COMPANY PROFILE

8Filtration Industry Analyst March 2013

8

Toyobo Co Ltd, JapanProfileToyobo is a Japanese industrial firm operating primarily in materials and related fields. Its operations are organised into six business segments, namely: Films and Functional Polymers, Industrial Materials, Life Science, Textiles, Real Estate and Other. Its Industrial Materials division produces a range of filters for automotive, office equipment and household appliance applications, whiles its Life Science segment product range includes hollow fibre membranes for artificial kidneys and water treatment membranes.

AnalysisToyobo saw some recovery in the business environment in Japan during fiscal 2012, following the Great East Japan Earthquake the previous year. The upturn, however, was constrained by a range of factors including flooding in Thailand, the appreciation of the yen and rising oil prices. As a result, consolidated net sales for the year increased 2.6% from the previous year to reach ¥349.5 billion, while net income was up 10.4% at ¥4.6 billion. Results in Toyobo’s Industrial Materials segment were affected by production adjustments in the automotive industry owing to the flooding in Thailand, although benefited from good demand from environment-related industries and the consumer safety field. Segment sales fell 0.3% from the previous fiscal year to ¥71.2 billion, while operating income rose 8.8% to ¥5.3 billion. In the Functional Filters business unit sales of filters for use in air conditioners and office equipment continued to be favourable, but were more challenging for VOC emissions treatment equipment in Asia. In Toyobo’s Life Science segment sales increased 1.0% from the fiscal 2011 comparator to ¥31.7 billion, while operating income fell 6.1% to ¥3.5 billion. In the segment’s functional membranes for medical-use business unit, sales remained favourable as a result of expansion in Toyobo’s overseas markets. In the segment’s water treatment membrane business, shipments for new projects in Saudi Arabia got off to a steady start, but were impacted by foreign currency fluctuations. Elsewhere in the company, sales in Toyobo’s Films and Functional Polymers were up 5.0% on the year earlier at ¥133.3 billion, while its operating income fell 26.5% to ¥9.2 billion. In its Textiles segment sales rose 1.3% to ¥88.0 billion with operating income also up, increasing 0.2% to ¥2.5 billion. In Toyobo’s Real Estate and Other businesses total sales increased 5.6% to ¥1.3 billion, with operating income up 0.2% at ¥2.5 billion.

Key Figures (¥ million)Toyobo Co Ltd Year ended 31.3 2012 2011 2010 2009 2008

Net Sales 349 505 340 573 318 773 367 271 431 417Of Which:Industrial Materials 71 221 71 462 63 157 74 656 76 138Life Science 31 695 31 386 32 337 33 123 33 961

Cost of Sales 274 803 264 980 253 695 295 877 342 506

Gross Margin 74 701 75 593 65 078 71 394 88 911

Selling, General & Admin Expenses 56 396 54 703 53 609 60 166 61 836

R&D Expenses 10 820 10 634 10 296 10 669 10 877

EBITDA 37 778 40 003 31 888 32 435 46 349

Operating Income 18 305 20 890 11 469 11 229 27 075

Net Income/(Loss) 4587 4155 2094 (12 505) 4698

Contact DetailsPresident & Chief Operating Officer: Ryuzo SakamotoAddress: 2-8 Dojima Hama 2-chome

Kita-ku, Osaka 530-8230 Tel: +81 6 6348 3111 Japan Web: www.toyobo-global.com

COMMENTIn recent years Toyobo has restructured its core textile operations and expanded its speciality businesses to improve its profitability, with the latter including its industrial materials and life science segments that are home to its filter and membrane operations. The company is now shifting its strategic focus towards expanding its production capacity, while retaining a focus on new product development and improving asset efficiency. The emphasis on capacity expansion includes a desire to accelerate its business development in markets outside of its Japanese base. Having traditionally exported from Japan, Toyobo is now looking to new approaches including alliances and mergers to increase its production capacity and capture emerging markets. Testimony to this new direction was the co-polyester plant it built in Thailand in fiscal 2012, while it has also recently established a joint venture with a firm in Saudi Arabia for its water treatment membrane activities. The company is also developing a stronger presence in China, while it recently merged its two wholly owned US subsidiaries to bring together what were previously separate operations and marketing/business development activities. Toyobo is looking to continue its shift away from traditional textile markets to higher profit speciality products and, consequently, is continuing to stress an emphasis on new product development. ■