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 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.
In FY03/21, sales were JPY337.4bn (-0.6% YoY), operating profit was JPY26.7bn (+16.9% YoY), recurring profit was JPY20.7bn (+14.8% YoY) and net income attributable to owners of the parent was JPY4.2bn (-69.5% YoY).
The company announced revisions to its full-year FY03/22 forecasts in August 2021, with the revised forecast calling for sales of JPY365.0bn (+8.2% YoY), operating profit of JPY29.0bn (+8.8% YoY), recurring profit of JPY24.0bn (+15.9% YoY), and net income attributable to owners of the parent of JPY13.0bn (+209.4% YoY). In making its revisions, the company lifted its forecast for sales by JPY5.0bn, operating profit by JPY2.0bn, recurring profit by JPY2.0bn, and net income by JP1.5bn. The revisions were made to reflect favorable performance in industrial films and PCR testing reagents.
As of May 2021, the company was formulating its next medium-term plan, and plans to hold a briefing in December 2021. 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.
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).
|Gross profit margin||21.4%||21.0%||21.9%||21.9%||22.9%||24.1%||24.5%||24.1%||24.9%||26.8%|
|Operating profit margin||5.2%||5.0%||6.0%||5.9%||6.6%||7.1%||7.2%||6.5%||6.7%||7.9%||7.9%|
|Recurring profit margin||4.5%||4.6%||5.2%||4.6%||5.9%||6.3%||6.2%||5.3%||5.3%||6.1%||6.6%|
|Net income attributable to owners of the parent||4,587||7,639||8,154||8,117||10,150||9,444||13,044||-603||13,774||4,202||13,000|
|Per-share data (split-adjusted; JPY)|
|Shares issued (year-end; '000)||89,049||89,049||890,488||890,488||890,488||890,488||89,049||89,049||89,049||89,049|
|EPS (fully diluted)||-||-||-||-||-||-||-||-||-||-|
|Dividend per share (JPY)||35.0||35.0||35.0||35.0||35.0||35.0||40.0||40.0||40.0||40.0||40.0|
|Book value per share (JPY)||1,473||1,554||1,603||1,780||1,768||1,890||2,034||1,989||2,003||2,090|
|Balance sheet (JPYmn)|
|Cash and cash equivalents||9,608||26,600||19,330||20,550||20,258||32,329||26,006||22,318||25,247||34,695|
|Total current assets||177,735||184,739||184,630||196,607||186,633||196,293||186,571||193,125||206,416||212,963|
|Tangible fixed assets||199,789||202,273||209,619||209,289||208,937||207,906||203,451||208,476||231,478||224,640|
|Investments and other assets||58,710||59,191||58,977||56,602||45,157||42,406||51,489||55,792||46,339||48,911|
|Total current liabilities||162,850||164,831||160,582||146,250||130,690||136,865||125,110||131,768||122,321||131,444|
|Total fixed liabilities||127,267||127,093||150,558||158,472||153,795||143,016||135,870||148,053||183,916||171,109|
|Total interest-bearing debt||149,397||155,304||167,914||176,043||164,374||168,345||144,832||163,324||171,388||182,920|
|Cash flow statement (JPYmn)|
|Cash flows from operating activities||14,192||30,354||23,927||20,107||32,337||26,872||22,353||7,838||44,255||35,028|
|Cash flows from investing activities||-15,061||-11,294||-22,218||-20,089||-10,636||-14,132||-1,174||-24,286||-39,216||-31,678|
|Cash flows from financing activities||-11,531||-2,636||-10,839||797||-21,384||-324||-27,831||12,608||-1,805||5,340|
Toyobo Co., Ltd announced the terms of its social bond issue.
The company has decided on issuance terms for its 43rd unsecured straight bond (with inter-bond pari passu clause) (social bond).
|Name of bond||43rd unsecured straight bond (with inter-bond pari passu clause) (social bond)|
|Interest rate||0.250% per annum|
|Payment date||December 7, 2021|
|Maturity date||December 7, 2028|
On November 30, 2021, Toyobo Co., Ltd. announced a planned upgrade to its thermal power plant at Iwakuni Production Center.
The company will upgrade its thermal power plant at Iwakuni Production Center (Yamaguchi Prefecture), shifting from the use of coals to liquified natural gas (LNG) and RPF (solid fuel mainly made from used paper and waste plastics) as the energy sources. Construction will begin in November 2021, with the upgraded plant scheduled to commence operations in October 2023. With this change in the energy sources, the company will be able to reduce greenhouse gas emissions by about 80,000 tons per year.
A production complex comprising a polymers plant which commenced operations in 1937, a functional materials plant, and a membrane plant. The center manufactures high-performance products in a wide range of fields under the common theme of "environment," a top priority for the company's corporate management, including resins for various industrial use, lifestyle materials such as fibers for sanitation products and industrial materials including those for use in automobiles, and functional membranes for medical and seawater desalination applications.
Toyobo Co., Ltd. announced price revisions for the PBO fiber ZYLON®.
Against the backdrop of the recent price rises in crude oil and naphtha, prices of raw materials for PBO fiber continue to increase. In addition, fuel costs, electricity costs, distribution costs, facility maintenance costs, and other overhead costs have increased, which is pushing up manufacturing costs for the company. The company has taken efforts to reduce costs, but decided to implement price revisions on the basis that it is difficult to maintain a stable supply of products to customers under the current price structure.
On November 11, 2021, Toyobo Co., Ltd. announced price revisions for yarns and fabrics for use in airbags
The company revised prices for yarns and fabrics for use in automobile airbags as follows.
Background to price revisions
The demand for Nylon 66, the main material for yarns and fabrics for automobile airbags, is growing for use in industrial fibers and automobile parts. However, since plants that manufacture Nylon 66 resin and its raw materials suspended operations due to severe cold weather in North America in February 2021, Nylon 66 has been in short supply. Further, raw material prices of Nylon 66 have risen to their highest levels due to increases in crude oil and natural gas prices.
Production volume of silicon metal—a raw material for silicone elastomers used as a coating agent for airbag fabrics—due to power shortages caused by a drought in China, a major production region for the material. At the same time, demand for silicon metal is also rising for non-airbag applications, including for use in semiconductors and solar panels, pushing up its price to record-high levels. As a result of these factors, silicone elastomers are in tight supply, and their prices are increasing.
Further exacerbating the matter are an increase in manufacturing costs of yarns and fabrics caused by a surge in crude oil and natural gas prices; soaring labor costs due to the economic recovery from the COVID-19 crisis, especially in the US and China; and a rise in distribution costs mainly in container shipping.
Under these circumstances, despite its efforts to cut costs, the company has concluded that at the current price range it would be difficult to stably supply products to customers, make capital investments to respond to future increases in demand, and develop environment-friendly products that are increasingly sought after by society.
Products subject to price revisions and the degree of revisions
The company will raise the price of yarns and fabrics for automobile airbags by 15%–20% of their current prices (15%–30% increase for products for the Chinese market)
Timing of price revisions
Price revisions will come into effect starting with products scheduled to be shipped on December 1, 2021.
On November 10, 2021, Toyobo Co., Ltd., announced additional price revisions for its packaging film products.
Following price revisions announced on August 5, 2021, for some of its packaging film products, the company will implement additional price revisions.
With crude oil and naphtha prices trending higher, prices on the raw materials used in packaging film products have continued to rise. Production costs have also increased as a result of higher fuel and electricity costs, distribution costs, and facility maintenance costs. Given that raw material prices have continued to soar since the previous price revisions were enacted, the company determined that it would struggle to provide a stable supply of products to its customers under its current pricing structure.
Products subject to pricing revisions and scope of those revisions
Timing of revisions
The revisions will take effect on shipments from November 21,
Toyobo Co., Ltd announced earnings results for 1H FY03/22; see the results section for details.
On the same day, the company announced the issuance of a social bond.
|Name of bond||43rd unsecured straight bond (with inter-bond pari passu clause) (social bond)|
|Term||Seven years (planned)|
|Determination of issuance terms||Early December (planned)|
|Use of proceeds and conformity with the SDGs||To cover expenditure associated with the production of medical membranes||3. Good health and well-being|
12. Responsible consumption and production
|To cover expenditure associated with the production of reagents||3. Good health and well-being|
On the same day, the company announced the establishment of
Toyobo decided to integrate some of its group companies and reorganize its textiles business with a view to consolidating its resources in that area. To this end, it will be establishing a new company, Toyobo Sen-i Co., Ltd., in April 2022.
Effective date: April 1, 2022
Integration of group companies and business reorganization:
Separate the fibers and textiles business from wholly owned subsidiary Toyobo STC Co., Ltd. and integrate it into Toyobo STC's wholly owned subsidiary, Toyobo Uni Products Co., Ltd.
With the business integration, form Toyobo Sen-i Co., Ltd. as a new entity.
Make Toyobo's wholly owned subsidiary, Toyo Knit Co., Ltd., a direct subsidiary of Toyobo Sen-i.
Upon separating the fibers and textiles business, Toyobo STC continues to exist as Toyobo's trading arm handling advanced functional materials.
Toyobo Co., Ltd.
The company decided to construct a plant dedicated to the end-to-end production of cellulose triacetate (CTA) dialyzers (artificial kidneys) together with Nipro. The new plant will be located in the premises of Nipro's Odate Factory. In line with the rise in dialyzer demand expected globally, the two companies intend to ramp up production and aim to begin operation of the new plant in July 2024.
Dialyzers are a medical device for patients with chronic renal failure resulting from kidney function loss, and are used to purify blood and remove toxins such as body waste during dialysis. Toyobo began manufacturing hollow fiber membranes for CTA dialyzers in the early 1980s.
Toyobo currently manufactures hollow fiber membranes at its Iwakuni Production Center. According to the company, its hollow fiber membranes made of CTA excel in biocompatibility and the ability to remove substances, and are therefore highly suitable for removing body wastes from blood. The membrane production technology of Toyobo has made it possible to form micropores in hollow fibers, which enables thorough filtration. To date, CTA dialyzers using the company's hollow fiber membranes have been in wide use globally.
At the new plant, Toyobo will be in charge of the front-end process of making hollow membranes from raw materials; Nipro will process the components into finished products in the back-end process. The two companies aim to improve production efficiency by building an integrated production system that allows for smooth manufacturing flow across the parties.
The number of dialysis patients is projected to increase globally at a rate of 7% per year, and the demand for dialyzers is expected to rise in tandem. The company plans to work closely with Nipro to help bring peace of mind to the patients and improve their quality of life.
Toyobo Co., Ltd. announced that it would integrate production facilities at the Toyoma Center.
The company decided on a policy of halting production at the Inami and Nyuzen plants in Toyama Prefecture, integrating the production functions of the two plants with those of the Shogawa Plant (also in Toyoma Prefecture), and made a proposal to the labor union.
At the Toyama Center, spinning processes are based at the Inami and Nyuzen plants, while the Shogawa Plant undertakes weaving and processing. The company has been producing high quality, high performance textile products for many years based on this structure. However, the company decided it needed to integrate facilities to improve production efficiency and focus management resources on development, human resource training, safety, and disaster prevention amid changes in textile market conditions.
The company plans to halt production at the Inami and Nyuzen plants by March 31, 2024, and scale back the weaving operation at the Shogawa Plant. After relocating the spinning process from the Inami and Nyuzen plants to the Shogawa Plant, the new production and development system at the Shogawa Plant will continue domestic spinning, weaving, and processing of textiles with some assistance from the Malaysian facility Toyobo Textile (Malaysia) Sdn. Bhd.
Employees working at the Inami and Nyuzen plants will keep their jobs, mainly by transferring them to the Shogawa Plant.
Toyobo Co., Ltd. announced that it would install new production equipment at its Utsunomiya Plant in order to increase production capability for MLCCs (multilayer ceramic capacitors).
The company decided to go ahead with new installation of production equipment for multilayer ceramic capacitors (MLCCs) at its Utsunomiya Plant (Utsunomiya City, Tochigi Prefecture). Start of installation is scheduled for summer 2022, and start of operations is slated for autumn 2024. The company intends to increase production capacity to meet forecast increased demand for MLCCs.
MLCCs are a general purpose electronic device used to adjust electric current or temporarily store electricity and are used on a variety of electronic circuits. Toyobo sees the market growing at over 7% annually on continued demand growth from increasing data transmission speeds, progress in digital transformation initiatives, and the increase of on-board electronic devices and self-driving cars in the automotive sector.
The Utsunomiya Plant, the main production facility of Toyobo Film Solutions Limited (TFS) which was merged in an absorption type merger by Toyobo Co., Ltd. in April 2021, produces highly functional films including mold resistant films for MLCCs, and highly durable and highly heat-resistant PEN (polyethylene naphthalate) films. The new production equipment will allow expansion of the company's highly functional mold release films by combining the inline coating technologies developed in-house by TFS and Toyobo's clean environment offline coating technologies.
Inline coating: Process that forms a coating layer during the membrane production process
Offline coating: Process that employs a separate coating process on the original membrane
Overview of new production equipment
Toyobo Co., Ltd. announced that it was awarded the top spot in a comprehensive ranking of patented high-polymer film-related technologies.
The company claimed the top position in a comprehensive ranking of patented high-polymer film-related technologies announced by Patent Result Co., Ltd. in September 2021.
Patent Results determines this ranking based on a patent score that it calculates by measuring the level of attention received by patented high-polymer film-related technologies that have been made public by the Japan Patent Office. Patent Results determined that Toyobo’s polyester resin and biaxially drawn polyester film received particularly high amounts of attention. The former boasts superior long-term thermal stability and moldability, while the latter is known for its excellent tearing straightness, moisture-proof properties, pinhole resistance, and anti-puncturing characteristics while maintaining its transparent characteristics and is used primarily in retort pouch packaging and wrapping material for items with high water content.
TOYOBO CO., LTD. has announced additional price increases for its packaging film products.
Following the price increases announced on February 25, 2021 for some of its packaging film products, the company has decided to implement new, additional price changes.
Against the backdrop of the recent price rises in crude oil and naphtha, prices of raw materials for packaging film products continue to rise steeply. In addition, fuel costs, electricity costs, distribution costs, facility maintenance costs, and other overhead costs have increased, which is pushing up manufacturing costs. On the other hand, product inventory levels have been tight due to strong demand in the market. The company has looked to reduce costs, but with raw material prices continuing to rise sharply since the last price change was announced, it has decided to implement additional price changes, on the basis that it is difficult to maintain a stable supply of products to customers under the current price structure.
For shipments from October 1, 2021.
Toyobo Co., Ltd. announced that it released its integrated report, Toyobo Report 2021.
The company updated its integrated report, Toyobo Report 2021, on its website. Based on the framework provided by the International Integrated Reporting Council (IIRC), Toyobo outlined its value creation process in the updated report for FY03/22. The company wrote about initiatives aimed at strengthening safety, security, and disaster prevention measures as well as quality management to restore trust. It also sought to improve the report by adding more details on its measures to reinforce HR, such as HR system reforms and promotion of women's advancement.
|(JPYmn)||Q1||Q1–Q2||Q1–Q3||Q1–Q4||Q1||Q1–Q2||Q1–Q3||Q1–Q4||% of Est.||FY Est.|
|Gross profit margin||26.6%||26.2%||26.7%||26.8%||27.5%||26.9%|
|Operating profit margin||5.8%||6.6%||7.5%||7.9%||9.8%||9.3%||7.9%|
|Recurring profit margin||3.7%||3.7%||5.1%||6.1%||7.9%||7.2%||6.6%|
|Net income attributable to owners of parent||1,764||2,642||25||4,202||6,170||9,705||74.7%||13,000|
|Gross profit margin||26.6%||25.9%||27.5%||27.0%||27.5%||26.2%|
|Operating profit margin||5.8%||7.4%||9.1%||8.9%||9.8%||8.8%|
|Recurring profit margin||3.7%||3.8%||7.6%||8.8%||7.9%||6.5%|
|Net income attributable to owners of parent||1,764||878||-2,617||4,177||6,170||3,535|
|Operating profit (JPYmn)||4,359||10,420||18,305||26,657||9,244||17,112||29,000|
|Change in operating profit (JPYmn)||-872||-694||2,337||3,863||4,885||6,692||2,343|
|Raw material and fuel prices||1,500||3,400||5,100||5,600||-2,100||-5,100||-10,600|
|USD/JPN exchange rate||108||107||106||106||110||110||112|
|Domestic naphtha price (JPY'000/kl)||26||28||29||31||48||51||57|
|Operating profit (JPYmn)||4,359||6,061||7,885||8,352||9,244||7,868|
|Change in operating profit (JPYmn)||-872||178||3,031||1,526||4,885||1,807|
|Raw material and fuel prices||1,500||1,900||1,700||500||-2,100||-3,000|
|(JPYmn)||Q1||Q1–Q2||Q1–Q3||Q1–Q4||Q1||Q1–Q2||Q1–Q3||Q1–Q4||% of Est.||FY Est.|
|Films and Functional Materials||36,308||73,779||113,020||152,842||45,734||85,917||50.5%||170,000|
|Lifestyle and Environmental||22,922||50,190||77,273||109,148||27,750||54,706||49.3%||111,000|
|Operating profit margin||5.8%||6.6%||7.5%||7.9%||9.8%||9.3%||7.9%|
|Films and Functional Materials||3,914||8,715||14,337||20,028||6,808||12,238||58.3%||21,000|
|Operating profit margin||10.8%||11.8%||12.7%||13.1%||14.9%||14.2%||12.4%|
|Operating profit margin||-||-||-||-||-||-||-|
|Lifestyle and Environmental||340||1,771||3,009||4,376||1,489||1,872||50.6%||3,700|
|Operating profit margin||1.5%||3.5%||3.9%||4.0%||5.4%||3.4%||3.3%|
|Operating profit margin||15.7%||12.9%||16.4%||16.7%||24.9%||28.2%||21.5%|
|Operating profit margin||39.2%||38.4%||40.7%||39.1%||32.6%||38.8%|
|Films and Functional Materials||36,308||37,471||39,241||39,822||45,734||40,183|
|Lifestyle and Environmental||22,922||27,268||27,083||31,875||27,750||26,956|
|Operating profit margin||5.8%||7.4%||9.1%||8.9%||9.8%||8.8%|
|Films and Functional Materials||3,914||4,801||5,622||5,691||6,808||5,430|
|Operating profit margin||10.8%||12.8%||14.3%||14.3%||14.9%||13.5%|
|Operating profit margin||-||-||-||0.2%||-||-|
|Lifestyle and Environmental||340||1,431||1,238||1,367||1,489||383|
|Operating profit margin||1.5%||5.2%||4.6%||4.3%||5.4%||1.4%|
|Operating profit margin||15.7%||10.0%||22.8%||17.2%||24.9%||31.1%|
|Operating profit margin||39.2%||37.5%||44.8%||34.1%||32.6%||45.1%|
Operating profit improved JPY6.7bn YoY. Factors lifting the operating profit included a JPY2.0bn boost from selling price hikes and an increase in sales volume by JPY10.9bn. Meanwhile, higher raw material and fuel costs had a downward impact of JPY5.1bn, and other factors, including depreciation and safety and disaster prevention-related investment, weighed on the operating profit by JPY1.1bn. The company reported an average exchange rate of JPY110/USD (versus JPY107/USD in1H FY03/21) and an average domestic price for naphtha of JPY51,000/kl (versus JPY28,000/kl in 1H FY03/21).
In the Films and Functional Materials segment, sales of COSMOSHINE SRF (a polarizer protective film for LCDs) and COSMOPEEL (a mold-releasing film for multilayer ceramic capacitors) increased with the operation of new production lines, as the market continued to perform strongly.
In the Mobility segment, sales were strong in engineering plastics and airbag fabrics thanks to the recovery of global demand for automobiles.
In the Lifestyle and Environment segment, demand for high-performance fibers showed signs of recovery at various regions abroad, while high raw material prices impacted performance in spunbond long-filament and polyester staple fibers.
In the Life Science segment, firm demand for PCR tests contributed to improved sales in PCR testing materials and reagents.
The performance by individual segments is detailed below.
The YoY rise in segment sales and earnings was driven by favorable performance in the industrial film and functional materials businesses.
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 new production lines for COSMOSHINE SRF (a polarizer protective film for LCDs) COSMOPEEL (a mold-releasing film for multilayer ceramic capacitors).
Functional materials: sales of Vylon industrial adhesives for electronics application were strong. Sales to China and Europe stood firm in the optical materials business, which handles water-developed photosensitive flexographic printing plates.
Sales improved and losses narrowed on firm sales in engineering plastics and airbag fabrics as global demand for automobiles recovered.
Sales of engineering plastics were strong in Japan and overseas amid higher raw material prices and concerns over semiconductor supplies.
Sales of airbag fabrics recovered, but remained weak as higher raw material prices narrowed the spread between raw material costs and selling prices.
Despite the impact from higher raw material prices on polyester staple fibers and spunbond long-filament non-woven fabrics, sales and profit improved as demand rose for high-performance fibers, recovering from the downturn brought on by the COVID-19 pandemic.
Environmental solutions: performance in volatile organic compound (VOC) emissions treatment equipment was weak as orders declined last year due to curbs on sales activities enacted in the face of the COVID-19 pandemic.
Sales of spunbond long-filament non-woven fabrics for construction material and automotive use were firm, but higher raw material prices limited the gain.
Sales of functional filters decreased for masks, but were strong for air purifiers and automobile-related products
Functional fiber materials:
In high-performance fibers, sales of "IZANAS" for fishing line and rope applications were strong, while sales of Tsunooga, used in cut resistant gloves, were strong amid a global recovery in factory work.
Performance in polyester staple fibers was impacted by higher raw material prices, and in-store sales of the BREATHAIR functional cushion materials were weak.
Textiles: Specialized fabrics for the Middle East and products for innerwear merited from market recovery, but
sales did not recover in items for sports and uniform applications where the market remained sluggish.
With the COVID-19 cases still abound, sales and profit in the segment expanded on an increase in demand for PCR testing-related products.
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.
|FY03/20||FY03/21||FY03/22||FY03/22||Vs. Prev. Est.||Vs. Prev. Est.|
|(JPYmn)||FY Act.||FY Act.||Rev. FY Est.||Prev. Est.||Change||Rate of change|
|Cost of goods sold||255,140||247,032|
|Gross profit margin||24.9%||26.8%|
|Operating profit margin||6.7%||7.9%||7.9%||7.5%|
|Recurring profit margin||5.3%||6.1%||6.6%||6.1%|
|Net income attributable to owners of the parent||13,774||4,202||13,000||11,500||1,500||13.0%|
|FY03/20||FY03/21||FY03/22||FY03/22||Vs. Prev. Est.||Vs. Prev. Est.|
|(JPYmn)||FY Act.||FY Act.||Rev. FY Est.||Prev. Est.||Change||Rate of change|
|Films and Functional Materials||127,127||152,842||170,000||168,000||2,000||1.2%|
|Lifestyle and Environmental||128,409||109,148||111,000||112,000||-1,000||-0.9%|
|Real Estate, other||14,629||11,757||11,000||12,000||-1,000||-8.3%|
|Operating profit margin||6.7%||7.9%||7.9%||7.5%|
|Films and Functional Materials||14,582||20,028||21,000||20,000||1,000||5.0%|
|Operating profit margin||11.5%||13.1%||12.4%||11.9%|
|Operating profit margin||-||-||-||-|
|Lifestyle and Environmental||5,936||4,376||3,700||4,600||-900||-19.6%|
|Operating profit margin||4.6%||4.0%||3.3%||4.1%|
|Operating profit margin||14.9%||16.7%||21.5%||18.3%|
|Real Estate, other||2,623||2,302||2,200||2,300||-100||-4.3%|
|Operating profit margin||17.9%||19.6%||20.0%||19.2%|
|FY Act.||FY Act.||Rev. FY Est.||Prev. Est.|
|Operating profit (JPYmn)||22,794||26,657||29,000||27,000|
|Change in operating profit (JPYmn)||1,067||3,863||2,343||343|
|Raw material and fuel prices||2,900||5,600||-10,600||-5,800|
|USD/JPN exchange rate||109||106||112||105|
|Domestic naphtha price (JPY'000/kl)||43||31||57||44|
The company announced revisions to its full-year FY03/22 forecasts in August 2021, with the revised forecast calling for sales of JPY365.0bn (+8.2% YoY), operating profit of JPY29.0bn (+8.8% YoY), recurring profit of JPY24.0bn (+15.9% YoY), and net income attributable to owners of the parent of JPY13.0bn (+209.4% YoY).
In making its revisions, the company lifted its forecast for sales JPY5.0bn, operating profit JPY2.0bn, recurring profit JPY2.0bn, and net income JP1.5bn.
In Q1 FY03/22, sales of COSMOSHINE SRF (a polarizer protective film for LCDs) COSMOPEEL (a mold-releasing film for multilayer ceramic capacitors) improved thanks to the full-scale operation of new production lines for each. Increased PCR testing demand also contributed to enhanced sales of PCR test raw materials and reagents.
Despite uncertainties due to the resurgence in COVID-19 cases and the rise in raw material prices, the company lifted its full-year earnings forecasts in line with favorable sales in industrial films and PCR testing reagents.
The company expects higher selling prices and increased sales volume of industrial films and products related to PCR testing to have a positive impact on profit, but higher raw material and fuel costs, increased depreciation expenses, and investment in safety and disaster prevention to have a negative impact.
Impact of raw material and fuel costs: A change of JPY1,000/kl in the price of naphtha in Japan generally results in a change of about JPY500mn in operating profit. The company expects the domestic price of Japanese naphtha to climb to JPY52,000/kl from JPY31,000/kl in FY03/21, so changes in raw material and fuel costs are expected to drag down operating profit by JPY10.1bn.
Revisions to selling prices: While higher raw material and fuel costs will have a negative impact on profit, the company has contracts that revise selling prices in line with changes in raw material and fuel prices, and asks customers to pay higher selling prices in response to higher raw material and fuel prices, and expects the combined impact of these to raise operating profit by JPY3.8bn.
Downward impact on profit stemming from an increase in raw material and fuel prices outweighed upward impact from selling price revisions. The company was able to reflect the increase in raw material and fuel prices in selling prices for products such as industrial film and engineering plastics. However, upward impact from price revisions could not compensate for downward impact as the company encountered prohibitive difficulty when attempting to incorporate these raw material and fuel price increases into prices for industrial film.
Change in volume: The company expects higher sales of industrial films and PCR-related testing reagents used for COVID-19 tests.
Other expenses: The company expects an increase of JPY900mn in depreciation costs and spending on safety and disaster prevention to have a negative impact on profit.
The company expects 15.9% YoY growth in recurring profit, outpacing operating profit due to an improvement in non-operating income.
The company expects a significant 209.4% YoY rise in net income to JPY13.0bn. In FY03/21, the company booked total extraordinary losses of JPY15.8bn, including an impairment loss of JPY7.8bn on business assets related to acrylic fiber (Lifestyle and Environmental segment’s fibers and functional materials business) and JPY1.9bn loss from the fire at its Inuyama Plant in September 2020. It expects lower extraordinary losses in FY03/22.
Segment outlook follows.
The company forecasts sales of JPY170.0bn (+9.9% YoY) and operating profit of JPY20.3bn (-0.1% YoY).
In August 2021, the company revised its full-year projections for sales and operating profit upward by JPY2.0bn and JPY300mn, respectively.
Sales growth drivers: The company expects higher sales due to a difference in fiscal year-ends with Toyobo Film Solutions in the wake of its absorption-type merger (results generated by the latter during January through March 2021 incorporated into consolidated results for Q1 FY03/22), increased output of COSMOSHINE SRF (polarizer protective film for LCDs) and COSMOPEEL (mold-releasing film for multilayer ceramic capacitors), and price rises in packaging films. The company expects sales of COSMOSHINE SRF to rise about 10% YoY and sales of COSMOPEEL to rise about 20% YoY. It has incorporated the impact of demands for higher prices due to increased input costs in its packaging films sales forecast.
The company expects operating profit in line with FY03/21. It expects a positive impact from volume growth on higher output of COSMOSHINE SRF and COSMOPEEL (mold-releasing film) and higher prices for packaging films. It expects these positive factors to be offset by higher raw material and fuel costs, increased depreciation, and increased investment in safety and disaster prevention.
It is common for packaging film prices to be renegotiated when raw material and fuel prices fluctuate, but industrial film profit appears to be more vulnerable to higher input prices because selling prices for industrial films are treated differently.
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 around 30% YoY in FY03/21. According to the company, among polarizer protective films, compared with its predecessor, triacetyl cellulose (TAC) film, COSMOSHINE SRF has superior durability and is non-hygroscopic; it is easier to handle, and so sales are growing. The company expanded capacity by installing new equipment (Facility No. 3) at its Inuyama Plant (Aichi), and started mass production in July 2020. The company said the new equipment boosted production capacity by roughly 50%. It expects sales to grow by about 10% YoY in FY03/22 as the new facilities are fully up and running.
The company expects sales of COSMOPEEL (mold-releasing film for multilayer ceramic capacitors) for use in high-end products to grow, as it has the advantage of being extremely smooth. According to the company, it aims to win market share based on its strengths, in addition to prospects for the ceramic capacitor market itself to grow at a pace of 10% yearly in the medium term. Sales grew by 20% YoY in FY03/21. On the production side, in October 2019, operations began at a new processing facility at the Tsuruga Research and Production Center, roughly doubling production capacity of mold-releasing film for multilayer ceramic capacitors. The company aims for sales growth of about 20% YoY in FY03/22.
The company forecasts sales of JPY39.0bn (+6.6% YoY) and operating loss of JPY1.4bn (operating loss of JPY1.6bn in FY03/21). In August 2021, the company revised its full-year projections for segment sales and operating profit upward by JPY1.0bn and JPY400mn, respectively.
The company projects that segment sales will rise due to recovery in sales of engineering plastics and an increase in the sales volume of airbags stemming from deployment in new models. In FY03/21, automobile production declined primarily in 1H due to the coronavirus pandemic, resulting in falling sales for this business. As for FY03/22, the company said it did not have high expectations for sales to increase on the recovery of automobile production.
The company expects narrower losses due to increases in the sales volumes of engineering plastics and airbags.
The September 2018 fire in the Tsuruga Research and Production Center damaged the company’s airbag yarn production facility. As an emergency interim measure to maintain airbag fabric supply, Toyobo decided to procure higher priced airbag yarns from external suppliers for roughly two years from December 2018.
The company forecasts sales of JPY112.0bn (+2.6% YoY) and operating profit of JPY4.6bn (+5.1% YoY).
In August 2021, the company revised its projections for sales and operating profit upward by JPY1.0bn and JPY600mn, respectively.
The company expects sales growth on recovering demand for non-woven fabric and high-performance fibers.
At the non-woven fabric business, sales of spunbond long-filament for automotive applications declined in 1H FY03/21 due to lower automobile production, but started recovering in 2H in line with the rebound in production. The company expects sales growth over full-year FY03/22, as automobile production rebounds.
In high-performance fibers, sales of Tsunooga fell on a drop in demand for cut-resistant work gloves due to factory slowdowns around the world in FY03/21. The company assumes higher demand for cut-resistant work gloves in FY03/22 as factory operations recover.
The textiles business accounts for most of segment sales. In FY03/21, sales declined due to slumping sales of sportswear, innerwear, and suits. The company said that it was unclear whether sales would recover in FY03/22.
In addition to the volume benefit from higher sales, lower depreciation following the impairment loss of JPY7.8bn on acrylic fiber business assets booked in FY03/21 should boost profit.
The company forecasts sales of JPY29.0bn (+7.1% YoY) and operating profit of JPY5.3bn (+17.3% YoY).
In August 2021, the company revised its projections for segment sales and operating profit upward by JPY1.0bn and JPY700mn, respectively.
The company expects rising demand for PCR testing reagents used to detect COVID-19. It also expects an increase in sales of artificial kidney hollow fiber. It also expects operating profit to increase due to an upturn in sales of PCR testing reagents used to detect COVID-19, which have relatively high margins.
Sales of reagents for PCR testing have been expanding since Q4 FY03/21 due to the ongoing spread of the COVID-19 pandemic. The company anticipates that demand for these reagents will remain robust through the end of Q2 FY03/22 (July–September 2021).
The company forecasts capital expenditure of JPY31.0bn (versus JPY23.3bn in FY03/21) and depreciation of JPY20.0bn (JPY19.1bn). This represents an expected increase of about JPY7.7bn in capital expenditure YoY.
Toyobo plans a year-end dividend of JPY40 per share in FY03/22.
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).
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”).
|2014 medium-term plan
|2018 medium-term plan
|Measures||- Strengthen capacity
- Accelerate overseas development
- Restructure portfolio by developing new products
|- Accelerate overseas development
- Expand new products, create new businesses
- Enhance competitiveness of domestic businesses
- Improve asset efficiency
- Strengthen global management function
|- Implement management styles that befit each business
- Strengthen efforts to develop new products and businesses targeting the mid- to long-term
- Strengthen business base
|Targets||- Operating profit: JPY30.0bn
- ROA: 8.0%
- D/E ratio: 1.0
|- Operating profit: JPY30.0bn
- ROA: 7.0%
- D/E ratio: Under 1.0
- Loans payable: JPY150bn
|- Operating profit: JPY30.0bn
- ROE: 8.0% or above
- OPM: 8.0% or above
- D/E ratio: Under 1.0
|Progress in financial results and standing||- Operating profit: JPY21.0bn
- 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
|- Operating profit: JPY23.9bn
- 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
|Progress in business and financing||- FY03/11: raised JPY16.8bn via new share issue; funds usage included capital investment in the Films and Functional Polymers segment.
- 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
|- In 2014, jointly acquired PHP Fibers (airbag fabrics business) with Indorama
- 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.
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.
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.
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.
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 polarizer protective film for LCDs COSMOSHINE SRF and 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||148,667||156,241||158,833||175,000||26,333||4.2%|
|% of total||44.9%||46.4%||46.8%||46.7%|
|% of total||19.2%||19.8%||19.3%||21.1%|
|% of total||10.8%||10.3%||1.2%||12.3%|
|Textiles and Trading||68,317||64,585||61,328||61,000||-7,317||-2.8%|
|% of total||20.6%||19.2%||18.1%||16.3%|
|% of total||4.5%||4.4%||1.3%||3.7%|
|% of total||71.0%||69.5%||67.7%||64.9%|
|Operating profit margin||7.2%||6.5%||6.7%||8.0%|
|Films and Functional Polymers||13,713||13,727||16,541|
|Operating profit margin||9.2%||8.8%||10.4%|
|Operating profit margin||6.7%||3.9%||1.6%|
|Operating profit margin||14.5%||14.9%||141.8%|
|Textiles and Trading||645||914||561|
|Operating profit margin||4.3%||6.2%||12.7%|
|Net income attributable to owners of the parent||13,000||-603||13,774||16,000||3,000||5.3%|
|ROE||7.5%||-0.3%||7.8%||8.0% or higher|
|Debt / Equity ratio||0.80||0.92||0.96||1.00|
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.
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.
*1 Super retarder film: Has a phase difference of about 10,000nm, far greater than the birefringence-causing phase difference of conventional films (about 1,000–3.000nm).
*2 Rainbow patterns: Phase differences caused by the material produce tinting that appears as a rainbow effect.
*3 Bezel-less: TV and other screens with very thin or no rim around the edges.
*4 Open-cell business model: Sales of semi-finished products without the backlight component.
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%.
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.
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.
14 overseas locations: US (Michigan, Ohio), Mexico (Querétaro), Thailand (Bangkok), Indonesia (Jakarta), China (Shanghai, Guangzhou), Hong Kong, Taiwan (Taipei), South Korea (Seoul), Brazil (São Paulo), Germany (Dusseldorf), India (Delhi in October 2017, Chennai in April 2018)
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 spring 2022.
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.
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 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.
Dimensional stability: Degree to which a substance (material) maintains its original dimensions when subjected to changing temperatures.
Coefficient of thermal expansion: Describes how the size of an object changes with a change in temperature. Measures fractional change in size per degree change in temperature.
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.
TOYOBO GS Catalyst: The world’s first aluminum catalyst that does not require heavy metals like antimony that are generally used in catalysts for polymerization reactions when manufacturing PET resin. This technology was independently developed by Toyobo in 2002. Resin manufactured using TOYOBO GS Catalyst is highly transparent, has superior thermal stability, and is not susceptible to deterioration of its properties or to yellowing when it is melted. It can be processed similarly to conventional PET resins, while also being more eco-friendly and recyclable. The technology has been used to make PET beverage bottles and Toyobo’s SHINEBEAM backsheets film for solar batteries, and also in the manufacture of DuPont APEXA, a line of biodegradable polymers Toyobo makes for DuPont.
In 2017, Toyobo licensed polymerization technology and patents using TOYOBO GS Catalyst to Indorama Ventures, the world’s largest PET resin manufacturer.
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.
Bonarc is made using octacalcium phosphate in powder form and medical-grade collagen, processed into a sponge-like disc. It is embedded into the defective portion of the patient’s bone, where the bone tissue has been broken or has become too thin. The octacalcium phosphate uses the collagen as a scaffold, inducing the formation of new bone as the patient’s body replaces the octacalcium phosphate with new bone tissue.
・The newly formed bone is expected to show the same properties as the patient’s original bone.
・The body dissolves and absorbs the material, so Bonarc itself does not remain in the body.
・There is no need to harvest healthy bone tissue, so hospitalization is unnecessary, even in the case of dental implant treatments. This greatly reduces the burden on the patient and is expected to contribute to improving the patient’s quality of life.
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.
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.
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.
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.
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.
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%).
|Business segment||Summary||Sales composition||OP composition|
|Films and Functional Materials||Packaging films, industrial films, industrial adhesives, photo-functional materials||45.3%||67.5%|
|Mobility||Engineering plastics, airbag fabrics||10.8%||operating loss of JPY1.6bn|
|Lifestyle and Environmental||Environmental solutions (reverse osmosis membranes for seawater desalination, VOC treatment equipment), non-woven fabrics, fibers and functional materials (high-performance fibers and lifestyle materials), textiles||32.3%||14.8%|
|Life Science||Bioproducts such as enzymes for diagnostic reagents, pharmaceuticals, medical membranes, medical devices||8.0%||15.2%|
|Films and Functional Polymers||148,000||149,640||146,029||143,398||138,574||138,574||148,667||156,241||158,833||Films and Functional Materials||127,127||152,842|
|Healthcare||27,344||28,674||28,777||27,723||27,134||36,423||35,723||34,675||39,412||Lifestyle and Environmental||128,409||109,148|
|Textiles and Trading||79,089||76,873||85,093||85,486||77,552||77,552||68,317||64,585||61,328||Life Science||25,538||27,087|
|Real Estate||3,670||3,642||4,001||4,203||4,444||4,444||4,284||4,197||4,405||Real Estate||4,405||3,959|
|Operating profit||21,006||20,580||20,580||23,123||23,332||23,332||23,923||21,727||22,794||Operating profit||22,794||26,657|
|Operating profit margin||6.0%||5.9%||5.9%||6.6%||7.1%||7.1%||7.2%||6.5%||6.7%||Operating profit margin||6.7%||7.9%|
|Films and Functional Polymers||7,794||7,577||6,988||9,920||12,747||12,747||13,713||13,727||16,541||Films and Functional Materials||14,582||20,028|
|Operating profit margin||5.3%||5.1%||4.8%||6.9%||9.2%||9.2%||9.2%||8.8%||10.4%||Operating profit margin||11.5%||13.1%|
|Operating profit margin||7.7%||8.9%||9.2%||8.9%||7.0%||6.5%||6.7%||3.9%||1.6%||Operating profit margin||-1.6%||-4.3%|
|Healthcare||5,140||5,028||5,042||4,726||4,281||5,242||5,179||5,170||5,547||Lifestyle and Environmental||5,936||4,376|
|Operating profit margin||18.8%||17.5%||17.5%||17.0%||15.8%||14.4%||14.5%||14.9%||14.1%||Operating profit margin||4.6%||4.0%|
|Textiles and Trading||2,952||2,389||2,334||2,500||1,066||1,066||645||914||561||Life Science||3,798||4,517|
|Operating profit margin||3.7%||3.1%||2.7%||2.9%||1.4%||1.4%||0.9%||1.4%||0.9%||Operating profit margin||14.9%||16.7%|
|Real Estate||1,722||1,732||2,236||2,270||2,344||2,344||2,023||1,572||1,482||Real Estate||1,482||1,548|
|Operating profit margin||46.9%||47.6%||55.9%||54.0%||52.7%||52.7%||47.2%||37.5%||33.6%||Operating profit margin||33.6%||39.1%|
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.
|Old segments||Old categories||New segments||New categories|
|Films and Functional Polymers||Industrial films
|Films and Functional Materials||Industrial films
|Industrial Materials||Airbag fabrics
Lifestyle and industrial materials
|Healthcare||Bioscience and medical
Membranes and environment (medical membranes, water treatment membranes, activated carbon [AC] fibers)
|Lifestyle and Environmental||Environmental solutions
Fibers and functional materials
|Textiles and Trading||Textiles and trading||Life Science||Bioproducts
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.
|Subsegment||Category||Segment sales composition|
|Films||Industrial films||Manufacture and sales of polarizer protective film for LCDs, mold-releasing film for MLCCs, and other products|
|Packaging films||Manufacture and sales of packaging films for food and other products|
|Functional Materials||Industrial adhesives||Manufacture and sales of VYLON and HARDLEN adhesives for industrial use|
|Photo-functional materials||Manufacture and sales of Printight (a water-washable, photopolymer relief printing plate) and Cosmolight (a water-washable, photosensitive flexo printing plate)|
|Fine chemicals||Manufacture and sales of various types of compounds, including thio compounds, azide compounds, tetrazoles, and carbodiimides|
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.
COSMOSHINE: Films must be able to slide when being processed into a roll; to facilitate this lubricity, inorganic particles (lubricant) are typically added into the film to create unevenness on the surface. However, Toyobo can add lubricity by simultaneously creating a thin lubricant-added outer layer at the time of film formation. COSMOSHINE was developed using this proprietary technology, and as there are no particles inside the film itself, the product becomes highly transparent. Surface layer adds lubricity as well as antiadhesive and antistatic properties.
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.
The industrial films business includes polarizer protective film for LCDs and mold-releasing film for multilayer ceramic capacitors (MLCCs).
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.