Toray Indus Inc Unsp/Adr

Thank you very much for joining us today despite your busy schedule. On behalf of Tore 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 Tore's business results for the second quarter ended September 30, 2025 and the business focus 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. The business environment of the first half continued the gradual recovery, but sluggishness in the flow of goods and holding back on purchases were also seen in some areas against the backdrop of growing uncertainties triggered by the US policy shift under the Trump administration. Amid these circumstances, cooperating income of the first six months decreased year-on-year to ¥67.9 billion due to the sluggish market conditions and impact from inventory adjustment although the company worked on business structure reform and strategic pricing. The full-year forecast for the cooperating income of the fiscal year ending March 2026 increased to ¥150 billion compared with the previous fiscal year. As for the shareholders' return, in line with the resolution at the Board of Directors meeting held on November 7, 2024, Tobler completed the share buybacks. The total repurchase price of shares has reached ¥100 billion, equivalent to 103 million shares. Furthermore, the company resolved ¥50 billion of additional share buybacks at the Board of Directors meeting on November 14, 2025. This resolution for repurchase shares is pursuant to this policy for the reduction of cross-share holdings. I'll explain the details starting from the next page. I'd like to begin with summary of business results for the second quarter ended September 30, 2025. Please turn to page 4. Consolidated revenue for the first 6 months decreased 4.6% compared with the same period a year earlier to 1,234.3 billion yen. Corporating income decreased 14.2% to 67.9 billion yen and profit decreased 33.5% to 36.9 billion yen. Page 5 is about assets, liabilities, equity, and free cash flow. As for financial condition, at the end of September 2025, both assets and liabilities were affected by the increase in translated yen amounts from its overseas subsidiaries due to fluctuation of the currency. Total assets stood at 3,351 billion yen, up 58.4 billion yen from the end of the previous fiscal year due mainly to increases in inventories as well as property, plant and equipment. Total liabilities increased ¥45.3 billion from the end of the previous fiscal year to ¥1,517.3 billion owing mainly to increases in borrowings. Total equity increased by 13.1 million yen compared with the end of the previous fiscal year to 1,833.7 million yen, mainly owing to increases in retained earnings and other components of equity despite the purchase of treasury shares. Owners' equity was ¥1,716.5 billion, interest-bearing liabilities was ¥896.2 billion, and DE ratio was 0.52. Free cash flow was positive at ¥24.2 billion. Page 6 explains about capital expenditures, depreciation and amortization, and R&D expenditures. Capital expenditures for the 6 months decreased by ¥21.3 billion to ¥67.1 billion on a year-to-year comparison. Meanwhile, depreciation and amortization decreased by ¥0.2 billion to ¥66.2 billion. R&D expenditures increased by ¥1 billion to ¥36 billion compared with the same period of the previous fiscal year. Page 7 shows the factor analysis of ¥11.3 billion decrease in incorporating income for the 6 months on a year-to-year comparison. The fibers and textiles segment was strong mainly in apparel applications. Meanwhile, in the performance chemicals segment, cooperating income decreased due to weak sales of battery separator film and lack of temporary factors including reversal of allowance, the increased profit in the first half of the previous fiscal year, etc. In the carbon fiber composite materials segment, profit decreased due mainly to the impact of inventory adjustment. As for the net change in price, strategic pricing has proceeded steadily. Cooperating income decreased 14.2% compared with the same period of the previous fiscal year, and the cooperating income margin fell 0.6 points. Using page 8 and after, I'd like to explain the results of each segment. First, fibers and textiles. Revenue of the overall segments decreased 2.2% to 504 billion yen compared with the same period a year earlier and the cooperating income increased 1.7% to 35 billion yen. Apparel applications were steady as shipment of the fall-winter clothing in Japan was strong overall. The industrial applications fell short of a full recovery of the market condition, especially in the automobile applications, but the group strived to reduce costs. Page 9 is the performance chemicals segment. Revenue decreased 7.2% to ¥443.3 billion compared with the same period a year earlier. Corporating income decreased 15.3% to 28.8 billion yen. In the resins and chemicals businesses, demand was on a recovery trend in the resins business as the effect of last fiscal year's production decline by the automobile manufacturers in Japan has resolved. However, the chemicals business was affected by the worsened market conditions. The film's business saw increase in electronic parts related demand, but sales of battery separator film was stagnant. In the electronic and information material business, all LED related materials and circuit materials were affected by the weak display panel demand and intensified competition in China. Page 10 is the carbon fiber composite materials segment. Revenue decreased 11.4% to 135.4 billion yen compared with the same period a year earlier, and this segment posted co-operating income of 9.4 billion yen, 19.6% decrease from the same period a year earlier. The aerospace applications were on a recovery trend, but affected by the inventory adjustment in the supply chains and the appreciation of the yen. In the sports applications, sales of the high-end products for outdoor leisure was steady. However, inventory adjustment of the general-purpose products continued. In the industrial applications, pressure vessel applications entered an adjustment phase. Page 11, in the environment and engineering segment, revenue decreased 2.2% to 117 billion yen compared with the same builder year earlier, and cooperating income decreased 16.8% to 9.8 billion yen. The water treatment business was affected by the concentration of shipments last year for a large-scale project in the Middle East in addition to the stagnant market conditions in China. As for subsidiaries in Japan, sales of the construction subsidiary was strong, but the engineering subsidiary in Japan saw decline in revenue due to shift in project timing. Page 12 is the life science segment. Revenue decreased 2% to 25.1 billion yen compared with the same period a year earlier, and cooperating income decreased by 0.5 billion yen to negative 1.1 billion yen. The pharmaceutical business was affected by the impact of the penetration of the generic versions of the drug in Japan, while overseas sales grew mainly in China. In the medical device business, shipment of the mainstay product dialyzers for hemodiafiltration was steady but affected by persistently high prices of raw materials. Page 13 shows the business results for major subsidiaries and regions. At Toray International, sales were strong mainly in the fibers and textiles but affected by the cost increase. At a subsidiary in Southeast Asia, in the fibers and textiles business, demand for apparel applications and automobile applications in the industrial applications was weak. In the performance chemicals business, spread of ABS resins improved. At our subsidiaries in China, in the fibers and textiles business, the apparel application was strong. In the performance chemicals business, the chemical business was impacted by divorce and market condition. As for our subsidiaries in the Republic of Korea, sales of the fibers and textiles business decreased stemming from the scale down of low profitability applications. However, spread has improved. In the performance chemicals business, sales of battery separator film was stagnant. Next, I'd like to explain the consolidated business forecast for the fiscal year ending March 2026. Please turn to page 15. The global economy is expected to continue with the gradual recovery phase. While the uncertainties stemming from the Trump typhus will remain, their impact on the global economy is likely to be limited. The Japanese economy is expected to continue with its gradual recovery. However, the prevailing economic trends will be affected by the direction of the trade policies of the US and the responses from other countries, geopolitical tensions and rising prices on primary products and the stagnation of the Chinese economy, which may also have a significant impact on the changes in the supply chains and the trade structure in the medium to long term. For the fiscal year ending March 2026, given the current business performance and environment, focus for revenue, cooperating income, and profit attributable to owners of parent remain the same overall as the announcement on May 14th despite some changes in the segment breakdowns of revenue and cooperating income. Assume the exchange rate from October onward is 145 yen per US dollar. Page 16 shows the biannually consolidated business forecasts for the fiscal year ending March 2026 by segment. Revenue and cooperating income of all segments are expected to increase owing to sales expansion in each segment, especially in the fibers and textiles and environment and engineering segments, in addition to the positive effects from strategic pricing and profitability improvement projects. Page 17 shows the comparison between the result of cooperating income in the fiscal year ended March 2025 and the focus for the fiscal year ending March 2026 with breakdowns into segments. The factors behind the differences are also shown. Page 18 shows impacts from the U.S. tariff measures and the difference between the initial and new forecasts for cooperating income by segment. And the flow of goods and holding back on purchases were currently seen in some area against the backdrop of growing uncertainties triggered by the U.S. policy shift by the Trump administration. Although it is difficult to clearly differentiate the impact from the US tariff measures, given the effects caused by the demand decrease, forecasts for the entire cooperating income remain unchanged. Variance factors between the initial and new forecasts for the cooperating income are shown on the right side of the table. Next, I'd like to explain topics in the first six months of the FY2025. Page 20 describes the business structure reform based on the four categories of growth potential and profitability as a measure to improve each business field. Tore continues to implement initiatives for low-growth and low-profitability businesses as shown on the bottom left. In October 2025, the company resolved the investment of joint venture of battery separator firm in Hungary, as well as sales of equity interests in Japan Violin Company in November 2025. Page 21 summarizes the initiatives in D Pro and its effects. In FY2024, Tora achieved ¥20 billion of improvement year-on-year through cost reductions and optimization of production. In FY2025, ¥10 billion of profitability improvement was expected compared with the previous fiscal year. However, after reviewing the plans based on the delay of sales expansion in polyester stapled fiber and large-toe carbon fiber businesses, ¥7 billion of year-on-year improvement in profitability is expected now. Tora aims to restore profitability through cost reductions as well as developing and expanding sales of differentiated products in the PP Spanbond business and PET field subsidiary in Europe. In addition, the company also continues to work on strengthening profitability in businesses that have already become profitable. On page 22, I will explain about reduction of close share holdings, share buybacks, and cancellation of shares. Total repurchase price of the close share holdings is 109.8 billion yen in FY2024. Including sales from 2025 onward, the cumulative sales amount of cross-share holdings will be about 150 billion yen. Therefore, 50 billion yen of additional share buybacks are resolved at the Board of Directors meeting on November 14, 2025. Furthermore, cancellation of 127 million treasury shares that the company has acquired is also planned. This concludes my presentation. Thank you very much.