The business environment for the Toyobo Group during the first half of fiscal 2013, ending March 31, 2013 (April 1, 2012, through September 30, 2012) was characterized by moderate recovery in the Japanese economy as reconstruction work progressed in the wake of the Great East Japan Earthquake and the positive effects emerged of policies to revitalize consumer spending through eco-car subsidies and other measures. However, future trends continued to be uncertain because of the effects of the prolonged appreciation of the yen, concerns about shortages of electric power, and other issues. In overseas economies also, concerns about a deceleration in economic activity grew because of the debt crises faced by European governments, the slowing of growth in China and other Asian countries, and other circumstances.

Amid this operating environment, the Toyobo Group aims to become “The category leader for providing new value in the environment, life science, and high-function products fields.” Accordingly, Toyobo is proceeding with activities targeted at further expanding its businesses by developing specialty products and increasing their sales in domestic and overseas markets. In the environment field, Toyobo’s accomplishments have been recognized and its reverse osmosis membranes for seawater desalination have been selected for use in the largest desalination plants in Saudi Arabia. In addition, Toyobo is developing its position in the market for VOC emissions treatment equipment in Asia and is working to expand the range of applications for its high-melting-point polyamide made from biomass. In the life science field, Toyobo has successfully developed a device for the regeneration of damaged nerves, the first medical treatment device in Japan, and has filed approval applications for its use in medical treatment. In the high-function product field, Toyobo’s facility in China for the manufacturing of airbag fabrics has gone into full production, and it is working to expand its overseas business through the establishment of a manufacturing and sales company in the United States. In addition, Toyobo has developed and is expanding sales of its films and related products for use in the manufacturing of ceramic capacitors for smartphones.

As previously mentioned, the Toyobo Group is addressing business issues as well as implementing measures and improvements that will lead to further growth and expansion. However, although recovery trends are in progress, because of the difficult operating environment in the first quarter, consolidated net sales during the first half of the fiscal year decreased ¥7.0 billion (3.9%), from the same period of the previous fiscal year, to ¥171.1 billion, with operating income down ¥3.4 billion (30.9%), to ¥7.6 billion; ordinary income declined ¥3.7 billion (36.1%), to ¥6.5 billion; and net income was decreasing ¥2.5 billion (48.0%), to ¥2.7 billion.

The performance of the Toyobo Group, which weakened temporarily in the first quarter, has been on a recovery trend since the second quarter. The Group is expected to attain the levels of income in the outlook announced previously, but net sales are now forecast to be slightly below the previously announced outlook. Accordingly, in its forecast for the full fiscal year, Toyobo has revised only its outlook for net sales.

As a result, we forecast net sales for the subject fiscal year decrease ¥5.0 billion from initially, increase ¥0.5 billion from the previous fiscal year, expected to ¥350.0 billion. Operating income declines ¥0.3 billion from the previous fiscal year to ¥18.0 billion, ordinary income down ¥0.7 billion, to ¥15.0 billion, and net income up ¥1.8, to ¥6.4 billion.

I would like to offer my most sincere appreciation to our shareholders and investors, and ask for your continued support.

November 2012
Ryuzo Sakamoto
President and Chief Operating Officer