Fiscal 2018 Perform

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erformance

Fiscal 2018 Perform

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erformance

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Sales of aramid fibers expanded mainly for automotive and infrastructure-related applicationsSales of para-aramid fiber Twaron for tires and other automotive applications and optical fiber applications were firm. In the meta- aramid fiber Teijinconex, sales related to automobiles such as turbo-charger hoses, protective clothing and industrial materials remained strong.

Aramid fibers possess outstanding features such as high strength and heat resistance. They can be divided into two broad categories: para-aramid fibers and meta-aramid fibers. Para-aramid fibers are particularly outstanding in terms of strength and heat resistance. Accordingly, they are mainly used as reinforcement for tires and friction material for automobile brake pads, as well as reinforcement for optic fiber cables. The market for para- aramid fibers is expected to grow at an annual rate of 3%. Meta-aramid fibers have outstanding long-term heat resis-tance and flame retardant properties, enabling them to be used in heat-resistant filters and special environment uniforms such as those worn by firefighters, as well as other industrial materials where heat resistance is required.

With ten times the strength and only one-quarter of the weight of steel, carbon fiber is attract-ing interest as an environmentally friendly material that will contribute to CO2 emissions cuts and provide other benefits. This growing interest has driven expansion in demand particularly for aerospace applications and industrial applications. The Teijin Group’s TENAX carbon fibers boast a high global market share, mainly in aircraft applications. Moreover, against the backdrop of tighter environmental regulations in recent years, carbon fiber is expected to see rapid growth in applications as automotive components.

With an impact resistance 200 times greater than glass, and only half the weight, polycarbonate (PC) resins offer outstanding heat resistance, transparency and weatherability. These resins are now widely used in the markets of the electronics and automotive fields, with market growth projected at an annual rate of about 3–4%. Teijin has a strong presence in Asia, mainly in the electronics field. The reason is that we have materials technologies that comprise compounds and are developing specialty polymers, and we also have large-scale molding and coating technologies. Polycarbonate films and sheets are also used in products that leverage their functionality due to factors including sophisticated optical control technologies.

Polyester films feature balanced physical properties in terms of such characteristics as strength, heat resistance, and optical properties, together with outstanding cost performance. For these reasons, polyester films are used in a wide array of applications. Our proprietary development polyethylene naphthalate (PEN) is a highly functional film used in high-density data backup tapes, electronic materials, and the automotive field.

Sales for use in aircraft grew steadilyThe sales volume of carbon fiber TENAX has increased for pressure vessel applications along with steady sales for aircraft use appli-cations. However, the rise in raw material and fuel prices pushed down profits in addition to slight stagnation seen through the market impact in compound applications.

Sales mix improved for polycarbonate resinIn main polycarbonate resin, despite a shift in sales to high-value-added products, profits were pushed down by the slowdown in demand for polycarbonate resin and the decline in market prices, which have progressed rapidly since the second quarter.

Sales expanded for use in smartphones and automotive electronicsSales of Purex, a mold release film for processes such as MLCC (Multilayer Ceramic Capacitors), a related material for smartphones and electronic parts for automobiles, continued to expand. Sales of PEN films for automobiles and electronic components remained strong.

Para-aramid fibers▶ The Netherlands,

Japan

Meta-aramid fibers▶ Japan, Thailand

Polycarbonate resins▶ Japan, China

Polycarbonate films and sheets▶ Japan

Polyester films▶ Japan, Indonesia

Carbon fibers▶ Japan, Germany

Global share of para-aramid fibers Twaron and Technora

Among the Approx. 50% (1st)

Global share of carbon fibers

Among the top class

Polycarbonate resins

Among the top class in Asia

Meta-aramid fiber Teijinconex for firefighting uniforms in Japan

Top share

Providing high added value through

Teijin’s proprietary technologies

MATERIALS

Expanded Teijin’s proprietary

PEN film productsto automotive applications

Strengths in processing technologiesMulti-layer film formation technologies and surface processing

* Plans to transfer the film business company to Toyobo Co., Ltd. effective October 1, 2019

Contributing to

energy conservation and CO2 emissions cutsthrough weight reduction

SECTION 3

BUSINESS STRATEGY

S W O T

Materials Business Field

■ Material Business Group

We are promoting the provision of materials and the development of composite materi-als that combine the characteristics of these materials in order to respond appropriately to the needs of the renewal of infrastructure, which is the social foundation. We are also responding to requests for lower fuel consumption and increased awareness of disaster prevention accompanying advanced environmental laws and regulations.

Yasumichi TakesueSenior Executive Officer, Member of the BoardPresident, Materials Business of Teijin Group

Aramid Fibers

Carbon Fibers

Resin and Plastics Processing

Films*

EBITDA (Billions of yen)ROIC (based on operating income) (%)

SWOT Analysis

(Right scale)⎯ ROIC

(based on operating income)

(Left scale)■ EBITDA

(FY)’19(Outlook)

’18’170

20

40

60

80

0

5

10

15

20

Net Sales (Billions of yen)

0

200

400

600

800

(FY)’19(Outlook)

’18’17

Operating Income (Billions of yen)

0

10

20

30

40

(FY)’19(Outlook)

’18’17

Early profit contribution of new business

Fundamental technologies to create new materials and products, composite technologies of various materials and a customer-oriented

business platform starting from CSP*

Increasing needs of material for mobility, weight reduction, high

durability and disaster prevention against the background of

environmental issues

Changes in material needs due to industrial structural changes and intensifying

competition across industries

Business Opportunities

Business Opportunities

Business Opportunities

Business Opportunities

* Continental Structural Plastics Holdings Corporation

TEIJIN LIMITED INTEGRATED REPORT 201968 TEIJIN LIMITED INTEGRATED REPORT 2019 69

MATERIALS

The para-aramid fiber Twaron will focus on expanding products which meet demands for weight reduction and higher performance

in the automotive field, such as tire reinforcement and rubber materials. In addition, looking ahead to the coming of a revolution in

communications (5G, etc.), we will expand business opportunities around communication infrastructure with items such as optical

fiber. With regards to Technora, we will respond to the growing demand for rubber material reinforcement in the automotive field.

A wide range of demand is expected in infrastructure-related fields for ropes and deep-sea oil field mining applications.

For the meta-aramid fiber Teijinconex neo, we will drive growth in demand for protective clothing in Asia and emerging countries,

where high growth is expected against the backdrop of increasingly stringent regulations pertaining to flame-retardant materials and

environmental safety.

In the aircraft field, we will intensively allocate resources to intermediate materials. We will build a competitive edge by accelerating the

expansion of thermoplastic prepreg and the textile materials business, thereby steadily expanding sales. Moreover, we will address

growing needs for use in the infrastructure and energy fields. Specifically, we will work to expand sales of pressure vessels for the

transportation of shale gas, along with sales of products and materials for wind turbine blades.

To address further growth in demand for carbon fiber primarily in North America, we have begun construction of a new carbon fiber

production facility in the U.S. and the construction work is proceeding steadily.

We will strive to add even more value by proposing weight reduction and design improvements using our high- performance compound

products that use the “super engineering plastic” polyphenylene sulfide (PPS) resin and suchlike, in addition to polycarbonate resins.

In addition, a compound factory and development technology center were newly established in Thailand to further expand the resin

business globally. Teijin is promoting the added value of plastic products with compound technology cultivated for many years, and we

aim to further expand our business, focusing on growth regions such as China and the ASEAN region.

There are plans to transfer the film company to Toyobo Co., Ltd. effective October 1, 2019.

Aramid fibers

Resin and plastics processing

Carbon fibers

Films

Fiscal 2018 P

erform

ance

Sales of Sports/Outdoor Materials and Polyester Staple Fibers Expanded SteadilyIn the clothing fabric field, sales of fabrics for sports and the outdoors are strong. While the product business utilizing materials such as SOLOTEX also grew, heavy winter clothing struggled due to inclement weather, and a rise in raw material and logistics costs pushed down profits. In the industrial materials field, full-scale production of polyester yarn and raw cotton transferred to Thailand due to structural reforms began, and sales of short-fiber raw cotton for RO membrane support and artificial leather remained strong. Due to the slowdown in growth in China, sales of automotive parts such as airbags were sluggish.

Teijin Frontier Co., Ltd. boasts top sales in Japan as a textile trading company, and it is the only business entity in the industry that does consistent handling from research and development of materials to production, processing and sales. With hybrid functions as a manufacturer and trading company as a growth engine, we have a wide range of businesses that meet various customer needs globally in the field of industrial materials, with items from materials to final products such as clothing fibers, automobile related materials, membrane structures, civil engineering/building materials and lifestyle-related products.

Thorough customer-oriented pursuit, that is, to further evolve the “solution provision business model,” as the only company in the industry which consistently handles research and development, production and sales, we will strive to further improve customer service through speedy development capabilities and stable supply capabilities. With the strength of the global supply chain from manufacturing to retail, we will develop more advanced and differentiated products, and we will create and provide products which meet customer needs and those products which are not on the market. We will also promote local production for local con-sumption and will use M&A and alliances to strengthen production functions. With automobile-related materials in particular, we will

expand production and sales by strengthening the supply chain across Japan, China, the ASEAN region, Europe and the United States. In environment-related fields, we are advocating an activity guide called “THINK ECO” consisting of seven themes: (1) Recycling, (2) Bio origin, (3) Energy saving, (4) Organic, (5) Reduction in the use of hazardous chemical substances, (6) Reduction in emissions of environmentally hazardous substances, (7) Adaptation to climate change. We are also focusing on CSR procurement activities and are working to build and expand environmentally conscious businesses, such as the development of materials that contribute to the reduction of plastic waste in the ocean.

Business Opportunities

Specialized textiles trading company

Among the top classin Japan

Delivering innovative

solutionsby integrating manufacturing and trading company functions

Pro

ductio

n S

ites

Polyester fibers ▶ Japan, Thailand

Textiles ▶ Japan, China, Thailand

Sewn products ▶ Japan, Vietnam, Myanmar

SECTION 3

BUSINESS STRATEGY

Materials Business Field

■ Material Business Group ■ Polyester Fibers & Trading and Retail Business Group

Medium- and Long-Term Strategies

Medium- and Long-Term Strategies

Accelerate measures to build a stable earnings base by expanding solutions-oriented businesses

We contribute to the realization of a beautiful environment and a prosperous future by creating new value through fiber

TEIJIN LIMITED INTEGRATED REPORT 201970 TEIJIN LIMITED INTEGRATED REPORT 2019 71