Top Management Message
To Our Shareholders and Investors
Global economic conditions in the three months ended June 2017 saw signs of improvement on the whole, underpinned by an upturn in internal and external demand in both developed and emerging countries, although the outlook for political conditions and public policy remained uncertain in Europe and the U.S. Meanwhile, the Japanese economy followed a gradual expansionary course on the whole, mainly reflecting a recovery in corporate earnings due to an increase in exports, along with further improvement in personal consumption.
In this environment, for the three months ended June 30, 2017, consolidated net sales totaled ¥198.2 billion, an increase of 13.8% 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 22.0% to ¥19.1 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 39.2% to ¥20.0 billion. Profit attributable to owners of parent increased 17.1% to ¥13.4 billion.
The global economy is expected to remain on a steady growth path on the whole, despite several risks associated with the direction of public policy in various countries. In developed countries, the employment environment has trended firmly in the U.S., and corporate business performance in the euro zone and Japan has also held firm. In emerging countries, surging demand for infrastructure is expected to drive internal demand. In this environment, in order to realize its long-term vision for becoming “An Enterprise that is Essential to Tomorrow’s Society,” as laid out in the new medium-term management plan “ALWAYS EVOLVING” announced in February 2017, the Teijin Group has clarified the actions it must take in the FY 2017 – FY 2019 period. We have positioned FY 2017 as a crucial year that will serve as the first step of our new medium-term management plan. Accordingly, we will press ahead with our growth strategies for enhancing the competitiveness of our existing businesses and our transformation strategies for entering fields outside existing businesses and creating new products and services through business model transformation. By executing these strategies, we will work to strengthen our core earnings power and to create and develop new businesses.
Looking at our consolidated full-term operating results forecasts for FY 2017, we have maintained our previous net sales forecast of ¥855.0 billion. Meanwhile, in line with factors such as the recording of consideration for licensing out an investigational preclinical antibody candidate, we now expect to report operating income of ¥64.0 billion, compared with our previous forecast of ¥62.0 billion, and ordinary income of ¥65.0 billion, compared with our previous forecast of ¥63.0 billion, Profit attributable to owners of parent is forecast at ¥44.0 billion, compared with our previous forecast of ¥42.0 billion.
In order for a company to sustain itself in the long run, having superior profitability goes without saying, but it must also continue to be an enterprise that is essential to society. It is necessary to think about how society is changing and what is being demanded in close proximity with the customer. Furthermore, it is also important to think about what the customer needs from their perspective, and how to respond flexibly to those demands as we change. In April, we launched our new medium-term management plan for 2017-2019, named “ALWAYS EVOLVING.” In line with the aspirations embodied by the plan, all employees will work as one to constantly provide innovative solutions in response to the needs of our customers and society. This will ensure that Teijin evolves into an enterprise that remains successful 10—and even 20 years—into the future and confidently serve future generations.
We look forward to the continued understanding and support of our shareholders and investors.
August 1, 2017
President and CEO