foundation for sustainable growth, focusing on the "Three Solutions" based on the selection of priority areas implemented in the previous Medium-Term Management Plan period, we will make key investments.

KSFs for creating growth platforms

1. Create opportunities
  • Increase resources for the Three Solutions and accelerate efforts to cope with societal challenges
  • Active investment to future sources of earnings, acceleration of portfolio transformation and increase of cash-generating ability
2. Reduce risks Enhance efforts to minimize environmental risks including climate change
3. Strengthen management basis Strengthen management basis to drive innovation and to accelerate creating business opportunities

1. Create opportunities

  • To establish the growth platform, Teijin Group will expand its capital investment and M&A budget to JPY 350 billion for the coming three-year period, up from JPY 240 billion in the existing three-year period
  • Teijin Group will invest 85% of the above budget in the Three Solutions fields and accelerate efforts to address pressing issues in global society, aiming to increase sales in these three fields to 75% of total sales by FY2030
  • Teijin Group's business portfolio will be broadly divided into Strategic Focus areas to boost cash-generating abilities in new businesses and Profitable Growth areas to expand stably profitable existing businesses. The goal is to increase cash-generating abilities by transforming the overall business portfolio through a strategic allocation of corporate resources. Teijin Group will invest 60% (excluding recurring investments) and target EBITDA of at least 1/3 (33%) in Strategic Focus businesses by FY2030
    Business portfolio
    Boost cash-generating abilities in new businesses
    (Strategic Focus)
    Expand stably profitable existing businesses
    (Profitable Growth)
    Materials
    • Composites for automotive
    • Carbon fiber Intermediate materials for aircraft
    • Aramid
    • Resin & Plastics Processing
    • Carbon Fibers
    • Separator / Membrane
    Healthcare
    • Comprehensive community healt hcare related business
    • Functional foods
    • New Healthcare businesses for orthopedics and new medical devices
    • Pharmaceuticals
    • Home Healthcare
    Others
    • Fibers & Products Converting
    • IT

    Breakdown of investments (capital investment and M&A)

    Business portfolio transformation

2. Reduce risks (environmental impact)

In line with the new Medium-Term Management Plan, Teijin Group will set long-term targets for reducing environmental impact as well as for developing new business.

Long-term goals for reducing environmental impact
Item Target year Goal
Contribution to CO2 reduction 2030 "Avoided emissions" > "Total emissions"
Climate change (CO2 emissions) 2030 20% reduction from FY2018 total emissions
2050 Net zero emissions
Water quality
(freshwater intake)
2030 30% improvement from FY2018 level (per sales unit)
Hazardous materials 2030 20% improvement from FY2018 level (hazardous chemical emissions per sales unit)

Note: resource circulation target to be set by mid-FY2020

3. Strengthen management basis

Teijin Group will strengthen its foundation for creating innovation and accelerate its creation of business opportunities to deliver sustainable solutions and to open new markets.

Capital policy and shareholder returns

Created cash flows will be given prioritized allocation to "Strategic Investment for Future Growth", while maintaining a healthy financial structure (aiming for a debt-to-equity ratio of 0.9 times). Stable and sustainable dividends will be considered, and own share repurchasing will be flexibly conducted as well. Dividends are in line with consolidated operating results, aiming to raise the dividend along with profits growth, and targeting a consolidated payout ratio of 30% of profit attributable to owners of parent for the medium term.

Previous MTP
(Outlook)
MTP Targets
(FY2020-FY2022)
Dividend payout ratio 30% 30% around
Share repurchase 20bil. yen Flexibly conduct

Business Strategy and Financial Targets

Main business strategies

1. Materials business field

Teijin Group will accelerate its development of high-added-value applications with high-performance materials and multi-materials strategy.

Strategic Focus (boost cash-generating abilities in new businesses)
Composites for automotive Increase top share of U.S. market and further penetrate European and Chinese markets. Restore profitability of North American base (CSP*) in FY2021 (after amortization of goodwill)
Carbon fiber Intermediate materials for aircraft Adopt new big programs and launch higher-profit mass production operations around FY2023

*CSP:Continental Structural Plastics Holdings Corporation

Profitable Growth (expand stably profitable existing businesses)
Aramid Maintain high growth (CAGR 5-7% in sales) by expanding manufacturing capacity and adding new applications
Resin & Plastic Processing Secure stable earnings by adding new high value-added products
Materials:Medium- to long-term strategy

2. Healthcare business

Utilizing strengths cultivated through existing businesses, Teijin Group will develop comprehensive community-based healthcare businesses in sectors including rehabilitation, nursing care, prevention and health promotion.

Strategic Focus (boost cash-generating abilities in new businesses)
Functional foods, Comprehensive community healthcare related business, New medical devices, etc. Expansion of businesses and markets both in areas covered and not covered by Japan's health insurance system (Functional foods, Nutraceuticals, Services supporting health management and preventing severity, Artificial joints, Absorbable bone-bonding materials, Devices for depression and rehabilitation, etc.)
Profitable Growth (expand stably profitable existing businesses)
Pharmaceuticals and Home Healthcare Strengthen business platform through organizational reforms of Pharmaceuticals and Home Healthcare to launch new drugs and minimize effects of "FEBURIC® cliff"
Healthcare : Medium- to long-term strategy

3. Fibers & Products Converting / IT

Profitable Growth (expand stably profitable existing businesses)
Fibers & Products Converting Expand businesses in growth areas and raise basic profitability
IT Keep growth of E-comics and expansion of healthcare business

Financial targets

Teijin Group, placing emphasis on both investment efficiency and earnings power, uses ROE (group-wide) and ROIC based on operating income (group-wide and for each business) as profitability indicators, and EBITDA (group-wide and for each business) as its most important growth indicator.

    *The figures for FY2019 on this page are based on FY2019 Outlook announced on February 5, 2020.