Top Management Message

To Our Shareholders and Investors

Global economic conditions in FY2017, ended March 31, 2018, remained on a recovery path as a whole, despite heightened geopolitical risks concerning North Korea. In the U.S., stock prices reached all-time highs, driven partly by strong corporate earnings. Europe too saw an increase in exports as overseas business conditions turned upward. The Japanese economy continued to stage a modest recovery, mainly due to an upturn in capital investment atop improved corporate earnings, supported by firm overseas demand and rising internal demand.

In this environment, for FY 2017, looking at EBITDA and ROE, our two key performance indicators, EBITDA increased to ¥115.5 billion, while ROE was 12.5%. This was due partly to higher sales in each business, along with the impact of recording consideration for the licensing out of an investigational antibody candidate targeting a possible new treatment of Alzheimer's disease. Consolidated net sales totaled ¥835.0 billion, an increase of 12.6% year on year. This increase was primarily due to the impact of U.S.-based Continental Structural Plastics Holdings Corporation joining the composites business following its acquisition in January 2017. Operating income rose 23.6% to ¥69.8 billion and ordinary income increased 21.3% to ¥67.8 billion. Profit attributable to owners of parent declined 9.1% to ¥45.6 billion, due partly to one-time factors such as a decrease in tax expense in FY2016. Earnings per share declined ¥23.65 to ¥231.26.

Looking at the global economy in FY2018, business conditions are forecast to expand steadily in the U.S., Europe and China, despite heightened geopolitical risks and concerns about stronger protectionism in the U.S. The Japanese economy is forecast to remain on a steady growth trajectory, underpinned partly by a projected improvement in corporate earnings against the backdrop of solid internal and external demand.

Looking at our full-term operating results forecasts for fiscal 2018, in light of the abovementioned initiatives, we are forecasting ROE of 11.4%, EBITDA of ¥118 billion, net sales of ¥880 billion, operating income of ¥70 billion, ordinary income of ¥71 billion and profit attributable to owners of parent of ¥47 billion.

We have entered the second year of our Medium-Term Management Plan for FY2017-2019, which constitutes an action plan for realizing our long-term vision. In FY2017, we achieved our ROE target of 10% or more, while putting our EBITDA target of ¥120.0 billion for FY2019 well within reach. 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.

2018 is a landmark year for the Teijin Group as it marks our founding centennial. For enterprises to remain in business for the long term, they must not only deliver superior business performance, but they must also, above all, remain essential to society. The Teijin Group aims to be "An Enterprise that Supports the Society of the Future"–one that creates new value. 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.

May 9, 2018

Jun Suzuki

Jun Suzuki
President and CEO