Toray Indus Inc Unsp/Adr

Thank you very much for joining us today despite your busy schedule. On behalf of Toro Group, I'd like to take this opportunity to extend my gratitude towards your continued understanding and your interest in our management and business activities. Now, I'd like to report Toro's business results for the fiscal year ended March 2025 and business forecasts for the fiscal year ending March 2026. Now, I'd like to follow the table of contents shown on page 1. This is a summary of the business performance and forecast. Corporating income of FY2024 increased in all segments to ¥142.8 billion. It was a significant increase compared with the previous fiscal year. Corporating income of FY2025 is forecasted to increase year-on-year to ¥150 billion despite the impact of downturn caused by the US tariff measures and other factors. In terms of annual dividend, for the fiscal year ending March 2026, the company anticipates paying ¥20 per share of common stock, a ¥2 increase compared with the previous fiscal year. Furthermore, the company is proceeding with share buybacks in line with the resolution at the Board of Directors meeting held on November 2024. As of the end of April 2025, the total repurchase price of shares has reached ¥54.7 billion, equivalent to 56 million of shares. I'll explain the details starting from the next page. I'd like to begin with an overview of business results for the fiscal year ended March 2025. Please turn to page 4. Revenue for the fiscal year ended March 2025 increased 4% to 2,563.3 billion yen compared with the previous fiscal year and the cooperating income increased 39.1% to 142.8 billion yen. Net income increased 255.8% to 77.9 billion yen. ROIC was 4.4% while ROE was 4.5%. Page 5 is about special items. Special items for the period improved by 29.7 billion yen compared with the previous fiscal year to negative 50.3 billion yen. Page 6 about assets, liabilities, equity, and pre-cash flow As of the end of March 2025, total assets stood at ¥3,292.6 billion, down ¥173.9 billion from the end of the previous fiscal year due to decreases in trade and other receivables and financial assets. Total liabilities decreased 148.1 billion yen from the end of the previous fiscal year to 1,472,000,000 yen owing mainly to decreases in bonds and borrowings. Total equity decreased by 25.8 billion yen compared with the end of the previous fiscal year to 1,820.6 billion yen. Owner's equity was 1,709,000,000 yen, interest-bearing liabilities was 842.7 million yen, and DE ratio was 0.49. Free cash flow was positive at 191.8 billion yen. The table on page 7 shows revenue and cooperating income, and the fact analysis of ¥40.1 billion increase in cooperating income for the fiscal year ended March 2025 on a year-to-year comparison. In the fibers and textiles, performance chemicals, and carbon fiber composite materials segments, both production and sales volume has expanded, capturing demand increase and recovery. As for the net change in price, strategic pricing has proceeded at a pace exceeding the plan and contributed to the increase in cooperating income. Cooperating income increased 39.1% year-on-year, and cooperating income margin rose 1.4 points as a result of capturing the strong demand and promotion of structural reform. Using page 8 and after, I'd like to explain the results of each segment. First, fibers and textiles. Revenue of this segment exceeded ¥1 trillion for the first time. The revenue increased 3.7% to ¥1,011.1 billion compared with the previous fiscal year and the cooperating income rose 17.3% to ¥64.2 billion. Operating applications were robust overall as sales momentum of the fall-winter clothing in Japan and shipments of overseas trading subsidiaries were strong. In the industrial applications, the automobile applications were affected by production decline in some automobile manufacturers in Japan and weak market conditions in Europe. Page 9 is the performance chemicals segment. Revenue increased 6.6% to 944.9 billion yen compared with the previous fiscal year. Corporating income rose 63.6% to 60 billion yen as demand recovery and improvement in the utilization rate in the famous business have contributed to improvement in profit. I would like to explain the conditions of each business on the next page. The resins and chemicals business were affected by the production decline in some Japanese automobile manufacturers, but demand recovered in non-automobile applications for China and ASEAN. In the famous business, profit improved due to the demand recovery in electronic parts-related applications owing to rebound from inventory adjustment in the supply chain as well as improvement in the utilization rate. In the electronic and information material business, demand for OLED-related materials and circuit materials saw some recovery. Breakdown of increase in cooperating income by sub-segment is shown in the graph on the right. In addition to the demand recovery in the resins and fumes business, effects of the profitability improvement project, Darwin project or DEPRO implemented at overseas sub-stories contributed to the increase in cooperating income. Page 11 is the carbon fiber composite materials segment. Revenue increased 3.3% to 300 billion yen compared with the previous fiscal year, and cooperating income rose 70.7% to 22.5 billion yen. In addition to the steady recovery in the aerospace applications, decreases in utility costs from lower electricity and natural gas prices in Europe contributed to the increase in cooperating income. I'd like to explain the status of each application on the next page. In the airspace applications, demand has steadily recovered. In the sports applications, inventory adjustment continued in the general-purpose products for outdoor leisure, but sales of high-end products were strong. In the industrial applications, gradual recovery continued in the wind turbine blade applications, but the other applications entered an adjustment phase. Page 13 In the environment and engineering segment, revenue decreased 3.1% to 236.5 billion yen compared with the previous fiscal year and cooperating income rose 11.6% to 25.9 billion yen. In the water treatment business, demand increased steadily and the shipment for major projects in the Middle East contributed to the business performance. In addition, sales of an engineering subsidiary in Japan were generally strong. Page 14 is the life science segment. Revenue increased 1.8% to 53.2 billion yen compared with the previous fiscal year, while cooperating income was negative 0.8 billion yen, 0.6 billion yen increase compared with the previous fiscal year. The pharmaceutical business was impacted by the penetration of generic versions of our drugs and the NHI drug price revision. In addition, sales volume was stagnant overseas. In the medical devices business, shipments of dialysers for hemodiafiltration were steady in Japan and overseas but affected by the soaring prices of raw materials. Page 15 shows the business results of major subsidiaries and regions. At Toray International, sales of performance chemicals business were strong. At the subsidiaries in Southeast Asia, in the fibers and textile business, industrial applications, especially in the automobile applications, were strong. The performance chemicals business, demand for ABS resins in China and ASEAN was on the recovery trend. At the sub-stories in China, in the fibres and textiles business, the apparel applications and the automobile applications in the industrial applications were strong. In the performance chemicals business, sales of the resins were strong, but the chemical business was affected by the periodic maintenance of facilities. As for our subsidiaries in the Republic of Korea, in the fibers and textiles business, supply and demand balance of nonwoven fabric worsened, however, the spread of filaments and staple fibers improved. Meanwhile, in the performance chemicals business, sales of films and electronic and information materials were strong. Next, I'd like to explain the consolidated business forecast for the fiscal year ending March 2026. Please turn to page 17. The global economy, which was in a gradual recovery phase, is facing a growing risk of entering a downturn phase triggered by the imposition of reciprocal tariffs by the US under the Trump administration. There are also concerns of an economic slowdown in the Japanese economy caused by a decline in exports and intensifying competition with China. Furthermore, instabilities in the stock and foreign exchange markets triggered by the imposition of the tariffs also pose concerns. The direction of the fiscal and trade policies of the U.S., as well as its negotiations with various countries, will likely affect the prevailing economic trends, which in the medium to long term may significantly alter supply chains and trade structure. For the fiscal year ending March 2026, Tore expects revenue of 2 trillion 670 billion yen, corporating income of 150 billion yen, and profit attributable to owners or parent of 82 billion yen, given the business expansion in the gross business field, preceding the improvements in profitability as well as the risk of stagnation in the global economy caused by the US tariff measures. Page 18 shows the consolidated business forecasts for the fiscal year ending March 2026 by segment. TOR expects increase in revenue and cooperating income through capture of demand recovery in the Fibers and Textiles and Performance Chemicals segment and expansion of the aircraft applications in the Carbon Fiber Composite Materials segment. At the same time, the company expects positive effects from strategic pricing and profitability improvement projects. As for the impact from the US tariff measures, given the macroeconomic factors such as effects on the global economy and business conditions, effects from the demand decrease was mainly estimated and included in this forecast. The company factored in decreases of ¥40 billion in revenue and ¥15 billion in cooperating income as an impact from the US tariff measures. Page 19 shows the comparison of cooperating income between the actual results for the fiscal year ended March 2025 and the forecast for the fiscal year ending March 2026 with breakdowns into segments. Page 20 describes the trends in capital expenditures, depreciation and amortization, and R&D expenditures. Capital expenditures for the fiscal year ending March 2026 are expected to be 180 billion yen, depreciation and amortization 135 billion yen, and R&D expenditures 84 billion yen. Page 21 explains about shareholders' return. Under APG 2025, while maintaining stable continuous dividends, Tore will aim to increase dividends based on earning growth. The target for dividend payout ratio is 30% or more. In terms of annual dividend in FY 2025, the company anticipates paying ¥20 per share of common stock, an increase of ¥2 compared with the previous fiscal year, with a payout ratio of 38%. On page 22, I'll explain about the progress on reduction of cross-share holdings and share buybacks. Toray has sold 109.8 billion yen of cross-share holdings in FY2024 and the ratio of the cross-share holdings to the total equity decreased to 5.4% as of the end of FY2024. The company has achieved the target two years ahead of schedule. The company plans additional sales of cross-share holdings in FY2025. As for share buybacks in line with the resolution at the shareholder meeting in November 2024, the total repurchase price of shares has reached ¥54.7 million, equivalent to 56 million of shares as of the end of April 2025. The proceeds exceeding ¥100 million from the sales of the cross-share holdings will be used for share buybacks. Going forward, the company will consider the cancellation of repurchased shares. Now, I'd like to explain about the progress of medium-term management program project APG 2025. In one of the basic strategies of APG 2025, sustainable growth based on Tore Group's sustainability vision, The company has positioned the sustainability innovation or SI business and the digital innovation or DI business as growth business fields for Tora Group where the company can leverage its strengths and expand revenue growth. In FY2024, although demand recovery in large-tool carbon fiber for the wind turbine blade applications was slower than expected, revenue from the SI business increased 4.4% to 1,368.9 billion yen compared with the previous fiscal year, as revenue increased in carbon fiber for the aircraft applications, fumes made from recycled materials, and resins for automobile, etc. Meanwhile, revenue from DAI business in FY2024 increased 16.9% to 211.9 million yen compared with the previous fiscal year due to recovery in demand for the electronic parts related applications such as MLCC, OLED related materials and circuit materials. Page 26 describes cost competitiveness. In APG 2025, promoting cross-organizational cost reduction that leverage the collective strengths of the organization and by sharing the information and implementing the cost reduction activities globally, the company will work on raising the level of cost competitiveness of the total group as a whole. As for the two-year results from FY2023 to 2024, the company achieved cost reduction of 146.1 billion yen. Toray is promoting each activity, aiming 200 billion yen of cost reduction in three years through self-efforts. On page 27, I'd like to explain about business structure reform based on the four categories of growth potential and profitability as a measure to improve each business field. The figure in the bottom right is the four categories of growth potential and profitability. The left half of the figure indicates low-productivity businesses. For the specific businesses and companies with large invested capital that fall under the category, the company is implementing Dpro, the project to improve profits of specified businesses and companies. Page 28 summarizes the initiatives in Dpro and effects. In FY2024, Tora achieved ¥20 billion of improvement year-on-year by restoring profitability through cost reduction of fixed costs and utility costs, optimization of production between global production sites and other initiatives in Zoltec's large total carbon fiber business, the film business in the US and Europe , as well as the polyester staple fiber business. In FY2025, ¥10 billion of profitability improvement is expected compared with the previous fiscal year by restoring profitability through developing and expanding sales of differentiated products in the PP Spanbond business and the Films business in Europe, in addition to strengthening profitability in the businesses that have already become profitable through sales and sales volume expansion. Please look at page 29. The company expects a ¥30 billion shortfall from the APG 2025 target as the pace of the world economic recovery from the COVID-19 pandemic was slower than expected and uncertainty rose due to the US-type measures. The fibers and textiles and environmental engineering segments are expected to exceed the target. However, the film, electronic and information material, and carbon fiber composite materials businesses are expected to fall short of the targets due mainly to the delay in demand recovery. Page 30 shows the factor analysis of cooperating income in APG 2025 and the next medium-term management program. The pace of recovery is slower than expected due to emergence of geopolitical risks and rise of uncertainties caused by the US tariff measures. However, the company expects continuous increases in cooperating income for three consecutive years as positive effects of the business structure reform and strategic pricing are seen. Toray will revise specific measures to promote as needed, including strategies for each business in response to changes in the business environment and strengthening of procurement functions. In the next medium-term management program, the company will aim for expansion of growth business fields and at the same time sound sustainable growth. Page 31 summarizes the financial targets. Page 32 shows the sustainability targets. In addition to our financial targets, we are committed to achieving these targets in terms of sustainability. This concludes my presentation. Thank you very much.