Teijin Limited

I will now explain the fiscal 2025 results and fiscal 2026 earnings outlook. First, regarding key points from the earnings announcement, fiscal 2025 adjusted operating income was ¥25.8 billion, down ¥1.8 billion year-on-year. In healthcare, adjusted operating income increased due to growth in a number of rented home healthcare devices and licensing income from pharmaceuticals. Fibres in products performed steadily. In materials, however, adjusted operating income declined due to a large-scale period maintenance at Toowon Aramid Operations. as well as a deterioration in the sales mix for aramid and carbon fibres. Please note that the aramid paper business has been decided for divestiture and has therefore been excluded from adjusted operating income. Below the adjusted operating income line in non-recurring items, impairment losses were recorded in healthcare related to diabetes treatment sales rights and other fixed assets. Annual dividends have been determined at 50 yen per share, unchanged from the previous announcement. Next, regarding the fiscal 2026 outlook, we forecast adjusted operating income of 30 billion yen up 4.2 billion yen year-on-year. Fibres and products are expected to remain solid, and integration with Asahi, Kasei and Vance is scheduled for October 1, contributing to profit growth. In healthcare, although amortisation expenses will decline following impairment losses recorded in fiscal 2025, we expect lower profits due to streamlining of the pharmaceutical business. In Aramid, the large-scale periodic maintenance that occurred in fiscal 2025 will not occur in fiscal 2026, and we expect profit growth driven by improved operating rates and progress in carbon fibre structure reforms. We plan annual dividends of ¥50 per share. Next I will explain fiscal 2025 results in more detail Revenue was 873.2 billion yen down 132.3 billion yen year on year Adjusted operating income was 25.8 billion yen down 1.8 billion yen year on year Other items were negative 14.7 billion yen deteriorating by 11.3 billion yen year-on-year, mainly due to reversals of deferred tax assets. As a result, profit attributable to owners of parent was negative 88 billion yen. As announced in our revised forecast on March 31, we guided net profit between negative 85 billion yen and negative 95 billion yen and actual results came within that range. ROIC was 2.6%. Looking at the overall summary, revenue declined by 132.3 billion yen in total. The main factor was materials, where revenue fell 120.7 billion yen year-on-year to 338.6 billion yen, primarily due to the divestiture of the North American Composites business on July 1, 2025. Revenue also declined due to the sale of Teiji Nakashima Medical. Adjusted operating income was 25.8 billion yen, down 1.8 billion yen year on year. I will explain the details by segment shortly. Starting with materials, adjusted operating income declined from 6 billion yen in fiscal 2024 to 100 million yen, with a decrease of 5.9 billion yen. Regarding volume effects, as mentioned earlier, fiscal 2025 included a large-scale product maintenance in aramid. Of the ¥9 billion negative volume impact, operating rate deterioration accounted for ¥-8.5 billion. Spread effects were ¥-7.5 billion due to deterioration in the sales mix for aramid and cotton fibres. Positive factors included cost structure reforms, lower depreciation and amortization expenses following impairments recognized for Aramid in the second quarter, and profit competition from the North American business divestiture. As a result, adjusted operating income came to positive 100 million yen. Next, 5,000 products performed steadily overall. There were some fluctuations due to front-loaded shipments and weakness in industrial materials, while headquarters expenses also increased. As a result, adjusted operating income declined slightly from ¥17.8 billion to ¥17.1 billion. Next is healthcare. In healthcare, volume effects contributed positive ¥1.5 billion due to strong performance in CPAP and Venor. In addition, reduced fixed costs, lower amortization following impairment losses on type 2 diabetes products recorded in fiscal 2024, and pharmaceutical licensing income contributed to higher earnings. As a result, adjusted operating income increased by 7.7 billion yen year-on-year from 5.7 billion yen to 13.4 billion yen. In others' business, separators and membranes perform steadily. As mentioned earlier, the divestiture of the RMIT Paper Group Company has been decided, and the business has therefore been excluded from adjusted operating income. This became a factor behind lower profits, resulting in adjusted operating income declining from 7.1 billion yen to 4.6 billion yen, down 2.5 billion yen year on year. Next I will explain financial income and expenses and non-recurring items. Regarding financial income and expenses, interest expenses improved by 3.6 billion yen from negative 10.4 billion yen to negative 6.8 billion yen due to progress in repayment of interest-bearing debt. As for non-recurring items, impairment losses totalled ¥88.9 billion in fiscal 2025, including impairments related to Arum, Healthcare and Carbon Fibres businesses. In fiscal 2024, impairment losses for the North American Composites business and Type 2 diabetes products totalled ¥95.2 billion. As a result, non-recurring items were negative 93.8 billion yen versus negative 94.7 billion yen in the prior year, effectively flat year on year. Next is financial position. Total assets as of March 2026 were 920.1 billion yen. down significantly due to the sale of the North American composites business and impairment of fixed assets. Inter-sparing debt also declined from 387.1 billion yen to 336.4 billion yen, down 50.7 billion yen as repayments progressed. As a result, the adjusted DE ratio remained stable at 0.78 versus 0.77 previously, and we believe a certain level of financial soundness has been maintained. Regarding cash flow, fiscal 2024 saw a substantial positive free cash flow of 122.4 billion yen due to the sale of Infocom. There was no similar gain in fiscal 2025, but working capital reductions contributed to an increase in operating cash flow to 98.7 billion yen, resulting in positive free cash flow of approximately 60 billion yen. Next, I'll explain the fiscal 2026 outlook. First, I would like to explain changes to our disclosure segments. The former Fibres and Products segment has been renamed Apparel and Industries. The former Healthcare segment has been renamed Healthcare and Life Solutions. The former Materials and Other segments have been partially reorganised. Resins from the form material segment and battery materials and membranes for other have been integrated into a new segment called electronics and energy. Meanwhile, aramid and carbon fibres, including composites, previously under materials, have been grouped into specialty materials. Other businesses now mainly consist of regenerative medicine and implantable medical devices. Now let me explain the four-year outlook. Please note that this forecast does not factor in the Middle East situation. Revenue is expected to decline by 23.2 billion yen year on year, while adjusted operating income is forecast at 30 billion yen, up 4.2 billion yen year on year. As mentioned earlier, gains from the Aramid paper divestiture were delayed until April 2026 and are therefore included in fiscal 2026 results. As a result, profit attributable to owners of parent is expected to reach 45 billion yen. Accordingly, ROE is forecast at 12%, ROIC at 3%, and the adjusted DE ratio is expected to improve further to 0.7. Annual dividends are planned at 50 yen per share. Regarding the Middle East situation, certain impacts are expected on raw material and field prices and procurement. However, we intend to minimise the impact through agile responses. For raw material and field prices, we will first seek to absorb increases through internal efforts. Any costs beyond that will be passed on to selling prices to minimise the impact. As for raw material procurement there are currently no significant impacts but considering procurement uncertainty we will focus on securing inventories We also plan to flexibly adjust production plans in response to customer conditions For the full year outlook, revenue is projected at 850 billion yen. Apparel and industries is expected to achieve revenue growth due to integration effects with Asahi Kasai Advance. On the other hand, specialty materials is expected to see lower revenue because the North American commerce business contributed through June fiscal 2025. Adjusted operating income is expected to total ¥30 billion, up ¥4.2 billion year-on-year. I will explain details by business on the following pages. Starting with apparel and industries, both apparel fibres and industrial materials are expected to remain solid. The management integration with Assekase Advance is expected to continue gradually from the second half onward. Although some integration related promotional expenses will increase, adjusted operating income is expected to rise from 17.1 billion yen to 19 billion yen. Next is healthcare and life solutions. Volume growth is expected from CPAP and rare disease related businesses. However, streamlining of the pharmaceutical business, including lower volumes and the impact of NHI drug price revisions, is expected to negatively impact earnings by approximately 7 billion yen. Although amortization expenses will decline following impairments, adjusted operating income is expected to decline from 13.4 billion yen to 10 billion yen. Next is electronics and energy. Resin and plastic, battery and semiconductor solutions are expected to continue performing steadily. though some spread deterioration is anticipated. As a result, adjusted operating income is expected to decline from 18.9 billion yen to 15 billion yen. Next is specialty materials. Adjusted operating income is expected to improve significantly from negative 9 billion yen in fiscal 2025 to positive 3 billion yen in fiscal 2026, an increase of 12 billion yen. As mentioned earlier, the absence of the large-scale aramid maintenance sit-down in fiscal 2026 is expected to improve volume effects, particularly operating rates. Spread improvements are also expected due to better sales conditions for carbon fibres, including increased aerospace demand. Lower depreciation and amortization expenses following the payments, along with structural reforms, are also expected to contribute to improved earnings. As a result, adjusted operating income is expected to improve from negative 9 billion yen to positive 3 billion yen. Interest-bearing debt is expected to decline further due to improved cash flow generation Equity is also expected to increase due to net profit generation and the adjusted DE ratio is expected to improve from 0.78 to 0.7 Regarding dividends, we aim to maintain stable dividends of ¥50 per share This concludes my presentation Next, I, Uchikawa, will explain the medium term management plan covering fiscal 2026 through fiscal 2028. Today's agenda is as shown here, but there are three key points I would like to discuss. First, we have slightly changed our wording. Previously, we referred to a customer proximate approach, but today we will discuss establishing a business model driven by customer issues, and achieving sustainable profit growth through that model. Second is structural reform to build a high quality earning space that supports this growth. Third, particularly in the materials businesses, our business model will shift from simply supplying materials to becoming customer driven. Accordingly, we will strengthen our corporate management foundation to support this business model. These are the three pillars of today's presentation. Before explaining the new medium term plan, I would first like to review the previous medium term plan. We consistently emphasised strengthening our core earnings power and pursued this through two pillars, portfolio transformation and recovery of core profitability. Regarding portfolio transformation, we executed what we promised, including the sale of the IT business and the North American Composites business, not only withdrawing from unprofitable businesses, but also narrowing our business focus from a best-owner perspective. As a result, total assets were reduced by 10%, including risk assets, and we believe we successfully stabilized our management foundation. Similarly, interest-bearing debt was steadily reduced and the DE ratio improved to our target level. On the other hand, regarding recovery of core profitability, although we executed what we had committed to, market conditions changed significantly during this period. In particular, aramid and carbon fibres businesses, which were heavily focused on supplying materials, struggled considerably. We responded by implementing structural reforms quickly, without clinging to the past. While there may have been criticism previously that our responses were slow, we are now able to act decisively when issues emerge. Nevertheless, financial results did not meet expectations. However, businesses such as Fibres and Products and Home Healthcare achieved high profitability and delivered solid results. So, while there were areas where we fell short, there were also areas where we fulfilled our commitments regarding recovery of core earnings power. As Shemai explained earlier, fiscal 2025 results unfortunately did not meet our numerical targets. While we regret not achieving our committed figures, we believe we did fulfil our qualitative commitments during the previous medium term plan. Next, I would like to explain the winning business model and growth strategy we have identified. On the left side is our recognition of the current environment. As written here, the commoditization of materials is accelerating significantly in the areas where we operate. We concluded that the traditional capital investment-led business model now requires fundamental reconsideration. To put it strongly, we believe the material-centric business model has reached its limits. At the same time, social issues have become increasingly complex. In the past, simply providing high value materials often directly contributed to solving social issues. However, that is no longer sufficient. Since fewer social issues can now be solved solely through materials, we believe we also need to change. Meanwhile, as mentioned earlier, businesses such as Fibres in Products and Home Healthcare possess overwhelming expertise in their respective fields and have built differentiated value chains and platforms that are highly valued by customers, patients and healthcare professionals. Through discussions with employees, we also confirmed that Teijin already has a corporate culture centred on growing together with customers. Based on these strengths, we've concluded that pursuing growth through a customer-driven business model is the right direction. On the right side is an infinity loop style diagram, and I would like to explain it as clearly as possible today. It describes combining our tangible and intangible assets. The issues customers face cannot necessarily be solved solely by our proprietary materials. We possess diverse technologies, can utilize assets from other businesses, and businesses like Fibers and Products and Home Health Care provide not only products, but also a wide range of services. Tejan Frontier is an easy example to understand. Of course it sells yarns and also procures and sells yarns. It can manufacture fabrics and also procure them externally. It has many supporting partners. If necessary, it can support sewing, design, brand launches, logistics, store operations or even simply handle import operations. Because it has such a broad service platform, customers are highly satisfied. What we want to do now is take what were previously siloed businesses organized by material type and make those assets available company-wide so we can create more solutions that satisfy customers. Going forward, specialty materials businesses such as Aramid, Calden Fibres and Compostos will also evolve into businesses that provide customers with the products and services they need, when and where they need them, without insisting solely on proprietary materials or production. Through this approach, we aim to increase opportunities for suriawase, working closely with customers to understand key issues and co-create solutions, or kumiawase, delivering solutions by combining technologies, services and partners to meet customer needs with customers. Traditionally, materials businesses competed on how efficiently and accurately they could meet customer-defined specifications. Going forward, however, we want to listen to customer issues before they even become formal specifications as Home Healthcare and Tejin Frontier already do and solve them through combinations of our capabilities. To achieve this, we will increase customer touchpoints and opportunities for collaboration. Through this process we aim to create value and businesses together with customers and healthcare stakeholders. Since we already have business areas where this model is working, we now intend to expand it across the entire company. However, to support this transformation, we must also fundamentally change our management and digital foundations. Previously, Tejan's growth in the 2000s was driven by siloed businesses focused on expanding each individual segment. Now, however, we need to break down those silos and make technologies and assets company-wide resources, rather than business-specific resources. This is what we aim to accomplish during this medium-term plan. As a result, and to achieve this transformation, we have reorganized our businesses into three strategic categories. To address customers' latent issues effectively, we believe businesses should be grouped more broadly. While we explained them earlier as segments, we enlarged the units for solution creation by grouping businesses together. The two pillars expected to drive sustainable growth are apparel industries, formerly fibres and products, and healthcare and life solutions, which combines home healthcare infrastructure with medical device services and rare disease pharmaceuticals. Electronics and energy combines resins and battery and semiconductor solutions businesses, which have already generated high profitability and share overlapping customer bases. These businesses are expected to maintain stable earnings while identifying future customer issues in electronics and energy fields. Meanwhile, aramid and carbon fibre businesses, together with composites, have been grouped into specialty materials for restructuring. First, these businesses must implement cost structure reforms as standalone materials businesses. Then, in areas where these materials are still valued, they must identify customer-driven business opportunities. We believe broader customer and business coverage will make this easier, which is why aramid, carbon fibres and composites have been grouped together. Finally, regarding conventional pharmaceuticals excluding rare disease treatments, the healthcare business had already begun integrating pharmaceuticals and home healthcare during previous medium-term plans in search of a new growth strategy. Since the sustainable growth direction has now been identified, we decided to separate existing pharmaceuticals as businesses requiring restructuring and consideration of new exit strategies. We intend to grow or restructure businesses according to these three strategic approaches. To support this transformation, future profit growth will focus on customer-driven businesses. This will shift us from asset heavy capital investment led businesses to more asset light businesses. In this medium term plan we are not aiming for aggressive top line growth. Instead we aim first to become a more efficient company. To support this, we will establish a high-quality earning space through structural reforms and renew our management foundation to match our changing business structure. Through these three pillars, we aim to achieve fiscal 2028 adjusted operating income of 60 billion yen and ROE of 8%. While the increase from 25 billion yen to 60 billion yen over three years may appear ambitious, 20 billion yen of the improvement is expected to come from structural reforms, while growth areas are expected to contribute 15 billion yen. We are not aiming for unrealistic growth, but rather achievable targets. Given our history of impairments on past investments, we believe disciplined investment and improving ROIC are more important than simply chasing top-line growth. Accordingly, our goal is to demonstrate profit growth to improve business efficiency and achieve ROE of 8% by fiscal 2028. Going forward, I would like to explain each of the three frameworks I mentioned earlier in more detail. First is apparel industries, one of our growth drivers. As you know, we have integrated Teijin Frontier, which is strong in polyester, and Asei Kasei Advance, which is strong in nylon, both of which operate integrated manufacturing and trading businesses. I believe this was announced today as well. The new company will begin operations under the name TA Frontier. T stands for Teijin and A for Asahi Kasei. We intentionally avoided using a name like Teijin Asahi because while respecting the cultures and corporate values of both parent companies, we wanted a name that reflects our ambition to become a core player in future industry restructuring. Based on employee feedback, we concluded that TA Frontier would better represent that vision. Regarding the substance of the integration, as I mentioned earlier, the two companies possess different strengths in polyester and nylon. From Teijin's perspective, as shown on the right side, this integration provides new pieces for the combinations I discussed earlier, including nylon and bamboo processing sites and processing technologies. At the same time, from Teijin's standpoint, the customer base in construction material applications, which Teijin Frontier previously did not have, has expanded significantly. Therefore, as indicated by the arrows, this integration not only creates synergies by utilizing materials and customer assets that each side previously lacked, but also greatly increases opportunities and building blocks for the kebnyase and suryase approach we are pursuing. We intend to continue expanding the business in this manner. Next is healthcare and life solutions, our second pillar. As I repeatedly stated, we intend to expand the business by leveraging the existing home healthcare business platform and extending into adjacent areas where our strengths can be utilised. To achieve this, we believe expansion of our business foundation through alliances with other companies and M&A will be necessary. First, the area shown on the left is what we refer to as outpatient type home healthcare. Patients visit hospitals roughly once a month for outpatient treatment and prescriptions and our role is to support the medical care they receive at home. To support this, we have established contact centres, visiting nursing stations and nationwide sales, maintenance and support systems. These businesses constitute what we call our home healthcare business and we now intend to expand into adjacent areas. Compared with outpatient and clinic visit models, we would like to expand into visiting type home healthcare where care is provided directly in patients' homes. To support this, we are also considering combining facilities that function as residential care bases. In essence, patients who have difficulty visiting outpatient clinics often require somewhat more invasive medical treatments and care. Therefore, we aim to expand into these areas as well, including through M&A, and create new business domains there. This will be our second growth pillar. Next is electronics and energy, which serves as a highly profitable business supporting these growth areas. We have not actively highlighted this business previously, but it is already highly skilled at promoting combinations across production, technology development, sales and marketing, including collaboration with partner companies. By integrating the previously separate resin business and battery materials business, we expanded the range of solutions we can offer to customers, particularly since the customer base significantly overlapped. This business has always been strong at Surrealse collaboration with component manufacturers and finished product manufacturers. By increasing the range of available solutions, we believe the business will become even more stable and better positioned to identify new customer challenges. Although this is not a particularly large business area, we aim to pursue a niche top strategy here. The third category consists of businesses requiring structural reform. First is specialty materials. Ultimately, we want this business to transform into a customer-driven business model. However, first and foremost, aeronautic and carbon fibre businesses must implement cost structure reforms as materials businesses and establish a foundation capable of generating stable profits. At the same time, in applications where these materials are still highly valued, such as aerospace, personal protection, defence and infrastructure, our recognition among customers remains very strong. Leveraging our market positioning, we want these businesses to shift from simply selling materials to identifying customer challenges and solving them. We expect them to uncover as many customer issues as possible. Ideally, by the end of the medium term plan, profitability in each materials business will have recovered and we will be able to report that we have established new business approaches in at least some of these four areas. If we can achieve that, we would consider this medium term plan successful. To put it simply, selling proprietary materials remains an important business today. However, even in this area, we want to move away from a focus solely on our own materials and instead prioritise solving custom challenges. I would now like to discuss structural reforms in more detail. For aramid and carbon fibers, including previously announced measures, we are planning significant workforce reductions alongside reviews of production structures and other reforms. Through these actions, we aim to further strengthen the business structure and establish a framework capable of providing value to customers at appropriate costs for materials that continue generating value, even after transitioning to a customer-driven business model. At the same time, in the application areas highlighted in red, where our materials already have a certain level of recognition and customer acceptance, we will also explore the creation of customer-driven businesses. This is one reason why we grouped these businesses together on a larger scale. Meanwhile, regarding existing pharmaceuticals, as I mentioned earlier, the pharmaceutical and home healthcare businesses had already begun integration around two medium-term plans ago in search of a winning strategy. As I explained earlier, the winning strategy has already been identified. Therefore, for existing pharmaceutical products that we believe no longer contributed to that strategy, we intend to identify best owners and further accelerate our focus on rare disease and intractable disease areas, as previously promised. At the company-wide level, as shown at the bottom, we also plan additional cost reductions across the group through workforce reductions. Of course, this is partly about reducing costs, but more importantly, we believe we must become a more productive company in preparation for an AI-driven era. Therefore, rather than simple cost cutting, we intend to proactively reduce functions that are deemed unnecessary, while strengthening functions needed for customer-driven businesses through the use of AI. Taken together, we intend to execute and realize the numerical targets shown here during this medium-term plan period. As I mentioned at the outset, the nature of the company will change significantly. Until now, we believed it was appropriate for each siloed, materials-based business to grow independently. That approach supported Teijin's growth during the 2000s. so it was not necessarily wrong. However, now that major transformation of our business structure is required we believe we must fundamentally change our management strategy in order to truly operate as one unified company. We will implement technology strategies that take siloed assets out of individual businesses and reposition them as shared company-wide assets. We believe this is essential for promoting combinations across businesses. Likewise, to support this transformation, we must integrate knowledge dispersed globally. Therefore, we intend to unify our IT infrastructure and establish a one-data platform within approximately one year. On top of that, over the next three years, we intend to build systems that maximize the use of AI to digitally promote suriyase and kumiase. In addition, we believe we must further develop systems that enable optimal global talent allocation and we will continue identifying and assigning personnel capable of supporting these initiatives. Summarising this numerically, this page outlines our targets. The management team, including myself, debated extensively how to disclose these segments. Ultimately, we decided that disclosing the Lions Fiscal 2025 loss in specialty materials was important as a demonstration of our determination and commitment to taking a do-or-die approach. Accordingly, we adopted the segment disclosure structure. Overall, we aim for revenue of 970 billion yen and adjusted operating income of 60 billion yen. As I mentioned earlier, we are not seeking aggressive top-line growth. Instead, we are prioritizing profit growth and improving ROIC to become a more efficient company. As shown here, businesses such as the parallel industries and electronics and energy already demonstrate strong ROIC. We intend to maintain those ROIC levels while supporting company growth and stable earnings. At the same time, we aim to improve healthcare and life solutions further and transform specialty materials from a loss-making business into one capable of generating ROIC above WAC by fiscal 2028. Next is capital allocation to support these initiatives. We expect to generate cash through earnings from business activities, asset sales contributing to ROIC improvement and flexible financing arrangements. We intend to allocate that cash toward business reinvestment and shareholder returns. Regarding the content of our growth investments, we have decided to focus first on growing apparel and industries and healthcare and life solutions. we intend to concentrate investments in these priority areas. In addition, even in the case of M&A, rather than pursuing new markets through entirely new technologies as we have done in the past, we intend to limit investments to areas such as rolling up existing businesses through horizontal integration and expanding customer bases by extending existing technologies into adjacent areas. We would like to proceed while reflecting on lessons learned from the past. These are the primary areas for growth investment. To support this strategy, as I mentioned earlier, we believe substantial digital investment will also be necessary. On the other hand, regarding shareholder returns, our basic policy remains stable dividends. Although we recorded a significant net loss in fiscal 2025, we maintain dividends as promised. By maintaining stable dividends, we hope that both existing and new shareholders who are willing to support our transformation, whether medium to long term, will continue to invest in the company. Going forward, we also intend to steadily improve ROE and demonstrate ROE improvement backed by profit growth, along with decreases in DOE before considering the introduction of DOE around fiscal year 2027. These are the basic principles behind our shareholder return policy. In any case, the most important point is that we must first achieve a significant improvement in ROE, moving from negative territory to at least 8%, which we believe is the minimum level at which shareholders will feel comfortable and trusting management with executing its strategy. To achieve this, we will place disciplined investment and efficient business operations at the centre of our management approach. In terms of investment, we will focus on making disciplined investments in areas where we can compete and win. Through these efforts, we intend to steadily execute on the commitments we have made. Finally, to summarize, we aim to combine all assets across the Teijin Group and strengthen suryaase collaboration through our numerous customer touchpoints, transforming ourselves into a company that creates businesses and value together with customers. The four business domains shown on the left will serve as the areas where this strategy is implemented. We will work steadily toward making these businesses the new Tejin Group by fiscal 2028. This concludes my presentation.