Top Management Message

To Shareholders and Investors

Global economic conditions in the three months ended June 2016 held firm, underpinned by the continuation of a gradual economic expansion in developed countries. However, growth in the People’s Republic of China continued to decelerate, despite support from fiscal stimulus through government spending. Moreover, the Japanese economy was sluggish amid slowing growth in personal consumption.

In this environment, for the three months ended June 30, 2016, consolidated net sales declined 9.5% to ¥174.2 billion. This decline was due in part to the impact of optimizing our production configuration associated with restructuring initiatives in the resin business, in addition to the stronger yen, although sales were generally steady across all businesses on the whole. Operating income decreased 4.4% to ¥15.7 billion, due in part to the impacts of foreign exchange movements and downward revisions to NHI drug reimbursement prices, despite efforts to steadily expand the earnings base by driving growth in existing businesses and executing restructuring initiatives. Coupled with the recording of foreign exchange losses and other factors, ordinary income decreased 19.9% to ¥14.4 billion. Meanwhile, profit attributable to owners of parent remained largely unchanged, edging up 2.2% from the same period a year earlier to ¥11.4, mainly reflecting the impact of Tax Effect Accounting.

In fiscal 2016, the global economy has been rapidly shrouded in increasing uncertainty owing to the repercussions of the UK’s decision to exit the EU. Although firm growth is expected to continue primarily in the U.S., there is a higher risk of further deceleration in economic growth amid instability in the financial markets.

In this environment, we will press forward with the implementation of various restructuring initiatives, guided by our revised medium-term management plan, announced in November 2014, with the goal of strengthening our earnings foundation. We will also continue to promote the focused allocation of resources to core strategic businesses and new businesses in an effort to spur the growth of our existing businesses. In addition, we will proactively advance various projects aligned with our transformation and growth strategies, with the aim of realizing new customer value.

In light of an increase in upfront expenses aimed at future growth and changes in our exchange rate assumptions, we have revised our consolidated full-term operating results forecasts for fiscal 2016. We now expect to report consolidated net sales of ¥740.0 billion, compared with our previous forecast of ¥775.0 billion, operating income of ¥53.0 billion, compared with our previous forecast of ¥58.0 billion, and ordinary income of ¥53.0 billion, compared with our previous forecast of ¥58.0 billion, Profit attributable to owners of parent is forecast at ¥35.0 billion, compared with our previous forecast of ¥36.0 billion.

In 2018, the Teijin Group will celebrate the centennial of its founding. Although our history has always been a journey of ceaseless evolution, the new challenge of a further transformation has now begun again. We seek to remain closely attuned to the changes reshaping our world and to create unique products and services that can only be developed by the Teijin Group—products and services that customers truly want to buy and use, even if that means paying a premium price. We seek to continuously create the value that society needs. To evolve into such an enterprise, we will bring together the Group’s comprehensive capabilities to transform our business portfolio.

We look forward to the continued understanding and support of our shareholders and investors.

August 2, 2016

Jun Suzuki

Jun Suzuki
President and CEO