Top Management Message

To Our Shareholders and Investors

Global economic conditions continued to show signs of improvement on the whole, despite heightened geopolitical risks. In the U.S., stock prices reached all-time highs, driven by strong corporate earnings. Europe saw a robust recovery led by internal demand. Meanwhile, in the Japanese economy, personal consumption was held to a modest rebound mainly due to sluggish growth in wages, despite a recovery in corporate earnings and improvement in capital expenditures.

In this environment, for the nine months ended December 31, 2017, the Teijin Group posted generally steady sales across all businesses on the whole. In addition, sales also reflected the impact of U.S.-based Continental Structural Plastics Holdings Corporation joining the composites business following its acquisition in January 2017. In the Healthcare Business, specifically Pharmaceuticals, performance partly reflected the impact of recording consideration for the licensing out of an investigational antibody candidate targeting a possible new treatment of Alzheimer’s disease to Merck & Co., Inc. In Home Healthcare, results reflected the recording of the impact of withdrawal from the U.S. home healthcare business.

Consequently, looking at EBITDA and ROE, two new key performance indicators set in the current fiscal year, EBITDA increased 26.2% year on year to ¥90.4 billion, while ROE was 14.4%, compared with our target of 10% or more. Consolidated net sales totaled ¥614.7 billion, an increase of 14.9% year on year. Operating income rose 29.1% to ¥56.3 billion. Ordinary income increased 24.1% to ¥56.8 billion. Profit attributable to owners of parent increased 16.6% to ¥39.7 billion. Earnings per share rose ¥28.69 to ¥201.92.

Looking at the outlook for global economy, the current expansionary trend is expected to continue both in developed countries centered on Europe and the U.S. and in emerging countries, despite the continuation of heightened geopolitical risks. The Japanese economy is forecast to remain on a steady growth trajectory on the whole, underpinned partly by a projected increase in investments to address personnel shortfalls, against the backdrop of growing corporate earnings.

Looking at our consolidated full-term operating results forecasts for fiscal 2017, we have maintained our previous forecasts of EBITDA of ¥111.0 billion, ROE of 12.4%, operating income of ¥68.0 billion, ordinary income of ¥68.0 billion and profit attributable to owners of parent of ¥45.0 billion. However, we have revised our forecast of consolidated net sales to ¥840.0 billion, compared with our previous forecast of ¥850.0 billion.

2018 is a landmark year for the Teijin Group as it marks our founding centennial. In the course of managing our businesses over the past century, we have continued to grow despite facing many crises along the way. I’d like to take this opportunity to once again express my gratitude for your continued support over the years. We are a business enterprise that aspires to realize “Human Chemistry, Human Solutions” that go far beyond conventional chemistry focused solely on substances and materials. As such, we hereby declare our commitment to provide solutions that enhance the Quality of Life of all people of the future. With this in mind, we have embraced “FUTURE NAVIGATION” as our new corporate message. The Teijin Group aims to be “An Enterprise that Supports the Society of the Future”. That is our long-term vision. To realize this vision, we will need to establish new core businesses. That will require us to put strong faith in the power of chemistry and to redefine and expand the horizons of this field. In the process, we must—and we will—create new value that people have never seen before.

There are only two more months left in the first year of our Medium-Term Management Plan for FY2017-2019, which constitutes an action plan for realizing our long-term vision. At this time, we are outperforming our initial forecasts for both the Materials Business Field and the Healthcare Business Field. Also, the new businesses we have been working on are slowly but surely starting to produce positive results. Looking ahead, all employees at Teijin will work as one to realize our aspirations for the Teijin Group through ceaseless evolution and ambition.

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

February 5, 2018

Jun Suzuki

Jun Suzuki
President and CEO