Top Management Message

To Our Shareholders and Investors

Global economic conditions in the six months ended September 30, 2017 continued to show signs of improvement, underpinned by an upturn in internal and external demand in developed countries, as well as the PRC and other emerging countries, despite concerns about geopolitical risks. Meanwhile, the Japanese economy remained on a gradual expansionary course, mainly reflecting a recovery in corporate earnings due to an increase in exports, along with further improvement in personal consumption in line with an improving employment environment. In this environment, for the six months ended September 30, 2017, consolidated net sales totaled ¥404.7 billion, an increase of 14.6% year on year. This increase was primarily due to generally steady sales across all businesses on the whole and the impact of U.S.-based Continental Structural Plastics Holdings Corporation joining the composites business following its acquisition in January 2017. Operating income rose 39.0% to ¥37.5 billion, due to the impact of recording consideration for the licensing out of an investigational antibody candidate targeting tau for a possible new treatment of Alzheimer’s disease to Merck & Co., Inc. Ordinary income increased 42.2% to ¥37.9 billion, benefiting from a decrease in non-operating expenses. Profit attributable to owners of parent increased 36.6% to ¥29.2 billion. Earnings per share rose ¥39.66 to ¥148.33.

In the second half of FY2017, the global economy is expected to remain on a steady growth path on the whole. The employment environment has continued to trend firmly in the U.S., and corporate business performance in the euro zone and Japan has also held firm. In the PRC and other emerging countries, surging demand for infrastructure is expected to drive internal demand.

In light of recent operating results, we have revised our full-term operating results forecasts for FY2017. We now expect to report consolidated net sales of ¥850.0 billion, compared with our previous forecast of ¥855.0 billion, operating income of ¥68.0 billion, compared with our previous forecast of ¥64.0 billion, ordinary income of ¥68.0 billion, compared with our previous forecast of ¥65.0 billion, and profit attributable to owners of parent of ¥45.0 billion, compared with ¥44.0 billion previously.

We declared an interim dividend of ¥30 per share as initially forecast. We also plan to declare a year-end dividend of ¥30 per share. As a result, combining our interim and year-end dividends, we are now forecasting full-term dividends of ¥60 per share for FY2017.

This year marks the first fiscal year of our new medium-term management plan for 2017-2019, named “ALWAYS EVOLVING.” We are advancing business management while constantly remaining aware of the levels of ROE, EBITDA and ROIC—our new key performance indicators set under the plan. In the next three years through 2019, we will devote advance development costs to our transformation strategy businesses, which will become our future core businesses, based on profits generated by growth in existing businesses. To determine whether these two priorities—specifically, “growth in existing businesses” and “advance development costs for the transformation strategy”—are progressing in line with targets, we will use the aforementioned key performance indicators as “milestones” to navigate a course for business management. We will continue to pursue ceaseless evolution and ambition as we aims to be an enterprise that supports the society of the future, which is our long-term vision. In a multitude of situations and circumstances, all employees at Teijin will work as one to effectively serve customers and society as a whole.

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

November 7, 2017

Jun Suzuki

Jun Suzuki
President and CEO