Sales of Toyobo acrylic fiber (EXLAN) down
The business environment for the Toyobo Group during the first quarter of fiscal 2009 (the three-month period from April 1 to June 30, 2008) was marked by increasing uncertainty as to the economic outlook.
Along with rising oil prices and a sense of slowdown in the U.S. economy precipitated by the subprime loan crisis, the Japanese economy saw sluggish growth in the exports that had been the driving force for the economy, along with a retreat of capital investment following deterioration in corporate earnings, and stagnant consumer spending.
Under such circumstances, the Toyobo Group took steps to strengthen and expand its specialty business segments Films and Functional Polymers, Industrial Materials, and Life Science while in the Textiles segment continued to narrow the overall focus of the Group to functional textiles.
However, increased costs stemming from rising prices for raw material and fuel, more intense competition, and the application of new accounting standards for valuation of inventories led to harsh consequences in terms of earnings.
As a result, net sales for the subject first quarter decreased ¥4.6 billion (4.6%) from the previous fiscal year to ¥97.1 billion.
Earnings declined, however, with operating income down ¥1.8 billion (29.7%) to ¥4.2 billion, and ordinary income down ¥2.4 billion (44.9%) to ¥2.9 billion, with Toyobo posting a net loss for the first quarter of ¥4.7 billion.
Sales in this segment rose due to aggressive marketing to expand sales of automotive-related materials, high-performance fibers, and functional filters, with earnings up as well.
Airbag fabric and tire cord sales rose along with greater demand in Japan and overseas. Sales of the high-performance fiber “DYNEEMA” remained high for such applications as safety gloves, fishing line, and ropes for large ships, and were boosted by increased production following the introduction of new production equipment.
In the filters field, sales of solvent adsorption equipment and various types of air purification filters continued to be strong. Revenue from spunbond was down due to a slowdown in construction-related demand.
As a result, sales in this segment rose ¥1.9 billion (10.1%) from the same period of the previous fiscal year to ¥20.1 billion, with operating income up ¥0.1 billion (5.1%) to ¥1.3 billion.
Both revenue and earnings were down in this segment as we continued to scale back unprofitable products and narrow the commodity textile field, tightening our focus to functional textiles that utilize Toyobo's proprietary technologies.
In the textiles business, sales rose with continued strong exports to the Middle East region, and sales of textiles for underwear and sportswear applications remained steady. Sales of the acrylic fiber “EXLAN” were down considerably due to a falloff in exports to China.
As a result, sales in this segment declined ¥5.4 billion (15.7%) from the same period of the previous fiscal year to ¥28.9 billion, with operating income down ¥0.3 billion (38.6%) to ¥0.5 billion.