Top Management Message
To Our Shareholders and Investors
Global economic conditions in fiscal 2016, ended March 31, 2017, tracked a gradual expansionary path as a whole, as developed countries centered on the U.S. drove firm growth, and the PRC economy turned upward from the second half of the fiscal year due to economic stimulus measures. Meanwhile, the Japanese economy saw signs of improvement, including an upturn in business confidence in the manufacturing industry due to a recovery in exports and other factors despite sluggish growth in personal consumption.
In this environment, for fiscal 2016, consolidated net sales totaled ¥741.3 billion, a decrease of 6.3% year on year. This decrease was due in part to the impact of restructuring initiatives mainly in the resin business, in addition to the stronger yen in the first half of the fiscal year, although sales were generally steady across all businesses on the whole. Operating income decreased 15.8% to ¥56.5 billion, due in part to the impacts of foreign exchange movements, new drug licensing costs and downward revisions to NHI drug reimbursement prices, despite efforts to steadily expand the earnings base by driving growth in existing businesses and executing restructuring initiatives. Ordinary income decreased 7.3% to ¥55.9 billion. Meanwhile, net income increased 61.3% to a record-high of ¥50.1 billion, partly due to a large decrease in tax expense in conjunction with the adoption of tax effect accounting in connection with a decision to withdraw from the home healthcare business in the U.S. Our year-end dividend for fiscal 2016 was declared at ¥30 per share, bringing dividends for the full term, including the interim dividend, to ¥55 per share.
The global economy in fiscal 2017 is expected to remain on a gradual expansionary path as a whole. However, global economic conditions are being impacted by factors such as increasing pressure from protectionist economic policies along with rising geopolitical tension in the Middle East, Asia and elsewhere. Based on these factors, the outlook for the global economy is still uncertain. In this environment, in order to realize our long-term vision, we will steadily press ahead with the implementation of our growth strategies, and our transformation strategies, laid out in the new medium-term management plan announced in this February. Concurrently, we will work to strengthen our management system platform underpinning these strategies.
Looking at our full-term operating results forecasts for fiscal 2017, in light of the abovementioned initiatives, we are forecasting net sales of ¥855 billion, operating income of ¥62 billion, ordinary income of ¥63 billion and net income of ¥42 billion. Excluding the impact of special factors such as the decrease in tax expense in fiscal 2016, we are effectively forecasting increases in sales and earnings.
Three years have passed since I was appointed as the CEO of the Teijin Group. We can view the past few years as a rebuilding period focused on reestablishing our profitability and laying the groundwork for new transformation and growth strategies. The next three years, which will span the Teijin’s founding centennial in 2018, will mark a new beginning for the Teijin Group—one that will see us make major strides towards the Teijin Group’s next centennial.
In an 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.
May 9, 2017
President and CEO