2nd quarter financial results (3287R)

TIDMTKK

RNS Number : 3287R

Toray Industries Inc

02 November 2011

November 2, 2011

Toray Announces Consolidated Results

for the Six Months Ended September 30, 2011

Tokyo, November 2, 2011 - Toray Industries, Inc. (the "Company") today announced its consolidated business results for the six months ended September 30, 2011. The following summary of the business results that Toray submitted to the Tokyo Stock Exchange is unaudited and for reference only. (Code Number: 3402)

Consolidated Financial Highlights

(Millions of yen, millions of U.S. dollars, except per share data)

 
                                 Six months ended September            (Reference) 
                                             30,                          Fiscal 
                                                                           2010 
----------------------  --------------------------------------------  ------------- 
                            2011         2010      Change     2011 
----------------------  -----------  -----------  -------  ---------  ------------- 
                                   Yen               %        U.S.         Yen 
                                                             Dollars 
----------------------  ------------------------  -------  ---------  ------------- 
 Net sales               Yen799,785   Yen733,377      9.1    $10,427   Yen1,539,693 
----------------------  -----------  -----------  -------  ---------  ------------- 
 Operating income            63,414       42,520     49.1        827        100,087 
----------------------  -----------  -----------  -------  ---------  ------------- 
 Ordinary income             65,506       40,464     61.9        854         98,888 
----------------------  -----------  -----------  -------  ---------  ------------- 
 Net income                  40,091       24,919     60.9        523         57,925 
----------------------  -----------  -----------  -------  ---------  ------------- 
 
 Depreciation             Yen32,735    Yen34,354    (4.7)       $427      Yen69,539 
----------------------  -----------  -----------  -------  ---------  ------------- 
 Capital investment          28,190       20,196     39.6        368         55,394 
----------------------  -----------  -----------  -------  ---------  ------------- 
 Total assets             1,601,510    1,552,861      3.1     20,880      1,567,470 
----------------------  -----------  -----------  -------  ---------  ------------- 
 Property, plant 
  and equipment, net        531,496      543,091    (2.1)      6,930        531,595 
----------------------  -----------  -----------  -------  ---------  ------------- 
 Net assets                 667,763      615,249      8.5      8,706        640,970 
----------------------  -----------  -----------  -------  ---------  ------------- 
 
 Per Share of common stock (yen) 
----------------------------------------------------------------------------------- 
 Net Income - Basic        Yen24.61     Yen16.05     -         -           Yen36.41 
----------------------  -----------  -----------  -------  ---------  ------------- 
 Net income - Diluted         23.29        15.16     -         -              34.43 
----------------------  -----------  -----------  -------  ---------  ------------- 
 Cash dividends                5.00         2.50    100.0      -                7.5 
----------------------  -----------  -----------  -------  ---------  ------------- 
 
 Ratios (%) 
----------------------------------------------------------------------------------- 
 Operating income 
  to net sales                 7.9%         5.8%     -         -               6.5% 
----------------------  -----------  -----------  -------  ---------  ------------- 
 Net income to net 
  sales                        5.0%         3.4%     -         -               3.8% 
----------------------  -----------  -----------  -------  ---------  ------------- 
 Equity ratio                 38.5%        36.6%     -         -              37.8% 
----------------------  -----------  -----------  -------  ---------  ------------- 
 

Notes:

1. For calculation of "equity ratio," minority interests and subscription rights to shares are deducted from net assets.

2. U.S. dollar amounts have been converted from yen at the exchange rate of Yen76.7 = U.S.$1, the approximate rate of exchange prevailing on September 30, 2011.

   3.   Amounts are rounded to the nearest million. 

Segment Information

(Millions of yen, millions of U.S. dollars)

 
          Net Sales                   Six months ended September 
                                                  30, 
-----------------------------  --------------------------------------- 
                                   2011         2010          2011 
-----------------------------  -----------  -----------  ------------- 
                                          Yen             U.S. dollars 
-----------------------------  ------------------------  ------------- 
 Fibers and Textiles            Yen307,500   Yen273,065         $4,009 
-----------------------------  -----------  -----------  ------------- 
 Plastics and Chemicals            206,459      186,539          2,692 
-----------------------------  -----------  -----------  ------------- 
 IT-related Products               130,045      136,162          1,696 
-----------------------------  -----------  -----------  ------------- 
 Carbon Fiber Composite 
  Materials                         36,322       31,871            474 
-----------------------------  -----------  -----------  ------------- 
 Environment and Engineering        85,278       73,461          1,112 
-----------------------------  -----------  -----------  ------------- 
 Life Science                       27,516       25,517            359 
-----------------------------  -----------  -----------  ------------- 
 Others                              6,665        6,762             87 
-----------------------------  -----------  -----------  ------------- 
 Consolidated Total                799,785      733,377         10,427 
-----------------------------  -----------  -----------  ------------- 
 
 
 
    Segment Income (Loss)            Six months ended September 
                                                 30, 
-----------------------------  ------------------------------------- 
                                  2011        2010          2011 
-----------------------------  ----------  ----------  ------------- 
                                         Yen            U.S. dollars 
-----------------------------  ----------------------  ------------- 
 Fibers and Textiles            Yen22,741   Yen13,550           $296 
-----------------------------  ----------  ----------  ------------- 
 Plastics and Chemicals            16,422      12,080            214 
-----------------------------  ----------  ----------  ------------- 
 IT-related Products               19,731      21,286            257 
-----------------------------  ----------  ----------  ------------- 
 Carbon Fiber Composite 
  Materials                         5,032       1,240             66 
-----------------------------  ----------  ----------  ------------- 
 Environment and Engineering        4,191     (1,541)             55 
-----------------------------  ----------  ----------  ------------- 
 Life Science                       4,245       3,334             55 
-----------------------------  ----------  ----------  ------------- 
 Others                               471         409              6 
-----------------------------  ----------  ----------  ------------- 
 Total                             72,833      50,358            950 
-----------------------------  ----------  ----------  ------------- 
 Adjustment                       (9,419)     (7,838)          (123) 
-----------------------------  ----------  ----------  ------------- 
 Consolidated Total 
  (Operating income)               63,414      42,520            827 
-----------------------------  ----------  ----------  ------------- 
 

Notes:

   1.   "Others" represents service-related businesses such as analysis, survey and research. 

2. "Adjustment" of segment income for the six months ended September 30, 2011 of (9,419) million yen includes intersegment eliminations of (145) million yen and corporate expenses of (9,274) million yen. "Adjustment" of segment income (loss) for the six months ended September 30, 2010 of (7,838) million yen includes intersegment eliminations of 708 million yen and corporate expenses of (8,546) million yen. The corporate expenses consist of the headquarters' research expenses, etc. that are not allocated to each reportable segment.

3. U.S. dollar amounts have been converted from yen at the exchange rate of Yen76.7 = U.S.$1, the approximate rate of exchange prevailing on September 30, 2011.

   4.   Amounts are rounded to the nearest million. 

Forecast of Consolidated Results for the fiscal year ending March 31, 2012

(Millions of yen, millions of U.S. dollars)

 
                         Year ending March 
                              31, 2012 
-----------------  ---------------------------- 
                        Yen        U.S. dollars 
-----------------  -------------  ------------- 
 Net sales          Yen1,670,000        $21,688 
-----------------  -------------  ------------- 
 Operating 
  income                 120,000          1,558 
-----------------  -------------  ------------- 
 Ordinary income         120,000          1,558 
-----------------  -------------  ------------- 
 Net income               74,000            961 
-----------------  -------------  ------------- 
 

Reference: EPS forecast (year ending March 31, 2012) Yen45.42

Notes:

1. U.S. dollar amounts have been converted from yen at the exchange rate of Yen77 = U.S.$1, the estimated rate of exchange from October onwards.

   2.   Amounts are rounded to the nearest million. 

Consolidated Business Results and Financial Condition

1. Overview of First Half (April 2011 - September 2011)

During the six months under review, though the global economy on the whole continued to expand steadily, growing uncertainties stemming from the financial crisis in Europe and the sluggish U.S. economy fueled concerns of economic slowdown even in emerging economies led by China since summer. The Japanese economy also, in spite of signs of recovery following the easing of supply constraints caused by the Great East Japan Earthquake, is facing increased uncertainties over the future due to the fluctuations in the global economy as well as the accelerated appreciation of the yen.

Under such circumstances, Toray Group in April 2011 launched the new medium-term management program "Project AP-G 2013." Under the project, the Group has been striving to strengthen its revenue base by pursuing business expansion in growth business fields and growth regions and by bolstering its total cost competitiveness.

As a result, consolidated net sales for the first half through September 30, 2011 rose 9.1% compared with the same period of the previous fiscal year to Yen799.8 billion (US$10,427 million). Operating income came to Yen63.4 billion (US$827 million), up 49.1%, and ordinary income rose 61.9% to Yen65.5 billion (US$854 million). Net income grew by 60.9% to Yen40.1 billion (US$523 million).

Business performance by segment is described below.

Business Performance by Segment:

Fibers and Textiles

In Japan, sales increased strongly in apparel applications including inner wear using functional materials and the garment business targeting major SPAs also expanded. Sales of industrial-use materials, especially automotive applications, also recovered along with retrieval of automobile manufacturers' operation. Overseas, the polyester filament and staple fiber business in ASEAN countries, the clothing textile business in China and ASEAN countries and the textile business for air bag applications in Thailand and Czech Republic expanded sales and shifted focus to high value-added products. This resulted in steady performance in both apparel and industrial applications abroad.

As a result, total sales of Fibers and Textiles rose 12.6% to Yen307.5 billion (US$4,009 million) from the previous year and operating income jumped 67.8% to Yen22.7 billion (US$296 million).

Plastics and Chemicals

In the Plastics and Chemicals segment, sales volume of automotive application and other products, mainly in the resin business, recovered since July from the impact of the Great East Japan Earthquake in Japan. In the film business, products in industrial material applications and packaging materials performed strongly during the period. Overseas, the polyester film business and polypropylene film business expanded sales in the U.S., Europe and Asia.

As a result, total sales of Plastics and Chemicals increased 10.7% year-on-year to Yen206.5 billion (US$2,692 million) and operating income rose 35.9% to Yen16.4 billion (US$214 million).

IT-related Products

In the IT-related Products segment, while sales of materials for small and mid-sized displays such as for smartphones performed strongly, those of LCD and PDP TV-related products including films and processed film products fell due to the impact of panel production adjustments caused by the slowdown in the TV market.

As a result, sales of the segment decreased 4.5% to Yen130.0 billion (US$1,696 million) compared with the same period a year earlier, and operating income fell 7.3% to Yen19.7 billion (US$257 million).

Carbon Fiber Composite Materials

In the Carbon Fiber Composite Materials segment, despite the impact of the strong yen and rising raw material prices, Toray Group has been actively pursuing sales expansion as demand for aircraft applications recovered and that in environmental and energy field including compressed natural gas tanks expanded. As a result, sales volumes in these applications increased. The Group also made steady efforts to push back prices primarily in the areas of general products for sports and general industrial applications.

On the whole, the Carbon Fiber Composite Materials registered a year-on-year sales increase of 14.0% to Yen36.3 billion (US$474 million) while operating income rose 305.8% to Yen5.0 billion (US$66 million).

Environment and Engineering

In the Environment and Engineering segment, sales of the water treatment business declined due to a lack of large-scale projects similar to those during the same period a year earlier. Nevertheless, the Company actively pursued activities to win orders for reverse osmosis membranes and other water treatment membranes around the world. In Japan, large projects at a water treatment engineering subsidiary made progress, while sales at construction and real estate subsidiaries expanded.

The total sales of Environment and Engineering increased 16.1% to Yen85.3 billion (US$1,112 million). The segment had operating profit of 4.2 billion yen (US$55 million), an improvement of 5.7 billion yen compared with the same period a year earlier.

Life Science

In the Life Science segment, sales of pharmaceutical products including REMITCH(R) , an oral antipruritus drug for hemodialysis patients, as well as those of Toraymyxin*, a hemoperfusion absorption column for removing endotoxin, increased.

Overall sales of Life Science rose 7.8% to Yen27.5 billion (US$359 million) from the same period a year earlier and operating income increased 27.3% to Yen4.2 million (US$55 million).

Note: REMITCH(R) is a registered trademark of Torii Pharmaceutical Co., Ltd.

New Businesses and New Investments

In September this year, the Company held the Toray Advanced Materials Exhibition 2011 and Toray Advanced Materials Symposium 2011 at the Tokyo International Forum. Under the theme of "Green innovation with Toray Materials," the exhibition introduced advanced materials and technologies that contribute to solving the global environmental problems. The exhibition, which attracted about 9,200 visitors, featured ample images and had on display large exhibits including TEEWAVE* AR1, the next-generation concept EV, which was introduced to the public for the first time, 40 meter blade for wind power generation and an actual main wing of Boeing 787, both based on Toray materials, and demonstration equipment of water treatment plant. The symposium set its theme as "Advanced materials and technologies for sustainable growth in the 21(st) century" and had academic leaders including Nobel laureates in chemistry in its core technologies of organic synthetic chemistry, polymer chemistry, biotechnology and nanotechnology to give lectures. Some 4,300 audiences attended the symposium.

2. Analysis of Financial Condition

As of September 30, 2011, Toray Group's total assets stood at Yen1,601.5 billion (US$20,880 million), up Yen34.0 billion compared with the end of the previous fiscal year. Current assets increased Yen49.2 billion from the end of the previous fiscal year primarily due to higher levels of notes and accounts receivable - trade and inventories. Fixed assets fell by Yen15.1 billion reflecting decreases in investment securities.

Total liabilities rose Yen7.2 billion to Yen933.7 billion (US$12,174 million) compared to the end of the previous fiscal year, owing to an increase in interest-bearing debts.

Net assets increased Yen26.8 billion compared with the end of the previous fiscal year to Yen667.8 billion (US$8,706 million). This reflected increased retained earnings from net income. Net assets less minority interests and subscription rights to shares stood at Yen616.5 billion (US$8,037 million).

3. Forecast of Consolidated Results

The outlook for the global economy is increasingly uncertain, as developed economies face a slowdown reflecting the financial crisis and unstable financial systems in Europe and the U.S. and as there is concern about deceleration of economic growth in emerging economies because of declining demand from developed countries. The Japanese economy is likely to track a moderate recovery path, as supply restrictions resulting from the Great East Japan Earthquake ease and production and exports recover, and recovery-related demand becomes apparent. At the same time, it is necessary to pay attention to the downside risks from the uncertainties in overseas markets, the rising yen and low stock prices. Also, the large-scale floods in Thailand is feared to give extensive impact on the overall supply chains.

Under such circumstances, Toray Group has been implementing the new medium-term management program "Project AP-G 2013" that pursues business expansion in growth business fields and growth regions. Under the project, Toray Group is driving forward the three group-wide projects in an integrated and aggressive manner: "Green Innovation Business Expansion (GR) Project" aimed at expanding businesses contributing to solution of environmental and resource- and energy-related issues, "Asia and Emerging Country Business Expansion (AE) Project" for growing businesses in respective regions to take advantage of remarkable economic growths in emerging countries in Asia and elsewhere, and the "Total Cost Reduction (TC-II) Project" to further enhance the corporate competitiveness, ultimately to promote growth strategy and strengthen its earnings base.

Given the increasingly uncertain economic situations both in Japan and abroad as well as the business results for the first half of the fiscal year, the Company decided to keep its full-year earnings forecasts announced on August 1 unchanged. The Company estimates an exchange rate of Yen77 to US$1 for the period from October onwards.

4. Subsequent events

Some of the Company's consolidated subsidiaries were inundated by the large-scale floods in Thailand which occurred in October 2011. The level of damage is yet to be fully assessed as of the publication of this report, and it is difficult to give a rational estimate of the timing of restoration and the overall impact on the business performance. The Company plans to file an insurance claim for the affected assets.

Notes:

1. U.S. dollar amounts have been converted from yen at the exchange rate of Yen76.7 = U.S.$1, the approximate rate of exchange prevailing on September 30, 2011.

2. U.S. dollar amounts of forecast for FY Mar/12 have been converted from yen at the exchange rate of Yen77 = U.S.$1, the estimated rate of exchange from October onwards.

   3.   Product names with (*) abbreviation are trademarks of Toray Industries, Inc. 

Disclaimer

Descriptions of predicted business results, forecasts and business plans contained in this material are based on predictive forecasts of the future business environment made at the present time. The material in this statement is not a guarantee of the Company's future business performance.

For further information, please contact:

 
 Mr. Kenjiro Kamiyama             Mr. Yoshiaki Nakayama 
  General Manager                  General Manager 
  Investor Relations Department    Corporate Communications 
  Tel: [phone]             Department 
  Fax: [phone]             Tel: [phone] 
                                   Fax: [phone] 
 
  Toray Industries, Inc. 
  http://www.toray.com/ 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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