Toyobo 3101
東洋紡
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Osaka Umeda Twin Towers South,
1-13-1 Umeda, Kita-ku, Osaka 530-001, Japan
Summary
Toyobo’s predecessor, Osaka Boseki, was established in 1882 as Japan’s first private spinning company, driven by founder Eiichi Shibusawa’s aspiration to build a spinning business that did not depend on government protection. Having shifted its focus to films and functional polymers, industrial materials, and healthcare (collectively, the “specialty businesses”), the company now plans to achieve earnings growth by investing in high-efficiency and high-growth areas, expanding sales overseas, and developing new products and businesses.
Chemicals
Key dates
2019-04-26
Coverage initiation
Executive summary
Business overview
Toyobo’s predecessor, Osaka Boseki, was established in 1882 as Japan’s first private spinning company, driven by founder Eiichi Shibusawa’s* aspiration to build a spinning business that did not depend on government protection. Toyo Boseki, currently Toyobo, was established in 1914 as the result of a merger between Osaka Boseki and Mie Boseki.
*Eiichi Shibusawa was an iconic Japanese industrialist who helped establish and manage a wide range of companies during the Meiji Period (1868 to 1912) when the country was transitioning into a modern state.
In 1950, Toyobo’s sales were higher than any other Japanese industrial company. By the 1960s, however, as the Japanese cotton spinning industry declined, the company had to scale down the cotton spinning business and make a shift to synthetic fibers. From the 1970s to the 1980s, the company closed several of its textile plants, as it was faced with the oil crises and Japan–US textile negotiations that led to export controls on fabrics including synthetic fibers. From 1990 onward, it suffered the effects of growing imports from emerging countries. By 2000, with the collapse of the bubble economy in the early 1990s followed by recession and deflation, domestic textile demand rapidly shrank and the company could no longer make full use of its own technologies in most areas of the textiles business.
In response to these changing times, from the 1970s to the 2000s Toyobo continued to restructure (downsize the textiles business) and diversify its business portfolio, leveraging the polymerization (bonding of two or more monomers to form a polymer) and modification (structural changes in macromolecules) technologies it had honed in the spinning industry. Sales from the textiles business, which accounted for more than 80% of total sales in the early 1980s, dropped below 60% by the mid-1990s. By the late 2000s, Toyobo completed its restructuring efforts in the textiles business. Having shifted its focus to films and functional materials, and mobility and life science, the company now plans to achieve earnings growth by investing in high-efficiency and high-growth areas, expanding sales overseas, and developing new products and businesses.
Toyobo’s business segments as of FY03/21 were Films and Functional Materials (generating 45.3% of sales and 67.5% of operating profit in FY03/21), Mobility (10.8% and operating loss of JPY1.6bn), Lifestyle and Environmental (32.3% and 14.8%),and Life Science (8.0% and 15.2%).
The Films and Functional Materials segment mainly consists of industrial films, packaging films, and industrial adhesives. COSMOSHINE SRF polarizer protective film for LCDs and COSMOPEEL mold-releasing film for MLCCs are the growth drivers.
The Mobility segment mainly includes engineering plastics and airbag fabrics. In airbag fabrics, in addition to organic growth from an increase in demand for airbags worldwide, Toyobo hopes to expand sales by offering contracted manufacturing of airbag fabrics to customers of PHP Fibers, an equity-method affiliate.
The Lifestyle and Environmental segment handles environmental solutions (reverse osmosis membranes for seawater desalination and VOC treatment equipment), non-woven fabrics, functional fibers (high-performance fibers and lifestyle materials), and textiles.
The Life Science segment consists of the bioproducts business (diagnostic reagents), pharmaceuticals business (contract drug manufacture and research), and the medical business (medical devices and medical membranes).
Most products Toyobo manufactures and sells are materials of end products; thus, earnings are easily impacted by demand levels of these products such as the production volume of LCD panels and automobiles. Earnings are also sensitive to raw material and fuel costs.
Trends and outlook
In FY03/22, the company reported sales of JPY375.7bn (+11.4% YoY), operating profit of JPY28.4bn (+6.7% YoY), recurring profit of JPY23.1bn (+11.5% YoY), and net income attributable to owners of the parent of JPY12.9bn (+206.2% YoY). Sales of COSMOSHINE SRF increased after a new production line started operating, and sales of raw materials and reagents for PCR testing were also robust. On the other hand, packaging films, engineering plastics, airbag fabrics, polyester staple fibers, and spunbond long-filament non-woven fabrics were affected by soaring raw material prices. The company reported extraordinary gain of JPY6.53bn (versus JPY629mn in FY03/21), including JPY6.5bn from the sale of a portion of its holdings of investment securities, and extraordinary loss of JPY14.8bn (versus JPY15.8bn in FY03/21), including impairment loss of JPY9.4bn on business assets and assets to be idled.
The company's FY03/23 forecast calls for sales of JPY410.0bn (+9.1% YoY), operating profit of JPY24.0bn (-15.6% YoY), recurring profit of JPY18.0bn (-22.1% YoY), and net income attributable to owners of the parent of JPY13.0bn (+1.0% YoY). Toyobo will add a new production line (Facility No. 2) for COSMOPEEL mold-releasing film for MLCCs and a new production line (Facility No. 3) for COSMOSHINE SRF, increasing production of both products. However, it believes FY03/23 results will be affected by decreased auto production and higher raw material and fuel costs. It expects net income attributable to owners of the parent to increase YoY due to insurance income of JPY5.6bn related to the Inuyama Plant fire, which it will post as extraordinary gain.
As of December 2021, the company was formulating its next medium-term plan covering FY03/23 to FY03/26. The company aims to post sustainable growth heading toward 2030, and said it wanted to outline its action plan until 2025. It plans to act in four areas to bring about sustainability-oriented management. These are restoring trust; rearranging the business portfolio; preparing for the future; and rebuilding the foundation.
Strengths and weaknesses
Toyobo’s strengths: a deep-rooted flexibility that allows it to overcome challenges in a changing environment and unique and high-margin product line-up leveraging polymerization and modification technologies.
Weaknesses: incidents of fire and quality-related misconduct; low capital efficiency in clothing textiles business; and limited focus on growth areas; (see the “Strengths and weaknesses” section).
Key financial data
Note: Figures may differ from company materials due to differences in rounding methods. Net income for figures prior to FY03/15.
Recent updates
Notice of recording extraordinary gain
Toyobo Co., Ltd., announced the recording of extraordinary gain in Q1 FY03/23.
(See company press release here.)
Since the insurance amount related to the September 2020 Inuyama Plant fire has been determined, the company expects to record in its Q1 FY03/23 financial statements some JPY5.6bn in insurance income as extraordinary gain.
Notice of organizational change, new appointments of directors/executive officers, changes in areas of responsibility
On April 21, 2022, Toyobo Co., Ltd. announced an organizational change and in areas of responsibility.
(See company press release regarding organizational reform here, press release regarding personnel changes here.)
Organizational reform
Overview of organizational reform
Forming a preparatory division for establishment of new company.
Explanation
The preparatory division for establishment of new company will handle the preparatory work related to the establishment of a new joint venture company with Mitsubishi Corporation. As announced in March 2022, the joint venture with will carry out the planning, development, and manufacturing of functional materials.
Schedule
Scheduled to be formed on April 26, 2022.
Planned changes of director/executive officers
New nominee for director: Hiroshi Fukushi (currently director and executive officer at Ajinomoto)
Planned retirements: Yoshio Araki (currently director and executive officer), Masakatsu Shirai (currently director and executive officer)
Effective date: On the day of general shareholders meeting scheduled in late June.
Changes in areas of responsibility for certain directors/executive officers
Chikao Morishige: In addition to current responsibilities, he will also serve as general supervisor of the preparatory division for establishment of new company. No change in current responsibilities as representative director/executive vice president, advisor to president/CEO, general manager of Films and Functional Materials Solutions Division.
Naoki Fujii: In addition to current responsibilities, he will also manage the preparatory division for establishment of new company. No change in status as executive officer but will step away from role as head of special projects for the president (under Corporate Planning Division).
Announcement on inclusion for ESG Index
On April 21, 2022, Toyobo Co., Ltd. announced that it has been selected as a component of the FTSE Blossom Japan Sector Relative Index.
(Click here to view the release.)
The company was selected for inclusion in the FTSE Blossom Japan Sector Relative Index. The index is designed to be sector-neutral, reflecting the performance of Japanese companies that excel in environmental, social, and governance (ESG) responsiveness.
To facilitate the transition to a low-carbon economy, companies with high greenhouse gas emissions are only included if their efforts to improve are evaluated positively using the TPI Management Quality Score.
Development of a recycling technology for KAMISHINE® release film
On April 15, 2022, Toyobo Co., Ltd. announced the development of a recycling technology for KAMISHINE® release film, a polyester-based synthetic paper.
The company has developed a new recycling technology for KAMISHINE® release film, which is part of the KAMISHINE® series of polyester-based synthetic paper made from recycled plastic bottles and used as a separator (label backing) for tack labels.
The company plans to launch the Kamishine® series products using recycled Kamishine® release film in April 2022, with the aim of bringing them to market during FY03/23.
Launch of nerve regeneration induction tubes for the US market
Toyobo Co., Ltd. announced that it has launched a major US marketing initiative for its Nerbridge® conduits for peripheral nerve regeneration.
(Click here for link)
The company will begin marketing its Nerbridge® conduits for peripheral nerve regeneration in the US market during 2022. Through collaboration with Synovis Micro Companies Alliance, Inc., a subsidiary of global medtech leader Baxter International Inc., Toyobo kicked off this marketing campaign at a joint conference held on January 11, 2022 in Carlsbad, California by the American Association for Hand Surgery, the American Society for Peripheral Nerve, and the American Society for Reconstructive Microsurgery.
This product is a medical device used with the aim of facilitating regeneration and reconstructing the functions of peripheral nerves severed or lost due to external injury. It consists of a tube made of polyglycolic acid filled with sponge-shaped collagen, which enables the creation of environments that facilitate nerve growth and the reconstruction of severed sections. The sponge-like structure of collagen has been confirmed as effective in multiplying nerve cells. The nerve conduit products made of synthesized materials that are available on the overseas market have reportedly, in some cases, triggered inflammatory reactions when the materials have decomposed inside the body. However, no such cases have been observed in connection with Nerbridge®. Since Nerbridge® does not require the harvesting of healthy peripheral nerves as it is the case with autografting, it contributes to reducing the patient’s burden and shortening the time needed for surgical treatment.
The company aims to increase its capacity to produce this product to about three times its current level by 2025. At the same time, it will strive to reduce associated costs and expand the product's range of clinical applications.
Announcement of a Comprehensive Collaborative Agreement with Kobe University
Toyobo Co., Ltd. announced the conclusion of a comprehensive collaboration agreement with Kobe University.
(Click here for link)
The company signed an Agreement on Promotion of Comprehensive Industry-Academia Collaboration with Kobe University for the the purpose of development of research and technology and contribution to society.
The two parties aim to acquire new knowledge, develop new products, and create new businesses through conducting joint research mainly in the environmental field, including membrane technology that contributes to carbon neutrality, and in the life science field for improvement of the quality of life (QOL). In addition, they will accelerate the implementation of the results of their research in society through promoting joint research in social sciences and other activities that combine the humanities and sciences. Furthermore, they will consider measures that contribute to the development of human resources, such as personnel exchanges and the establishment of courses for recurrent learning.
Acceleration of development of photoelectric conversion materials for organic optical diodes
On March 28, 2022, Toyobo Co., Ltd. announced its plans to accelerate the development of photoelectric conversion materials for organic optical diodes.
The company plans to accelerate development of a photoelectric conversion material, which converts light energy into electrical energy. In collaboration with the French Alternative Energies and Atomic Energy Commission, a French government research organization, the company succeeded in building a highly sensitive prototype organic optical diode module with world-class dark current reduction levels by using its photoelectric conversion material. The company aims to commercialize the material by 2025 for use in optical sensors for IoT devices which connects all things to the Internet.
Announcement regarding earnings revision, establishment of joint venture with Mitsubishi Corp.
Toyobo Co., Ltd. has announced both the posting of extraordinary income and losses and revisions to its full-year earnings forecast.
Posting of extraordinary income (gain on sale of investment securities)
The company sold portions of both its own investment securities and those held by its subsidiaries with the goal of improving asset efficiency and financial soundness.
Projected recording of extraordinary losses
In FY03/22, the company expects to record JPY9.5bn in impairment losses. Details have been included below.
Toyobo has continuously posted operating losses in its contract manufacturing business due to costs associated with Good Manufacturing Practice (GMP) compliance. Due primarily to these costs, the company expects to record JPY4.5bn in impairment losses moving forward.
In the textile business, Toyobo aims to further improve production efficiency by shutting down production at its Nyuzen Mill and Inami Mill by the end of March 31, 2024 and reducing production in the woven material department of its Shogawa Mill. The company will consider ways to utilize the land and other assets associated with these facilities in the future and will also examine possible uses that are not related to its business operations. Due to these circumstances, the company expects to record JPY2.7bn in impairment losses.
Having reviewed business plans associated with Xenomax - Japan Co., Ltd., a consolidated subsidiary that manufactures and sells highly heat-resistant polyimide film, Toyobo expects to record JPY2.3bn in impairment losses.
Revised full-year forecast for FY03/22
Reasons for revisions
Toyobo has lowered its previous projection for net income attributable to owners of the parent by JPY2.5bn due primarily to the aforementioned extraordinary income and losses that it expects to record moving forward. Based on current circumstances, including soaring raw material and fuel costs and an expected expansion in sales of raw materials and reagents for PCR testing, the company has maintained its previous forecasts regarding net sales, operating profit, and recurring profit (as announced in February 2022).
Additionally, the company announced the conclusion of a joint venture establishment agreement with Mitsubishi Corporation and an absorption-type demerger of its business operations related to functional materials.
Together with Mitsubishi Corporation, Toyobo has decided to establish a joint venture company with the goals of enhancing the competitiveness of its performance materials-related business operations and ensuring that it can continue to provide solutions worldwide. In addition, Toyobo concluded an agreement according to which Mitsubishi Corporation will invest in the new joint venture company, which will inherit a portion of Toyobo's business operations as specified in the same agreement.
Goals of the agreement
This agreement will facilitate joint business expansion between both Toyobo, which possesses the capacity to develop products and technologies, and Mitsubishi Corporation, which, as a general trading company, has expertise regarding marketing and business development related to functional materials and has also developed proficiency in categories such as overseas business development, environmental response, and measures related to digitalization. As a result of this agreement, the new joint venture company will establish a global position in the functional materials industry, manage an extensive portfolio of technologies and products, and improve its ability to respond to industry issues, including challenges related to the environment and digital technology. Toyobo and Mitsubishi Corporation aim to make this new company a business entity that will contribute to improving the overall competitiveness of the entire materials industry in Japan.
Outline of the new joint venture company
Outline of the business operations that will be demerged
The new joint venture company will assume responsibility for the following businesses operations associated with the planning, development, manufacture, and sale of functional materials in Japan and overseas, as well as ancillary or related operations. Details will be determined through discussions between the two parties.
Operating results generated through operations that will be demerged or inherited by the joint venture company
Details regarding the operations that will be demerged shall be determined through discussions between the two parties, but the overall scale of these operations, measured in sales, is estimated to be around JPY100.0bn as of March 2022.
Future outlook
The business entity that will inherit these operations after they are demerged is a wholly owned subsidiary of the company, so this demerger is expected to have only minimal impact on the company's financial results. Following this demerger, the new joint venture company plans to allocate new shares to Mitsubishi Corporation through a third-party allotment.
Launch of joint venture
As of March 2022, no forecasts have been announced regarding projected earnings for the joint venture company to be established between Toyobo and Mitsubishi Corporation. This joint venture company is scheduled to begin operating in January 2023.
Notice of investigation into quality-related issues, and price hikes for packaging films
On March 17, 2022, Toyobo Co., Ltd. released a statement concerning its investigation into product quality-related issues, as detailed below.
(See company press release here.)
Following its announcement in March 2021 that it had found signs of possible misconduct in relation to product quality-related issues, the company proceeded to conduct a survey of its executive level personnel and employees both in Japan and overseas. The investigation was primarily conducted by the company's quality assurance unit which operates separately from its regular business divisions. It also received the assistance and guidance of a special investigatory team from major auditing companies.
Overview of investigation
The company first conducted a multi-language, anonymous survey in February and March 2021 to gather information regarding suspected cases of misconduct related to product quality. The company also conducted multi-language survey between July 2021 and January 2022 which had a response rate of 93.8% with a total of 8,866 respondents.
Starting August 2021, the factual confirmation was conducted with the respondents for all declarations obtained from the name questionnaire. Additional investigations were conducted as necessary, through verification of documents and records interviews with relevant parties.
Results of investigation
The company's investigation did not find any serious cases of misconduct with respect to product quality-related issues. The investigation identified issues to be improved, such failure to conform with agreements with customers, comply with or lack of maintenance of internal rules, and concerns about compliance awareness, etc.
On the same day, the company announced a second round of price hikes for some of its packaging film products, as detailed below.
In addition to the price hike of packaging film products announced on November 10, 2021, the company announced the second round of price hikes.
Reason for price hikes
With the price of crude oil and naphtha still on the rise, the company has seen the cost of raw materials for its packaging film products continue to rise since its previous price hike. Despite efforts to reduce cost through other means, it has come to the conclusion that it can no longer provide a steady supply of certain packaging film products to customers at the prices indicated under its current pricing schedule.
Products effected and size of price hikes (Ream: 500㎡)
Effective date for price hikes
The new pricing schedule will be applied to shipments made on or after April 1, 2022.
Certification of 2022 Health & Productivity Management Outstanding Organization Recognition Program
Toyobo Co., Ltd. announced that it has been selected under the 2022 Certified Health & Productivity Management Outstanding Organization Recognition Program.
In March 2022, the company received recognition in the large enterprise category of the 2022 Certified Health & Productivity Management Outstanding Organization Recognition Program, a project conducted jointly by the Ministry of Economy, Trade and Industry and the Nippon Kenko Kaigi (Japan Health Council).
The term “health and productivity management” refers to the strategic implementation of health management for employees from the perspective of enterprise productivity. The recognition program identifies both large enterprises and SMEs with outstanding health and productivity management based on their approach to regional health issues and the health promotion initiatives proposed by the Nippon Kenko Kaigi.
Notice of investment in a U.S biotechstartup, DMC Biotechnologies Inc.
Toyobo Co., Ltd. announced an investment in DMC Biotechnologies Inc., a U.S. biotech startup.
The company invested in DMC Biotechnologies Inc. (DMC), a U.S. biotech startup, in January 2022.
DMC is a biotech company that develops chemical products through microbe fermentation. Biochemical products are generally associated with low production efficiency, because unnecessary byproducts are generated when producing them. DMC has developed a production process independent of the specific product or scale that is capable of selectively and efficiently producing the target chemical product via its proprietary Dynamic Metabolic ControlTM precision fermentation technology.
Announcement of being selected as a Supplier Engagement Leader by the CDP
On February 25, 2022, Toyobo Co., Ltd. has announced its first-ever selection as a Supplier Engagement Leader by the CDP. The company received this designation (the highest available) through the CDP's Supplier Engagement Rating assessment.
The company was designated a Supplier Engagement Leader (the highest possible rating) for the first time through the Supplier Engagement assessment conducted by the CDP, a British NPO that operates a global disclosure system for environmental information.
Announcement of revision to FY03/22 full year forecast
Toyobo Co., Ltd., announced a revision to its earnings forecast.
Revised FY03/22 forecast
Reasons for revision
The company upwardly revised its previously announced full-year sales projection due to recent circumstances and the revision of selling prices for some products in response to higher raw material prices.
However, despite the expectation of an increase in sales, it left its previously announced full-year profit projections unchanged in light of rising raw material and fuel prices.
Trends and outlook
Quarterly trends and results
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Figures may differ from company materials due to differences in rounding methods.
Full-year FY03/22 results
Sales rose JPY38.3bn (+11.4% YoY) on higher sales in the Film and Functional Materials, Mobility, and Life Science segments.
Operating profit rose JPY1.8bn (+6.7% YoY) on increased profit in the Lifestyle and Environment and Life Science segments.
Sales grew 12.6% YoY in cumulative Q3, but just 11.4% YoY in full-year FY03/22.
Operating profit grew 25.1% in cumulative Q3, but a much smaller 6.7% YoY in full-year FY03/22.
In terms of progress versus the company's full-year FY03/22 forecast, sales hit 101.5%, operating profit 98.0%, recurring profit 96.2%, and net income attributable to owners of the parent 122.5%.
The company forecast for FY03/23 calls for sales of JPY410.0bn (+9.1% YoY), operating profit of JPY24.0bn (-15.6% YoY), recurring profit of JPY18.0bn (-22.1% YoY), and net income attributable to owners of the parent of JPY13.0bn (+1.0% YoY).
Performance was as follows at segments with a relatively large impact on earnings.
Films and Functional Materials segment
The YoY rise in segment sales was driven by favorable performance in the industrial film and functional materials businesses, but profit declined with the rising cost of raw materials.
Industrial film:
Despite sustained stay-at-home demand, packaging film performance remained weak due to a decline in sales driven by the effects from the fire last year and the ongoing impact from soaring raw material prices.
Industrial film sales improved on the operation of a new production line for COSMOSHINE SRF (a polarizer protective film for LCDs). Sales of COSMOPEEL mold-releasing film for MLCCs were robust in 1H after activation of a new production line, but sluggish in 2H due to changes in the market environment.
Functional materials: Sales of Vylon industrial adhesives for electronics application were strong, but were affected by soaring raw material prices. Sales of optical materials for water-developed photosensitive flexographic printing plates grew in China, North America, and Europe.
Mobility segment
Sales recovered somewhat, rising YoY, but the impact of rising raw material prices and a decline in auto production triggered by semiconductor shortages and other factors led to wider segment loss.
In engineering plastics, sales in China, the US, and Thailand were robust, and the company made progress on revising overseas selling prices in response to rising raw material prices. In Japan, selling price revisions failed to catch up, and 2H was affected by the decline in auto production.
Sales of airbag fabrics struggled as selling price revisions failed to keep pace with soaring raw material prices.
Lifestyle and Environment segment
Although demand recovered in some areas as economic activity began returning to normal, leading to higher sales YoY, soaring raw material prices caused profit to fall YoY.
Environmental solutions: Performance in volatile organic compound (VOC) emissions treatment equipment saw some recovery with expansion of the lithium-ion battery market, but was still relatively weak as orders declined due to curbs on overseas sales activities in FY03/21.
Nonwoven fabrics:
Sales of spunbond long-filament non-woven fabrics for construction material use recovered, but the decline in auto production and higher raw material prices limited the gain.
Sales of functional filters for masks decreased.
Functional fiber materials:
In high-performance fibers, sales of "IZANAS" for fishing line and rope applications were strong, while demand for ZYLON for bicycle tires and firefighting uniforms recovered, resulting in higher sales.
Polyester staple fibers and BREATHAIR functional cushion materials were affected by higher raw material prices.
Textiles: The profitability of specialized fabrics for export to the Middle East improved due to a weaker yen. Products for innerwear merited from market recovery, but in-store sales of sportswear were sluggish and sales of uniforms to corporate customers were weak, negatively impacting items for those applications.
Life Science segment
Demand for PCR testing remained strong, leading to higher sales and profit for the segment.
In the biotechnology business, sales expanded in raw materials and reagents for PCR testing, genetic testing equipment, and diagnostic reagents.
Performance was weak in the contract manufacturing of pharmaceuticals business as the company slowed down operations to address the intervention by the FDA.
In the medical materials business, sales were strong in hollow fibers for artificial kidneys and in filters for virus removal.
Full-year company forecast
Note: Figures may differ from company materials due to differences in rounding methods.
Notes: Figures may differ from company materials due to differences in rounding methods.
Notes: Figures may differ from company materials due to differences in rounding methods.
Full-year FY03/23 company forecast
The company's FY03/23 forecast calls for sales of JPY410.0bn (+9.1% YoY), operating profit of JPY24.0bn (-15.6% YoY), recurring profit of JPY18.0bn (-22.1% YoY), and net income attributable to owners of the parent of JPY13.0bn (+1.0% YoY). Toyobo will add a new production line (Facility No. 2) for COSMOPEEL mold-releasing film for MLCCs and a new production line (Facility No. 3) for COSMOSHINE SRF, increasing production of both products. However, it believes FY03/23 results will be affected by decreased auto production and higher raw material and fuel costs. It expects net income attributable to owners of the parent to increase YoY due to insurance income of JPY5.6bn related to the Inuyama Plant fire, which it will post as extraordinary gain.
Medium-term outlook
Approach to next medium-term plan
As of May 2021, Toyobo is formulating its next medium-term plan, which it plans to explain in December 2021. It hopes to explain its action plan through 2025 for achieving sustainable growth by 2030, fleshing out the following four initiatives on the way to realizing both ESG goals and earnings capacity as part of sustainability-oriented management.
The following explanation is about previous medium-term plans and the current plan (FY03/19–FY03/22).
Previous three medium-term plans
Toyobo scaled down its cotton spinning business (the company’s origins) due to the rise of synthetic fibers in the 1950s. The downsizing of its textiles business followed. In the 1970s, amid voluntary controls placed on exports to the US, the company began closing factories and scaling back unprofitable subsidiaries and affiliates. Import volumes from emerging countries grew since the 1990s, and the company spent a decade from the late 1990s restructuring its outmoded textiles business while simultaneously expanding into films and functional materials. Toyobo explains that it finally concluded these restructuring efforts in FY03/09, providing the leeway to prioritize growth in its focus areas (“specialty businesses”) of Films and Functional Polymers, Industrial Materials, and Healthcare.
Since FY03/09, the company has unveiled a total of three medium-term plans, including the current one. Shared Research understands the basic policies of all of these plans, although expressed differently, can be summed up as focused investments in high-efficiency and high-growth areas; downsizing of low-efficiency areas; sales growth by strengthening overseas business; and the development of new products and businesses.
Under the previous two medium-term plans, profits increased but the company failed to reach operating profit and ROA targets. From FY03/11 to FY03/14 (period of the first medium-term plan), profit fell in the Films and Functional Polymers business on the back of production adjustments for LCD panels, which led to production cuts in industrial films and lower selling prices. Under the 2014 medium-term plan (FY03/15 to F03/18), the company sought to achieve profit growth from increased sales in the specialty businesses. However, profit rose only in the Films and Functional Polymers business mainly from higher sales of COSMOSHINE SRF; profit (excluding the impact of segment changes) declined in the Industrial Materials and Healthcare as sales dropped gradually in both of these businesses. Industrial Materials was affected by worsening market conditions for PROCON (PPS fiber for bag filters), and Healthcare by sluggish performance in the pharmaceuticals (contract manufacturing) business. Sales and profit fell in the Textiles and Trading business.
Meanwhile, the company reached the D/E ratio target of under 1.0 during the 2014 plan period as it increased retained earnings and repaid interest-bearing debt, and its financial standing continued to improve. Further, litigation regarding bullet-resistant vests that had been ongoing since 2003 was settled in FY03/18, resolving the company’s litigation risk (for details, see the “Functional materials” section under “Business”).
FY03/11–FY03/14
FY03/15–FY03/18
FY03/19–FY03/22
- Accelerate overseas development
- Restructure portfolio by developing new products
- Expand new products, create new businesses
- Enhance competitiveness of domestic businesses
- Improve asset efficiency
- Strengthen global management function
- Strengthen efforts to develop new products and businesses targeting the mid- to long-term
- Strengthen business base
- ROA: 8.0%
- D/E ratio: 1.0
- ROA: 7.0%
- D/E ratio: Under 1.0
- Loans payable: JPY150bn
- ROE: 8.0% or above
- OPM: 8.0% or above
- D/E ratio: Under 1.0
- CAGR (operating profit): 16.3%
- OP share of specialty businesses: 76.4% (down 8.2pp from FY03/10)
- ROA: 4.1%
- D/E ratio: 1.16
- CAGR (operating profit): 3.3%
- OP share of specialty businesses: 87.0% (up 10.6pp from FY03/14)
- ROA: 4.6%
- D/E ratio: 0.78
- FY03/13: capital investment to expand capacity of industrial film and packaging film manufacturing facilities, and facilities for contract manufacturing of injectable drugs.
- FY03/13: began manufacturing airbag fabrics in China and the US
- Bolstered production facilities for COSMOSHINE SRF (polarizer protective film for LCDs)
- Sold trust beneficiary rights in Toyobo’s headquarters building
- Settlement reached in bullet-resistant vest litigation
Under the 2018 (current) medium-term plan, Toyobo seeks to improve earnings and investment efficiency through higher sales in growth areas—areas for which the company has already laid the groundwork based on the previous two plans (developing production facilities, manufacturing sites, and raw materials procurement channels). The current plan also calls for continued capital investment in the specialty businesses.
2018 medium-term plan (FY03/19 to FY03/22)
Numerical targets of 2018 medium-term plan
In May 2018, Toyobo announced its 2018 medium-term plan spanning FY03/19 through FY03/22. For the final year, the company targets operating profit of JPY30.0bn (+JPY6.1bn from FY03/18; CAGR of 5.8%), and an ROE of 8.0% or higher (ROE was 7.5% in FY03/18). The current plan focuses more on overseas sales than domestic sales. By segment, the company projects sales to increase in Films and Functional Polymers, Industrial Materials, and Healthcare, and to decline in Textiles and Trading, Real Estate, and Other businesses. It aims for a D/E ratio of under 1.0, leaving room to increase leverage against the FY03/18 ratio of 0.81.
Toyobo commented at its Q2 FY03/20 results briefing that it is maintaining its FY03/22 operating profit target of JPY30.0bn
At the 1H FY03/20 results briefing, Toyobo commented that it is maintaining its FY03/22 operating profit target of JPY30.0bn. It expects the airbag business to fall short of the medium-term plan profit target due to the impact of the fire in September 2018, but the Films and Functional Polymers and Healthcare businesses appear likely to provide a positive impact on operating profit of JPY11.0–11.5bn in FY03/22 compared with FY03/19, so it deems the JPY30.0bn target possible even with the burden of R&D spending. Specifically, the Films and Functional Polymers segment’s existing businesses look likely to generate about JPY6.0bn more in profit versus FY03/19. Together with the impact of making Teijin Film Solutions a subsidiary in October 2019, this means the segment could generate about JPY7.5bn more operating profit in total. Toyobo said it also expects Industrial Materials to generate an additional JPY1.0–1.5bn and Healthcare an additional JPY2.5bn or so.
Toyobo commented at its FY03/20 full-year results briefing that it is maintaining its operating profit target of JPY30.0bn, but may achieve it later than expected
At the FY03/20 full-year results briefing, the company said it recognizes that the fire in September 2018, the COVID-19 pandemic, and other factors have significantly impacted the business environment assumptions on which its 2018 medium-term plan was based. For this reason, it plans to maintain the operating profit target of JPY30.0bn included within its 2018 medium-term plan, but realizes that it may not achieve that target until after FY03/22.
The company plans to advance key initiatives by 1) firmly establishing operational systems that are suited to each business (short-term goal), 2) strengthening development of new products and businesses (longer-term goal), and 3) building a stronger business foundation through corporate culture reform and other measures, based on the “Three Part Harmony”.*
* The company explains the Three Part Harmony as the idea of resolving the issues that the company confronts at present, identifying goals for the near future, and acting with confidence and pride as a member of society and the Toyobo Group.
Firmly establishing operational systems suited to each business (short-term)
Toyobo plans to introduce key performance indicators that are suited to each of its businesses with a view to developing growth businesses and accelerating sales. It also intends to inject management resources into the growth businesses.
This applies to growth businesses created around COSMOSHINE SRF polarizer protective film for LCDs and COSMOPEEL mold-releasing film for MLCCs in the Films and Functional Polymers segment as well as airbag fabrics in the Industrial Materials segment. Toyobo aims to expand earnings in these growth businesses, as shown by the following numerical targets by segment.
Films and Functional Polymers
In Films and Functional Polymers, the company targets a JPY26.3bn increase in sales from FY03/18, up 17.7% at a CAGR of 4.2%. The drivers of this sales growth are COSMOSHINE SRF and mold-releasing film for MLCCs in industrial films, and engineering plastics in functional polymers.
COSMOSHINE SRF polarizer protective film for LCDs
Super retarder film*1 COSMOSHINE SRF is used to protect the polarizing plate components in LCDs. The company began selling COSMOSHINE SRF in 2013, and sales of the product were up 65% YoY in both FY03/18 and FY03/19 and up 15% in FY03/20. Under the current medium-term plan, it will seek to further expand sales in its application as a polarizer protective film for LCDs.
Previously, triacetyl cellulose (TAC) film, which does not exhibit birefringence, was typically used to manufacture polarizer protective film for LCDs. However, TAC film was highly permeable to moisture and issues arose when using it in harsh environments. In contrast, polyester film had high moisture resistance, but tended to produce tinting (rainbow patterns*2), and was therefore generally considered unsuitable for LCD application.
Toyobo, however, discovered that an extremely high birefringence eliminated tinting in polyester film. Applying this reverse thinking, it developed COSMOSHINE SRF (super retarder film), a polyester film that can be used as a polarizer protective film. The film also retains the water-resistance and durability of polyethylene terephthalate (PET) and adheres easily to a range of materials.
LCD TVs are advancing toward larger panels and bezel-less*3 configurations, as well as open-cell business models*4, and the company says these shifts have increased the demand for COSMOSHINE SRF, which is highly water resistant, durable, and cost-competitive. With conventional films in open-cell models, components can absorb moisture when exposed to air during shipping, and in a bezel-less configuration screens can absorb moisture at the edges, causing the polarizing plate to arch, peel, or suffer damage. This leads to deterioration of the liquid crystal panel quality, making the product defective. However, COSMOSHINE SRF is non-hygroscopic, so it reduces the risk of absorbing moisture, thereby reducing the ratio of defects. Only Toyobo has successfully commercialized a polarizer protective film made of polyester, and because of the patents and expertise on manufacturing methods, it explains that no other company can follow suit.
The company has been introducing new manufacturing facilities to meet the growing demand for COSMOSHINE SRF. It is targeting COSMOSHINE SRF sales to double from FY03/18 to FY03/22, capturing about 50% of the market. The product was launched in 2013 on a refurbished line at the Inuyama Plant (Aichi Prefecture). Under the previous medium-term plan, the company made an investment of approximately JPY1.0bn (around the end of 2016) to double the number of production lines in the existing facilities of the Tsuruga Research and Production Center (Fukui Prefecture). Under its current medium-term plan, Toyobo invested JPY10.0bn in the Inuyama Plant to add a new production line. The company began mass production through this plan in July 2020, expanding production capacity by about 50%.
Mold-releasing film for MLCCs
Sales of mold-releasing film for MLCCs are expected to increase for use in high-end capacitors, which require an extremely smooth releasing film. Leveraging the growth of the ceramic capacitor market and the strength of the product itself, the company intends to increase its market share and achieve a two-fold growth in sales from FY03/18 to FY03/22. Sales of mold-releasing film for MLCCs were up 90% YoY in FY03/18, up about 30% YoY in FY03/19, up 5% YoY in FY03/20, and up 10% YoY in FY03/21.
Under the current medium-term plan, the company invested JPY3.0bn in the Tsuruga Research and Production Center to bolster manufacturing facilities for this product and commenced full-scale production from Q1 FY03/20. These measures roughly doubled the production capacity.
Engineering plastics
In the functional polymers business, the company plans to grow sales of engineering plastics for automotive applications with a focus on overseas markets. Under the previous medium-term plan, the company leveraged its strength in meticulously meeting customer needs and expanded the number of overseas sales sites to 14 locations. As a result, it successfully doubled sales for automotive applications overseas, increasing the overseas sales ratio of engineering plastics to nearly 50%. Currently, Toyobo’s main customers are domestic automobile manufacturers, but it says it will enhance sales activities targeting overseas automobile manufacturers.
Industrial Materials
In Industrial Materials, the company targets a JPY15.5bn increase in sales from FY03/18, up 24.4% at a CAGR of 5.6%.
For airbag fabrics, during the last medium-term plan in 2014, the company acquired PHP Fibers GmbH, a German yarn manufacturer (a joint purchase by Indorama [80% stake] and Toyobo [20%]).
The global airbag market is expected to grow at an annual rate of about 6% over the medium-term. In addition to rising automobile sales volumes, the increasing prevalence of curtain airbag installations in China will become growth drivers.
In the past, Toyobo has sold fabrics primarily to domestic airbag manufacturers, but it aims to sell fabrics to customers of PHP Fibers that have typically purchased only the yarns. As a global manufacturer handling integrated production from yarns to fabrics, Toyobo plans to offer uniform quality around the world. For this reason, between FY03/18 and FY03/21, the company is pouring a total of JPY10.0bn into its bases in China, Thailand, and the US to increase production capacity.
PHP Fibers installed a production facility for airbag fabrics in its plant in Germany and began manufacturing in 2019. This added a European base to the existing airbag fabric production sites in Japan, Thailand, China, and the US, for a total of five global bases. In addition, in December 2018, PHP Fibers reached an agreement to acquire UTT Technische Textilien GmbH & Co. KG (hereinafter UTT), a major German airbag fabric manufacturer with plants in Germany and Mexico. In this way, Toyobo is expanding its global production and supply systems.
The fire that occurred in the Tsuruga Research and Production Center in September 2018 destroyed the company’s airbag yarn production facility that had an annual output capacity of about 10,000 tons. To regain output capacity, Toyobo decided to build a new plant for airbag yarns in Thailand. The company explains that until the new plant comes online, it must procure about 10,000 tons of airbag yarns from PHP Fibers and other companies, thereby incurring associated procurement costs. In the 2018 medium-term plan, the company initially estimated airbag-related profit growth of JPY2.0bn, but now expects growth in sales volume to fall short of the initial plan.
In October 2020, the company agreed to establish a joint venture for the production of automobile airbag yarns with Bangkok-based Indorama Polyester Industries PCL (IPI), a subsidiary of Indorama Ventures, the world’s largest manufacturer of polyethylene terephthalate (PET) resin. The company plans to build a new airbag yarn production plant on the IPI factory site in Rayong Province, Thailand and launch operations at the plant in 2H 2022. Management intends to launch commercial production in 2023, with shipments commencing following a product certification period of six months to one year.
Summary of new joint company for producing airbag yarns
Summary of new plant
Healthcare
In the Healthcare segment, Toyobo targets a JPY10.3bn increase in sales from FY03/18, up 28.9% at a CAGR of 6.5%. Under the 2018 medium-term plan, it expects sales growth in Healthcare, but positions the segment as a long-term growth business, with profit contribution only anticipated to arrive under the next medium-term plan.
In the bioscience and medical business, the company expects sales of enzymes for diagnostic reagents to increase overseas. It also forecasts sales of diagnostic systems to grow. In August 2018, it launched sales of the GENECUBE® automated gene analysis system and the USCANNER (E) urine sediment analyzer in China. In regard to sales of reagents for use with GENECUBE®, starting in January 2019, Toyobo has a business alliance in place with Kyokuto Pharmaceutical Industrial Co., Ltd. (unlisted), which has a strong channel with hospitals. In April 2018, the company concluded a sales and distribution agreement with Synovis Micro Companies Alliance Inc. for the sale of Nerbridge nerve regeneration conduit in the US.
In the membranes and environment business, the company plans to increase sales of VOC emissions treatment equipment used for recovering solvents.
Strengthening development of new products and businesses for the long term
Toyobo intends to strategically invest capital, conduct R&D, and promote marketing with an aim to developing growth drivers. In the long term, it expects to see earnings contribution from products such as 1) XENOMAX heat-resistant polyimide film (Films and Functional Polymers), 2) PET packaging film TOYOBO ESTER® GS (Films and Functional Polymers), 3) bone regeneration inducing materials Bonarc (Healthcare), and 4) hollow fiber forward osmosis (FO) membranes (Healthcare). The company is also promoting open innovation.
XENOMAX heat-resistant polyimide film
XENOMAX is a heat-resistant polyimide film with dimensional stability equivalent to that of glass and silicon wafers. It has a coefficient of thermal expansion of about 3ppm/°C in environments ranging from room temperature to as high as 500°C, making it usable as a substrate for thin-film transistors (TFT), which require high temperatures for processing. To develop XENOMAX, Toyobo fused a technology developed by Michigan Molecular Institute (a US research facility), for which Toyobo holds an exclusive license, with its own technologies to synthesize heat-resistant polymers and make films.
Polyimide film is a type of polymer film with a robust molecular structure. Thanks to its highly heat resistant and insulating properties, polyimide film has been used as insulating film, mainly for electronic circuit substrates. On the other hand, since the substrates for thin-film transistors (TFT) and other electronic circuits in displays and sensors must be able to withstand high processing temperatures, glass was typically used. Displays and sensors have become lighter, thinner, and more flexible in recent years, leading to greater need for thin, easy-to-bend polymer films on which electronic circuits can be built. Such polymer films must be heat-resistant and dimensionally stable, which means they do not deform, shrink, or stretch when subjected to the same level of heat applied to glass substrates.
In April 2018, Toyobo and Nagase & Co., Ltd., jointly established Xenomax–Japan Co., Ltd. (capital: JPY3.4bn, with Toyobo having a 66.6% stake and Nagase 33.4%) to produce and sell XENOMAX heat-resistant polyimide film. With the founding of Xenomax–Japan, a new production facility was built with an investment of about JPY3.0bn, and the facility began operation in October 2018. Previously, Toyobo had been manufacturing XENOMAX at a pilot production facility within its Corporate Research Center and providing it as a TFT substrate for electronic paper displays. Operation of the Xenomax–Japan plant is helping Toyobo respond to increased demand for TFT substrate for such electronic paper displays. Furthermore, because XENOMAX is thin, light, flexible, and virtually unbreakable, Toyobo aims to develop next-generation uses in flexible organic electro-luminescent displays, various sensors, and micro LEDs. In collaboration with Nagase, Toyobo hopes to swiftly create a JPY10bn business.
PET packaging film TOYOBO ESTER® GS manufactured using aluminum catalyst
Toyobo has developed TOYOBO ESTER® GS, a packaging film made primarily of polyethylene terephthalate (PET) resin that is manufactured using an environmentally friendly aluminum catalyst that does not require heavy metals. The company began shipping samples of TOYOBO ESTER® GS film in mid-January 2019 and moved to commercial production in FY03/20.
PET resin, the main ingredient in TOYOBO ESTER® GS, is produced using TOYOBO GS Catalyst, an aluminum catalyst developed by the company. Because TOYOBO GS Catalyst does not require heavy metals such as antimony that are used in conventional PET resin production, PET resin manufactured using this catalyst is friendlier to the environment upon disposal. In addition, it has superior thermal stability and is not susceptible to deterioration of physical properties or yellowing when melted, which makes it suitable for recycling and reuse.
Bone regeneration inducing materials Bonarc
Bonarc (octacalcium phosphate-collagen composite) is a bone reconstruction material that is embedded into the defective portion of a patient’s bone to induce the new formation of bone tissue. Toyobo and Tohoku University have been conducting joint research into Bonarc since 2013, and are proceeding with development to commercialize the material.
Hollow fiber forward osmosis (FO) membranes head for practical application; adopted at osmotic power plant in Denmark
Toyobo’s hollow fiber forward osmosis (FO) membranes have been adopted at an innovative osmotic power plant in Denmark. The pilot plant is operated by Danish venture firm SaltPower ApS with support from industrial machinery maker Danfoss A/S and engineering firm SEMCO Maritime A/S. The plant began pilot testing in FY03/20, and the companies aim to achieve practical application at an early timing.
FO membrane, in which hollow fibers are densely packed in a cylindrical pressure vessel, is a kind of semipermeable membrane that allows water molecules to pass, but filters out other molecules and ions above a certain size. Toyobo developed hollow fiber semipermeable membranes in the 1970s, applying spinning technology cultivated in its textiles business. Since the early 1980s, Toyobo’s reverse osmosis (RO) membranes using the technology to turn seawater into fresh water have been adopted at desalination facilities mainly in the Middle East.
The osmotic power plant that started operation in Denmark generates electricity by using the difference in salt concentration between fresh water and saline geothermal water pumped up from underground. When saline water comes into contact with fresh water over the FO membrane, which filters out salt content from saline water, water currents are created in the saline water due to the difference in osmotic pressures. These currents turn a turbine to generate electricity. Osmotic power using geothermal water is attracting attention as a novel renewable energy that, unlike solar or wind power, is unaffected by weather or time of day.
Toyobo’s FO membrane has an internal structure in which densely packed hollow fibers enable water to flow efficiently, generating stable water currents at a low pressure loss for turning the turbine. In addition, the membrane is robust enough to withstand the high water pressure needed for efficient osmotic power generation, a property already verified in the company’s RO membranes. The company explained that these features prompted the adoption of its FO membrane at the Danish osmotic power plant.
Toyobo, SaltPower, and the other companies began pilot testing in FY03/20 at the 20kW osmotic power plant. They are then to build a one MW osmotic power plant in Denmark using Toyobo’s FO membranes by 2021, followed by other plants on the same scale in other European countries. Toyobo also plans to market its FO membranes for energy-saving desalination plants and industrial wastewater concentration systems.
Promotion of open innovation
Toyobo believes open innovation with outside institutions is critical in the development of new businesses. One successful example of such initiatives is the aforementioned XENOMAX heat-resistant polyimide film, incorporating a technology developed by Michigan Molecular Institute (a US research facility) for which Toyobo holds an exclusive license.
New business development is also one of the goals of the MIRAI New Business Planning Group, which the company established within its Corporate Planning Department. Since 2016, Toyobo has been part of a venture capital fund with a focus on technology as it seeks to accelerate new business development in the areas of films, polymers, and healthcare. It intends to foster the creation of new businesses with a focus on the startup companies in this fund.
Building a stronger business foundation
Toyobo is prioritizing safety and working to reform its organizational culture focusing on compliance. It also initiated the KAERU Project (kaeru means “to change”) to foster an organizational culture in which the employees can aspire to win close competitions without fearing failure. Additionally, the company has been promoting the reinterpretation of its corporate philosophy, Jun-Ri-Soku-Yu (meaning “adhering to reason leads to prosperity”), to help change their perception of growth.
KAERU Project
Launched in April 2018, this project covers a range of activities aimed at reforming systems and work style, creating an improved corporate climate and culture, and strengthening human resources.
Reinterpreting Jun-Ri-Soku-Yu and fostering a positive attitude toward business growth
Toyobo’s corporate philosophy, Jun-Ri-Soku-Yu, has been interpreted in a passive way, to mean “refraining from taking actions that are incorrect.” Toyobo explains that its history of restructuring the textiles business from the late 1970s to the late 2000s led to a culture of shying away from risks. As such, the company thinks employees have tended to be overly cautious about investing in new businesses.
However, Toyobo founder Eiichi Shibusawa is thought to have interpreted the phrase to include the sense of “proactively taking the right action.” Toyobo is therefore reinterpreting it to also mean “aiming to contribute to society by striking a balance between accumulating company profit and resolving social issues.”
Toyobo’s financial standing has improved by FY03/18, following the restructuring of its textiles business and the implementation of the previous two medium-term plans. The risks related to bullet-resistant vest litigation (ongoing since 2003) have also been mitigated. Under the current medium-term plan, the company says it aims to expand future revenue opportunities by changing the employees’ perception of growth. It plans to invest actively in facilities and product development to accelerate growth in existing focus areas while creating new businesses.
Business
Business segments
The company’s business segments comprise Films and Functional Materials (generated 45.3% of sales and 67.5% of operating profit in FY03/21), Mobility (10.8% and operating loss of JPY1.6bn), Lifestyle and Environmental (32.3% and 14.8%), Life Science (8.0% and 15.2%), and Real Estate (1.2% and 5.2%).
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The AP business, formerly included in the Films and Functional Polymers segment, was moved to the Industrial Materials segment in FY03/16. Also, certain consolidated subsidiaries included in the Others segment were moved to the Textiles and Trading segment, and certain consolidated subsidiaries formerly included in the Textiles segment were moved to the Films and Functional Polymers, Healthcare, Textiles and Trading, and Real Estate and Other businesses segments, respectively.
Note: The AC business, formerly included in the Industrial Materials segment, was moved to the Healthcare segment in FY03/18.
In Q1 FY03/21 the company made changes to its organizational structure and reclassified its reporting segments to Films and Functional Materials, Mobility, Lifestyle and Environmental, and Life Science.
Films and Functional Materials includes the businesses from the old Films and Functional Polymers segment (industrial films, packaging films, industrial adhesives, photo-functional materials, and fine chemicals), except for engineering plastics.
Mobility includes engineering plastics from the old Films and Functional Polymers segment and functional fibers (airbag fabrics) from the old Industrial Materials segment.
Lifestyle and Environmental includes functional materials (high-performance fibers, lifestyle and industrial materials, and non-woven fabrics) from the old Industrial Materials segment, membranes and environmental products (water treatment membranes and activated carbon) from the old Healthcare segment, and textiles business from the old Textiles and Trading segment.
Life Science includes bioproducts, pharmaceuticals, medical devices, and medical membranes from the old Healthcare segment.
Packaging films
Engineering plastics
Industrial adhesives
Photo-functional materials
Fine chemicals
Packaging films
Industrial adhesives
Photo-functional materials
Fine chemicals
High-performance fibers
Lifestyle and industrial materials
Airbag fabrics
Membranes and environment (medical membranes, water treatment membranes, activated carbon [AC] fibers)
Non-woven fabrics
Fibers and functional materials
Textiles
Pharmaceuticals
Medical devices
Medical membranes
Films and Functional Materials segment
45.3% of total sales and 67.5% of operating profit (FY03/21)
The Films and Functional Materials segment—constituting Toyobo’s core businesses—accounted for 45.3% of total sales and 67.5% of operating profit in FY03/21. OPM was 13.1% and segment ROA was 12.3%, indicating higher profit margin and asset efficiency than the all segment averages of 7.9% and 5.4%, respectively. Growth drivers are products such as polarizer protective film for LCD and mold-releasing film for multilayer ceramic capacitors (MLCCs).
This segment deals in packaging films, industrial films, industrial adhesives, and photo-functional materials.
The films business began in 1961 when polypropylene fiber technology was introduced to the company. Toyobo developed film from polypropylene fiber and launched production of cast polypropylene films and biaxially oriented polypropylene films, mainly for use in packaging. The company began production of biaxially oriented polyester films in 1971, and biaxially oriented nylon films in 1976, establishing its position as a comprehensive manufacturer of packaging films.
In the 1980s, Toyobo’s films business extended into industrial films, expanding mainly in the field of optical films from the late 1990s. In particular, with the adoption of COSMOSHINE as an LCD material offering high transparency and easy adhesion, the sales volumes of industrial films quadrupled between the late 1990s and late 2000s.
The company started the films business from basic research on film production equipment and moved on to the design and development of resin raw materials, solving problems it faced along the way by initiating creative solutions internally. According to the company, this approach has led to Toyobo’s strength in the films business, which is its ability to appropriately and promptly respond to product quality issues. Also, by having engineers accompany the salesforce on customer visits, the company is able to gain a better grasp of market needs, which are then conveyed to the research team so that technologies can be upgraded for greater added value.
The functional materials business was established through the application of synthetic fiber polymerization technologies and the extended application of synthetic resins, from fibers to molded products. The company began the business in the early 1970s with the sales of nylon resin buttons, sash parts, textile bobbins, and other products.
Industrial films (Films and Functional Materials segment)
The industrial films business includes polarizer protective film for LCDs and mold-releasing film for multilayer ceramic capacitors (MLCCs).
Polarizer protective film for LCDs—COSMOSHINE SRF
COSMOSHINE SRF (Super Retarder Film) is used to protect polarizers in LCDs. A single LCD typically comprises two polarizing plates, which are polarizers sandwiched by protective films. The polarizing plate only transmits light that vibrates in a certain direction. The polarizer itself is made of a processed polyvinyl alcohol (PVA) film dyed in iodine, and is therefore thin and weak. Strength is added by sandwiching the polarizer between two layers of protective film.