Top Management Message

To Our Shareholders and Investors

Global economic conditions in the three months ended June 30, 2018 saw continued economic expansion in Europe and the Americas due to factors including growth in personal consumption. The PRC and the ASEAN economies also continued to grow at a moderate pace. However, concerns about the global economic outlook grew stronger, mainly reflecting the risk of economic deceleration due to factors such as political developments in Europe, the Americas and Asia, along with rising interest rates in the U.S. The Japanese economy also continued to stage a modest recovery mainly underpinned by favorable corporate earnings and employment conditions. However, the outlook for the Japanese economy remained opaque, based partly on the uncertainty in overseas economies.

In this environment, for the three months ended June 30, 2018, consolidated net sales totaled ¥216.4 billion, an increase of 9.1% year on year. This increase was primarily due to firm sales in each business, especially in the Materials Business Field. Operating income decreased 4.7% to ¥18.3 billion. This decrease was mainly due to the impact of recording consideration for the licensing out of an investigational antibody candidate targeting tau protein for a possible new treatment of Alzheimer’s disease to Merck & Co., Inc. in FY2017, despite solid sales in each business. Ordinary income increased 5.8% to ¥21.2 billion, mainly reflecting an increase in foreign exchange valuation gains due to the yen’s depreciation. Profit attributable to owners of parent rose 45.4% year on year to ¥19.5 billion, helped by the recording of extraordinary income. Earnings per share increased ¥30.38 year on year to ¥98.47.

Looking at the outlook for global economy going forward, the risk of economic deceleration due to political developments in Europe, the Americas and Asia is expected to persist. Accordingly, the environment surrounding our businesses has become increasingly uncertain.

In light of this economic outlook and considering the firm sales trends in both the Materials Business Field and Healthcare Business Field, our consolidated first half operating results forecasts call for net sales of ¥435.0 billion, operating income of ¥35.0 billion, ordinary income of ¥37.0 billion and profit attributable to owners of parent of ¥29.0 billion. Looking at our consolidated full-term operating results forecasts for FY2018, we are forecasting net sales of ¥890.0 billion, operating income of ¥70.0 billion, ordinary income of ¥72.0 billion, and profit attributable to owners of parent of ¥48.0 billion.

We entered the second year of our Medium-Term Management Plan for FY2017-2019. Our operating results are progressing steadily. Looking at ROE and EBITDA, our two key performance indicators, we expect to continuously achieve our ROE target of 10% or more, and we are on track to achieving our EBITDA target of ¥120.0 billion or more in FY2019. In FY2018, we will continue to drive the ceaseless evolution of our businesses to achieve future growth and transformation, in conjunction with allocating the necessary resources to the Materials Business Field and the Healthcare Business Field.

In 2018 the Teijin Group celebrates its founding centennial—a landmark year for all of us. We would like to once again express our heartfelt gratitude to you for your continued support for our businesses over the years. On occasion of its centennial, the Teijin Group is launching the message “Toward the world we all desire: FUTURE NAVIGATION”. Along with this message, in the future also, we aim to be an enterprise that supports the society of the future as an enterprise that puts people first in its thinking beyond materials and products, and focusing on quality of life (QOL) for future humanity. Looking ahead, we will continue to hand to future generations the entrepreneurial spirit and ambitious DNA that Teijin has developed since its founding. With this in mind, we will continue to endeavor ceaselessly and ambitiously to remain an essential partner to society over the next century.

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

 

August 1, 2018

Jun Suzuki

Jun Suzuki
President and CEO