AUGUST 31, 2018
R E P O RT |2 0 1 8
Possibilities, turning seawater into drinking water, reinforcing genetic analy-
sis for medical breakthroughs, furthering the evolution of eco-cars, producing
plant-based functional clothing, extending the shelf life of food for reduced
waste, and creating a world where everyone can achieve their personal best.
Materials have the power to do all of this and more, because materials make
our modern world.
The world is full of possibilities and our materials can change the world,
which we will never stop believing.
ANNUAL REPORT 2018
April 1, 2017–March 31, 2018
Corporate Philosophy
Contributing to society through the creation of new value
with innovative ideas, technologies, and products
Corporate Missions
For our customers
To provide new value to our customers through
high-quality products and superior services
For our employees
To provide our employees with opportunities for self
development in a challenging environment
For our stockholders To provide our stockholders with dependable and
trustworthy management
For society
To establish ties and develop mutual trust as a
responsible corporate citizen
Contents
VALUE CREATION
03 Toray’s Story of Creating Value
04 Using the Power of Chemistry to Address a Host of Issues Worldwide
06 Toray Group’s Business Process
08 Toray Group’s Basic Strategy for Sustainable Growth
10
A Path of Sustainable Growth Since the Company’s Foundation and
Medium- to Long-term Targets (KPIs)
12 A History of Value Creation
14 Toray Group’s Providing Value
16 Financial & Non-financial Highlights
STRATEGY
18 To Our Stockholders and Investors
28 Results by Segment for Fiscal 2017
30 Fibers & Textiles
31 Performance Chemicals
32 Carbon Fiber Composite Materials
33 Environment & Engineering
34 Life Science
35 Founded on Technology and Knowledge
SUSTAINABILITY MANAGEMENT
42 Toray Group Sustainability Vision
44 Sustainability in Toray Group
46 Environmental Management Initiatives
48 Human Resource Development and Training
50 Stakeholder Engagement
52 Corporate Governance
58 Board of Directors and Corporate Auditors
59 Organization
60 Toray Group Worldwide Network
61 Financial Section
103
Investor Information/Corporate Data
Cautionary statement with respect to forward-looking statements
Descriptions of predicted business results, projections and business plans contained in this annual report
are based on forecasts and assumptions regarding the future business environment made at the present
time. This annual report is not a guarantee of the Company’s future business performance.
02
Annual Report 2018
Toray’s Story of Creating Value
INNOVATION BY
CHEMISTRY
Materials can Change Our Lives
Toray Group firmly believes that “materials, as the foundation of all products, have the power to
bring about fundamental transformations in society.” Based on this belief, our goal is to become
a global top company in advanced materials as an integrated chemical industry group. Since our
establishment, we have positioned “contributing to communities” as the focus of our existence.
Carrying this focus into our corporate philosophy of “contributing to society through the creation
of new value with innovative ideas, technologies, and products,” we are ramping up efforts to
solve a host of issues worldwide together with global partners by providing innovative technolo-
gies and advanced materials. With this in mind, we are working to become a corporate group that
provides high value to all stakeholders.
The World as Envisioned by Toray Group in 2050
Toray Group’s innovative technologies and advanced materials
A net zero emissions
world, where greenhouse
gas emissions are
completely offset by
absorption
Accelerating measures
to counter climate
change
A world where
resources are
sustainably managed
Realizing sustainable,
recycling-based use
of resources and
production
A world with a
restored natural
environment, with
clean water and air for
everyone
Providing clean
water and air
A world where
everyone enjoys good
health and hygiene
Contributing to
better medical care
and hygiene for
people worldwide
03
Toray Industries, Inc. Using the Power of
Chemistry to Address
a Host of Issues Worldwide
04
Annual Report 2018 Materials are the foundation of all products. And we at Toray believe that the evolution of materials is
what will help change the future in a bigger and better way. Much like the butterfly effect*.
Looking at such issues as climate change, water scarcity, and the depletion of resources, the world
in which we live is growing increasingly severe with each passing day. Exacerbating many of these
problems, the world’s population is projected to reach around 10 billion in 2050. Against this back-
drop of population growth and the continuous aging of society, the need to maintain and improve
people’s health is becoming an increasingly important issue. Looking ahead, Toray Group recognizes
the need to overcome a host of challenges for people all over the world to enjoy prolonged healthy
lifestyles while benefiting from the abundant gifts of nature.
At the same time, we remain fully confident that material innovation is vital to the manufacture
of attractive end products that can in turn provide the fundamental solutions necessary to address
many of these global problems. It is in fact this confidence that drives our mission to develop and
commercialize innovative technologies and advanced materials from a long-term perspective, and to
contribute to society as a part of efforts to realize the world to which we aspire.
* The Butterfly Effect is one of the ideas in chaos theory that suggests that a flap of a butterfly’s wings in one part of the world can set off
a tornado in another. This idea proposes that one small change can instigate various phenomena that ultimately results in a larger trans-
formation in the future.
05
Toray Industries, Inc. Advanced Materials Give Shape to Advanced Industries
—Toray Group’s Business Process
Raw Materials
Management Resources
INPUTS
Petrochemical
products
Metals, mineral
raw materials
Natural fiber
Plant-based
material
Water resources
Energy resources
(Crude oil, natural gas, etc.)
Financial
Capital
Net assets ¥1,169.2 billion
A+
Rating (R&I)
Equipment
Capital
Capital Expenditures
¥157.9 billion
Intellectual
Capital
Valid and Enforceable
Patents
Domestic 5,809
Overseas 9,918
R&D Expenses
¥66.2 billion
Human
Capital
Number of Employees
45,762
Gender Ratio (Male:Female)
73:27
Number of R&D staff
about 4,000
Business Bases
26 countries/regions
Natural
Capital
Social and
Relationship
Capital
06
Annual Report 2018 Drawing on organic synthetic chemistry, polymer chemistry, bio- and nanotechnology as its core technol-
ogies, Toray Group provides innovative technologies and advanced materials in each of the fibers and tex-
tiles, performance chemicals, carbon fiber composite materials, environment and engineering, and life
science business domains. Through a process of co-creation with customers, we are generating new value.
INPUTS
OUTPUTS
Toray Group’s Business Process
Core Technologies + Co-creation
Business Domains
*Operating Income Ratio by Business Segment
(As of March 31, 2018)
Organic
Synthetic
Chemistry
Fibers &
Textiles
40%
Polymer
Chemistry
Performance
Chemicals
39%
Co-creating
with customers
Carbon Fiber
Composite
Materials
11%
Biotechnology
Environment &
Engineering
7%
Nanotechnology
Life Science &
Other
Businesses
3%
07
Toray Industries, Inc. Employees Shape the Destiny of a Company
—Toray Group’s Basic Strategy for Sustainable Growth
People-centric Management
Based on the concept that “the success or failure of a
company is decided by its people, and that employ-
ees shape its destiny,” Toray has continued to nurture
its employees as a long-term management resource
since its establishment. Management’s efforts there-
fore reflect the importance placed on continuously
motivating employees as the key to improving the
Company’s performance.
The Direction of
Toray’s Human Resources Development
01
Development of fair-minded
individuals who act with high
ethical standards and a sense of
responsibility
02
Training of professionals with
advanced expertise, technical skills,
and originality in problem solving
03
Development of leaders who act
with foresight and a sense of
balance
04
Development of individuals,
professionals, and leaders who
can play an active role in global
business
Toray’s Basic Strategies
(Toward Sustainable Growth)
1
Developing Innovative Technologies
and Advanced Materials from a
Long-term Perspective
Social Issues
Climate
change
Water
scarcity
Resource
depletion
Population
increase
Aging of
population
Others
Lightweight
materials for
automobiles
and aircraft
Plant-based
polyester
fibers
Materials for
solar and
wind power
generation
Organic
synthetic
chemistry
Lithium-ion
battery
separators
Polymer
chemistry
Core
Technologies
Bio-
technology
Reverse
osmosis
membranes for
seawater
desalination
Nano-
technology
hitoeTM
functional
material for
vital signs
monitoring
DNA chip
Protective
clothing
Toray executes diverse training programs to enhance
management, sales and marketing, and production tech-
nology capabilities, and specialized skills, and to better
equip employees to address globalization. These pro-
grams cover all levels of employees and fields, aiming to
develop future management candidates while expanding
and educating the base of core staff ready to employ their
strong work place capabilities to lead on the front lines.
Adopting a long-term perspective, Toray sees
the potential value that materials can provide
in addressing social issues and market needs
through innovative and effective solutions. As a
result, the Company engages tenaciously in the
development of advanced materials drawing on its
core technologies.
08
Carbon Fiber Composite Materials, Aircraft Application
Aircraft
manufacturer
Product Development
Technical Support
Stable Supply
Tier 1
Tier 2
Providing
Prepreg
Toray Group
Fibers & Textiles, Apparel Applications
Existing Supply Chain (Apparel)
(multi-steps in sales channels of each materials, applications, and items)
F
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Integrated Apparel Flow
(Toray Group responds to all customers needs-any materials, applications, or items)
Toray Group
Yarn
manufacturing
Weaving,
Knitting
Dyeing Garment
Apparel,
SPA, etc.
Mother Plants in Japan
Development of advanced materials
Creation of high value-added products
Development of innovative processes
Radical cost reductions
Further expand business and
strengthen cost competitiveness
Reinvest in R&D
Overseas Bases
Development of applications that
address local needs
Local production based on location of
demand and cost competitiveness
Annual Report 2018
Employees Shape the Destiny of a Company
—Toray Group’s Basic Strategy for Sustainable Growth
Guided by the understanding that “employees shape the destiny of a company,” Toray Group is lever-
aging the strengths of our human resources together with our research and development capabilities
while adopting the basic strategy of building competitive advantage. This enables us to ensure its sus-
tainable growth.
2
Carrying Out Business Strategies
that Take into Account the Entire
Supply Chain
Carbon Fiber Composite Materials, Aircraft Application
Aircraft
manufacturer
Product Development
Technical Support
Stable Supply
3
Working Toward Sustainable Growth
on a Global Scale
Business Bases 26countries/regions
Overseas Sales Ratio 54%
Tier 1
Tier 2
Providing
Prepreg
Toray Group
Fibers & Textiles, Apparel Applications
Existing Supply Chain (Apparel)
(multi-steps in sales channels of each materials, applications, and items)
i
F
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r
M
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a
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i
R
e
t
a
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l
i
n
g
Mother Plants in Japan
Development of advanced materials
Creation of high value-added products
Development of innovative processes
Radical cost reductions
Further expand business and
strengthen cost competitiveness
Reinvest in R&D
Overseas Bases
Development of applications that
address local needs
Local production based on location of
demand and cost competitiveness
Integrated Apparel Flow
(Toray Group responds to all customers needs-any materials, applications, or items)
Toray Group
Yarn
manufacturing
Weaving,
Knitting
Dyeing Garment
Apparel,
SPA, etc.
Toray is building close-knit ties with powerful busi-
ness partners by carrying our business strategies
that take into account the entire supply chain. At
the same time, the Company is honing the quality
and performance of new materials. Through these
means, we are establishing a position of competi-
tive advantage.
Toray engages in cutting-edge innovative R&D at
mother plants in Japan while working to realize a
sustainable growth cycle on a global scale. To this
end, we are adopting both a flexible and timely
approach as we work to build a local production
structure that takes into consideration the location
of demand as well as cost competitive concerns.
At the same time, we are undertaking the devel-
opment of applications that address local needs at
each site. By the same token, we are cultivating
markets in growth countries and regions while tak-
ing steps to capture new profit opportunities.
09
Toray’s Basic Strategies
(Toward Sustainable Growth)
Social Issues
Climate
change
Water
scarcity
Resource
depletion
Population
increase
Aging of
population
Others
Lightweight
materials for
automobiles
and aircraft
Plant-based
polyester
fibers
Materials for
solar and
wind power
generation
Organic
synthetic
chemistry
Lithium-ion
battery
separators
Polymer
chemistry
Core
Bio-
Technologies
technology
Reverse
osmosis
membranes for
seawater
desalination
Nano-
technology
hitoeTM
functional
material for
vital signs
monitoring
DNA chip
Protective
clothing
Toray Industries, Inc.
Enhancing Long-term Corporate Value
—A Path of Sustainable Growth since the Company’s
Foundation and Medium- to Long-term Targets (KPIs)
1926
Began as a manufacturer of viscose rayon
The former Mitsui & Co.* was an importer of rayon yarn from
Courtaulds PLC of the U.K. for sale in Japan. Mitsui established
Toyo Rayon Co., Ltd. based on the national policy promoting
Japanese industrial manufacturing. At the inaugural meeting on
January 12, 1926, Yunosuke Yasukawa—at the time a managing
director of Mitsui & Co.—acted as a representative of the incorpora-
tors and stated his hopes that the company would generate “major
benefits for the national economy.”
* Note that the former Mitsui & Co. was a completely different corporate
entity with no legal connection to the present-day Mitsui & Co.
Other Businesses 1%
Life Science 2%
Environment & Engineering 11%
Carbon Fiber Composite
Materials 8%
FY2017
Consolidated Net Sales
¥2,204.9billion
Fibers & Textiles 41%
Performance Chemicals
36%
New Products & Other Businesses 6%
Pharmaceuticals & Medical Products 5%
Housing & Engineering 12%
IT-related Products 14%
FY2000
Consolidated Net Sales
¥1,075.4billion
Fibers & Textiles 40%
New Products & Other Businesses 6%
Housing & Engineering 8%
Plastics & Chemicals 23%
FY1985
Consolidated Net Sales
¥787.0billion
Fibers & Textiles 58%
Plastics & Chemicals 27%
Changes in Net Sales
(trillion yen)
3.0
2.5
2.0
1.5
1.0
0.5
0
1926
1930
1940
1950
1960
1970
1980
1990
2000
2010
2020
(Fiscal Year)
“US GAAP” for 1964 - 1983, “Japanese GAAP” after 1984
Non-consolidated
Consolidated
10
Annual Report 2018 Enhancing Long-term Corporate Value
—A Path of Sustainable Growth since the Company’s
Foundation and Medium- to Long-term Targets (KPIs)
Toray Group began as a manufacturer of viscose rayon in 1926. On top of all three major synthetic fibers,
nylon, polyester, and acrylic, the Company has continued to develop innovative technologies while creat-
ing a host of advanced materials and high-value-added products in a broad range of films, chemicals, plas-
tic resins, carbon fiber composite materials, pharmaceuticals, and medical products, water treatment, and
environmental fields. With an eye toward how society will evolve in 2050 and how innovative technologies
and advanced materials may be utilized as a driving force, we will adopt a long-term perspective toward
enhancing our corporate value.
Other Businesses 1%
Life Science 2%
Environment & Engineering 11%
Carbon Fiber Composite
Materials 8%
FY2017
Consolidated Net Sales
¥2,204.9billion
Fibers & Textiles 41%
Performance Chemicals
36%
New Products & Other Businesses 6%
Pharmaceuticals & Medical Products 5%
Housing & Engineering 12%
FY2000
Consolidated Net Sales
¥1,075.4billion
Fibers & Textiles 40%
IT-related Products 14%
New Products & Other Businesses 6%
Housing & Engineering 8%
Plastics & Chemicals 23%
FY1985
Consolidated Net Sales
¥787.0billion
Fibers & Textiles 58%
Plastics & Chemicals 27%
Changes in Net Sales
(trillion yen)
3.0
2.5
2.0
1.5
1.0
0.5
0
1926
1930
1940
1950
1960
1970
1980
1990
2000
2010
2020
(Fiscal Year)
“US GAAP” for 1964 - 1983, “Japanese GAAP” after 1984
Non-consolidated
Consolidated
Financial KPI
Net Sales
Operating Income
Operating Income to Net Sales Ratio
ROA
ROE
Dividend policy
Guideline of D/E ratio
Net Sales of
Green Innovation Business
FY2016
FY2019 (Target)
¥2,026.5billion > ¥2,700.0billion
¥146.9billion > ¥250.0billion
7.2% >
6.3% >
9%
approx9%
10.1% > approx12%
Aim for sustainable dividend increase
linked to business performance
Below 1
¥628.2billion > ¥900.0billion
Net Sales of Life Innovation Business
¥195.5billion > ¥270.0billion
R&D Expenses
Capital Investment
Net Sales of
New Business Creation
¥220.0billion
(Total of 3 years from FY 2017)
¥500.0billion
(Total of 3 years from FY 2017)
¥1,000.0billion (2020s)
Improve Long-term
Corporate Value
Sustainable Related KPI (excerpt)
FY 2019 Target
Environmental Management
Reduction of greenhouse gas emissions per unit of sales:
15% reduction continued (Compared to FY 1990)
Water usage per unit of sales (Compared to FY 2001): 61% reduction
Human Resource Management
Group companies that have
adopted a mid-term human resource plan:100%
Supply Chain Management
Number of Group companies that have requested
their suppliers to practice CSR procurement: More than 40 companies
For details, we are publishing it as a KPI on promoting CSR:
Toray website > Social Responsibility >CSR Road Map
11
Toray Industries, Inc. An Advanced Materials Manufacturer That
Gives Shape to Advanced Industries
—A History of Value Creation
1955
Company principle established
“Toyo Rayon contributes to communities” was
identified as the Company’s original principle.
Shigeki Tashiro, the Company’s chairman at that
time, states “Just like individual people, companies
have a social responsibility to improve the society
in which they live.”
1941
Succeeded in the synthesis and
melt spinning of nylon 6 fiber
using proprietary technology
Developed using proprietary technol-
ogy, “Nylon 6” has created new mar-
kets as a new fiber that can be applied
in fishing nets as well as apparels
such as stockings.
1959
Manufacture of Lumirror™
polyester film began
Toray was the first company in Japan to indus-
trialize polyester film. Positive steps have been
taken to address market growth and to adapt to
changing conditions and circumstances while
gaining a share across a wide range of fields
such as video tapes, industrial materials, spe-
cialty products, and others.
1971
Manufacture and
marketing of carbon fiber
TORAYCATM began
High-performance carbon fiber
TORAYCA™ features light weight,
high tensile strength, and high stiff-
ness. Sales activities commenced
under the registered trademark
“TORAYCA” from 1971.
1971
Marketing of ESCAINETM, ultra-
microfiber non-woven fabric with
suede texture, began
ESCAINETM is a non-woven fabric with suede
texture using ultrafine microfibers. It was
highly acclaimed as a fashion material for its
lightweight and excellent chromogenic prop-
erties. Currently, it is being used in such areas
as automobile interiors and furniture.
12
1976
Marketing of
TORAYCON™ PBT resin began
Featuring outstanding
long-term heat-resis-
tance, chemical-resistance, weather resistance,
and electrical characteristics, TORAYCON™ is
widely used in various connectors and other
automobile parts, bobbins, coil cases and other
electronic and electrical components, and preci-
sion parts for office equipment.
1980
Marketing of ROMEMBRA™
reverse-osmosis membrane
elements began
Research began in 1968 with ongoing devel-
opment as a water treatment membrane.
ROMEMBRA™ enabled
the production
of ultra-pure water for the semiconductor
industry and the desalination of sea and
brine water.
Annual Report 2018 Since our establishment, we have positioned “contributing to communities” as the focus of our existence.
Carrying this focus into our corporate philosophy of “contributing to society through the creation of new
value with innovative ideas, technologies, and products,” we have created a succession of materials that
bring unprecedented levels of value to the world and forged a globally leading presence as an advanced
materials manufacturer that gives shape to advanced industries.
1986
The declaration of “A new founding” and a corporate philosophy
was established to commemorate 60 years in business
We reviewed the Company principle and established a new corporate philosophy:
“Contributing to society through the creation of new value with innovative ideas, tech-
nologies, and products.” At the same time, we established our new corporate symbol
as further commemoration of 60 years in business.
2016
Decided to establish the R&D
Innovation Center for the Future
as a project to commemorate the
Company’s 90th anniversary
Toray decided to establish the R&D Innovation
Center for the Future at its Shiga Plant where the
Company was founded, and will strengthen R&D
to make people’s lives better with Kotozukuri,
value creation, which utilizes the strengths of
advanced materials.
1990
TORAYCA™ carbon-fiber
prepreg certified as a primary structural
material for U.S. Boeing passenger aircraft
Initially the main applications of carbon fiber were fish-
ing rods, golf shafts, and other sporting goods. Through
improved technology and quality, the Company built up
trust in this product as a secondary structural material
in aircraft applications. In 1990, Toray prepreg was cer-
tified for the first time as a primary structural material
(for structural parts where damage is directly linked to a
crash) for the Boeing 777.
2006
Corporate slogan formulated
In April 2006, Toray Group created a new, long-term corporate vision—”AP-In-
novation TORAY 21”—and adopted the corporate slogan “Innovation by
Chemistry,” declaring its aspiration “to become a global top company of
advanced materials,” while focusing on Chemistry.
2006
Strategic partnership started with UNIQLO Co., Ltd.
As a company that provides innovative technologies and materials
that have the power to fundamentally change society, Toray Group
entered into a partnership agreement with UNIQLO, a company that
enriches people’s lives through clothes. Under this partnership both
companies provide products that deliver new value and unprec-
edented levels of performance and comfort to people all over the
world. The two companies are now on the third stage of the strategic
partnership agreement.
13
Toray Industries, Inc. Providing Solutions to Social Issues through Innovation
—Toray Group’s Providing Value
Carbon Fiber Composite Materials
Reducing CO2 Emissions and
Realizing a New Energy Society
through Lightweight Materials
Carbon fiber is one quarter the weight while provid-
ing 10 times the tensile strength of steel, plus it does
not rust. Toray has tenaciously honed its stable pro-
duction technology for high-quality carbon fiber for
over 50 years. Toray’s carbon fiber composite mate-
rials are currently used in the manufacture of aircraft
wings, fuselage and other parts helping to reduce fuel
consumption and CO2 emissions thanks to their light-
weight properties. They are also used in the hydrogen
tanks for wind turbine blades and fuel cell vehicles
that support a new energy society.
Fibers & Textiles, Performance Chemicals
Toward a Sustainable Society
through the Use of Biomass
Resources
With the increase in the world’s population as well
as energy consumption, the global scale depletion of
petroleum/fossil fuels and increased atmospheric CO2
concentration (the main cause of global warming) are
becoming issues. Toray believes in realizing a sustain-
able society that takes into consideration the needs of
both the Earth and its inhabitants by changing the raw
materials of petroleum-derived products. Materials
and products made using Toray’s biomass-based
polymers make this a reality.
Aircraft with 50%
CFRP used in their
body structure weight
compared with
conventional aircraft
approx
20% lighter
Lifecycle CO2 emissions
exhibit a
27,000
t-CO2
reduction per aircraft
over 10 years
Toray Group’s Vision for the World and
Contributions
A net zero emissions
world, where
greenhouse gas
emissions are completely
offset by absorption
Accelerating measures
to counter climate
change
A world where resources
are sustainably managed
Realizing sustainable,
recycling-based use
of resources and
production
Light-
weight
Electri-
fication
Safety
Com-
fortable
Fibers & Textiles, Performance Chemicals,
and Carbon Fiber Composite Materials
Supporting the Automobile
Industry, Where Technology
Innovation Continues to Progress,
through Advanced Materials
The automobile industry is experiencing a period of
technology innovation from a wide range of energy,
IT, environmental and other related perspectives. As
the manner in which cars are manufactured continues
to adapt to changing trends including the focus
on a sustainable,
low-carbon society, self-driving
automobiles and the way in which people view vehicles,
Toray Group is placing the utmost emphasis on four
core concepts—lightweight, electrification, safety, and
comfort—in its development of new materials.
14
Annual Report 2018 Toray Group is providing innovative technologies and advanced materials that greatly contribute to the
fundamental solutions of global problems.
We help accelerate the pace of transition to a sustainable society to cope with increasing environmental
problems including climate change and water shortages due to population growth and secure the health
and longevity that people desire by stimulating improvements in medical technologies, developments in
preventative health care, and reduction of burdens on medical professionals.
Renewable
resources
No increase in
CO2
concentration in the
atmosphere
Continuous measurement
of biological information by
simply wearing
Maintaining
sound health
A world with a restored
natural environment,
with clean water and air
for everyone
Providing clean water
and air
A world where everyone
enjoys good health and
hygiene
Contributing to
better medical care
and hygiene for people
worldwide
Water Treatment
Resolving Global Scale Water
Shortage Issues with Water
Treatment Technologies
Toray has developed reverse osmosis (RO) membranes
that facilitate the extraction of drinking water from the
Earth’s abundant supply of seawater. The Company’s
water treatment technologies are today being used at
water treatment plants worldwide. In addition to sea-
water desalination, Toray’s RO membrane elements are
helping in the fight against global water shortages and
improvement of the world’s water environments by
reusing sewage water. Toray’s RO membrane elements
account for a cumulative water equivalent of 59.9 mil-
lion m3 per day. This in turn is equivalent to the daily
life water of 420 million people.
Fibers & Textiles
Functional Materials That
Biosense Body Signals
Toray took on a new challenge and collaborated cross-in-
dustrially with Nippon Telegraph and Telephone
Corporation (NTT) to develop and commercialize hitoeTM,
a functional material capable of gathering biologi-
cal information. Nanofibers measuring just 1/100th the
diameter of a human hair are coated with special highly
conductive resins and are used for biosensing clothing
with the ability to sense a heart rate, cardiographic wave-
forms, and other body signals with high sensitivity. Since
this material is highly durable, formfitting, and breath-
able, expectations are that it will be used across a wide
range of sporting, work safety management as well as
nursing, monitoring and health care fields.
Cumulative water equivalent of
RO membrane elements used
at water treatment plants
59.9
million m3 per day
Equivalent to the daily life
water of 420 million people
15
Toray Industries, Inc. Financial & Non-financial Highlights
Financial Highlights
Net sales
(Billions of yen)
2,500
2,000
1,500
1,000
500
0
Operating Income and
Operating Income to Net Sales
(Billions of yen)
200
(%)
8
Non-financial Highlights
Net Sales of Green Innovation
Net Sales of Life Innovation
Businesses
(Billions of yen)
10,000
Businesses
(Billions of yen)
3,000
150
100
50
0
6
4
2
0
Mar/
14
15
16
17
18
(Forecast)
Mar/
14
15
16
17
18
(Forecast)
Operating income (left)
Operating income to net sales (right)
Mar/
14
15
16
17
Mar/
14
15
16
17
19
(Target)
19
(Target)
ROA, ROE and Net Income
Attributable to Owners of Parent
(Billions of yen)
120
(%)
12
Net Assets and Equity Ratio
Cash Flows
Number of Employees by Gender
Percentage of Woman in
Reduction of Greenhouse Gas
Unit Manager or Higher Positions
Emissions (Toray)
(Billions of yen)
1,200
(%)
60
(Billions of yen)
200
(Billions of yen)
80
100
80
60
40
20
0
10
1,000
8
6
4
2
0
800
600
400
200
0
50
40
30
20
10
0
100
0
-100
-200
40
0
-40
-80
At least
15%
lower than
fiscal 1990
Mar/
14
15
16
17
18
(Forecast)
Net Income Attributable to Owners of
Parent (left)
ROA (right) ROE (right)
Mar/
14
15
16
17
Mar/
14
15
16
17
Mar/
15
16
17
Mar/
14
15
16
17
Mar/
14
15
16
17
Net assets (left)
Equity ratio (right)
Cash flows from operating activities (left)
Cash flows used in investing activities (left)
Free cash flows (right)
Dividend per Share and
Payout Ratio
(Yen)
20
Capital Expenditures and
Depreciation
(Billions of yen)
200
(%)
40
R&D Expenses
(Billions of yen)
80
Reduction of Atmospheric VOC
Comparative Water Usage per Unit
Waste Recycling Rate
Emissions
of Sales (FY2001, set to an index value of 100)
At least
70%
lower than
fiscal 2000
No more than
61% of
2001 level
At least
86%
30
150
20
100
10
50
0
0
60
40
20
0
Mar/
14
15
16
17
18
(Forecast)
Mar/
14
15
16
17
18
(Forecast)
Mar/
14
15
16
17
18
(Forecast)
Dividend per Share (left)
Payout Ratio (right)
Capital Expenditures
Depreciation
* Total of tangible assets and intangible assets (excluding goodwill)
Mar/
14
15
16
17
Mar/
14
15
16
17
Mar/
14
15
16
17
Target *No target value for FY 2014
Target *Percentage relative to FY2001
Target *No target value for FY 2014
15
10
5
0
16
8,000
6,000
4,000
2,000
0
(%)
9
7
0
(%*)
65
60
55
50
0
(Number)
50,000
40,000
30,000
20,000
10,000
0
Man
Woman
(%)
80
75
70
65
0
2,000
1,000
0
(%)
25
20
15
10
0
(%)
90
85
80
0
Target
Annual Report 2018 Mar/
14
15
16
17
18
Mar/
14
15
16
17
18
(Forecast)
Operating income (left)
Operating income to net sales (right)
(Forecast)
Attributable to Owners of Parent
(Billions of yen)
(Billions of yen)
(Billions of yen)
(%)
8
6
4
2
0
80
40
0
-40
-80
Net sales
(Billions of yen)
2,500
2,000
1,500
1,000
500
0
(%)
12
(Billions of yen)
1,200
10
1,000
8
6
4
2
0
800
600
400
200
0
30
150
20
100
10
50
0
0
(%)
60
50
40
30
20
10
0
200
150
100
50
0
200
100
0
-100
-200
80
60
40
20
0
120
100
80
60
40
20
0
(Yen)
20
15
10
5
0
Financial Highlights
Operating Income and
Operating Income to Net Sales
(Billions of yen)
Non-financial Highlights
Net Sales of Green Innovation
Businesses
(Billions of yen)
10,000
Net Sales of Life Innovation
Businesses
(Billions of yen)
3,000
ROA, ROE and Net Income
Net Assets and Equity Ratio
Cash Flows
Number of Employees by Gender
(Number)
50,000
40,000
30,000
20,000
10,000
0
8,000
6,000
4,000
2,000
0
2,000
1,000
0
Mar/
14
15
16
17
19
(Target)
Mar/
14
15
16
17
19
(Target)
Percentage of Woman in
Unit Manager or Higher Positions
(%)
9
Reduction of Greenhouse Gas
Emissions (Toray)
(%)
25
7
0
At least
15%
lower than
fiscal 1990
20
15
10
0
Mar/
14
15
16
17
18
Mar/
14
15
16
17
Mar/
14
15
16
17
Mar/
15
16
17
Mar/
14
15
16
17
Mar/
14
15
16
17
(Forecast)
Net Income Attributable to Owners of
Parent (left)
ROA (right) ROE (right)
Net assets (left)
Equity ratio (right)
Cash flows from operating activities (left)
Cash flows used in investing activities (left)
Free cash flows (right)
Dividend per Share and
Payout Ratio
Capital Expenditures and
R&D Expenses
(Billions of yen)
Depreciation
(Billions of yen)
(%)
40
200
Mar/
14
15
16
17
18
Mar/
14
15
16
17
18
Mar/
14
15
16
17
18
(Forecast)
(Forecast)
(Forecast)
Dividend per Share (left)
Payout Ratio (right)
Capital Expenditures
Depreciation
* Total of tangible assets and intangible assets (excluding goodwill)
Man
Woman
Target
Reduction of Atmospheric VOC
Emissions
Comparative Water Usage per Unit
of Sales (FY2001, set to an index value of 100)
Waste Recycling Rate
(%)
80
75
70
65
0
At least
70%
lower than
fiscal 2000
(%*)
65
60
55
50
0
No more than
61% of
2001 level
(%)
90
85
80
0
At least
86%
Mar/
14
15
16
17
Mar/
14
15
16
17
Mar/
14
15
16
17
Target *No target value for FY 2014
Target *Percentage relative to FY2001
Target *No target value for FY 2014
17
Toray Industries, Inc. Akihiro Nikkaku
President
18
TORAY Report 2018
Annual Report 2018 To Our Stockholders and Investors
Toray Group provides innovative technologies and advanced
materials. The Group is committed to further increasing
revenues and profits by contributing to society through the
creation of new value with innovative ideas, technologies,
and products that are in high market demand.
Toray Group’s Unwavering Management
period to fiscal 2019, and systematically continue to pro-
mote CSR in every aspect of business. Working to ensure
Materials offer infinite possibilities. We at Toray Group
balance between the need for Toray Group’s sustainable
maintain the unwavering belief that materials, which
growth and fulfilling our CSR, we are working to align CSR
form the foundation of all products, have the power to
initiatives with the Group’s management strategies.
intrinsically change society. Guided by this belief, we are
Under these circumstances, it was discovered that
working diligently to develop and commercialize innova-
Toray Hybrid Cord, Inc., a subsidiary of the Company,
tive technologies and advanced materials ahead of the
had inappropriately overwritten data in product inspec-
global competition in an effort to contribute to society
tion reports. It has been confirmed in this case that there
at large. Persistent research as well as technologies and
were no legal violations and no problems relating to the
know-how accumulated over a long period are essential
safety of customers’ products. An evaluation submit-
to unearthing first-in-class materials. The manufactur-
ted by an expert committee entrusted by Toray Group
ing process is also grounded in efforts to hone a com-
to investigate the matter stated that while the Group’s
petitive spirit throughout the workplace as a wellspring
response was essentially appropriate, it recommended
for innovation. Our role therefore is to tackle the world’s
that steps be taken to strengthen compliance measures.
long-term challenges head-on and to focus closely on our
In addition, this incident provided us with the opportunity
operational competency at work place while considering
to investigate quality data of the entire Group at the same
how to utilize the potential of new materials from a long-
time. We have subsequently confirmed that there are no
term perspective. Based on a firm grasp of existing con-
legal violations or problems which will affect the safety of
ditions, we are drawing a clear image of the very best
customers’ products.
that we can be, setting and addressing those issues that
Toray Group has initiated measures to secure the
need to be overcome, and adopting an unwavering man-
effectiveness of quality assurance activities across the
agement style that is unaffected by popular trends.
entire Group and will redouble efforts relating to compli-
“Having the Integrity to
Do the Right Thing in the Right Way”
ance adherence, including quality assurance. In order to
ensure quality assurance and address problems in a rapid
and appropriate manner if they occur, Toray Group will
strengthen communication with customers. The Board of
With respect to safety, accident prevention and environmen-
Directors and Corporate Auditors receive regular reports
tal preservation, corporate ethics and legal compliance and
about the status of progress of these measures to fulfill
other essentials of Corporate Social Responsibility (CSR),
the Group’s governance functions. The Group will hence-
Toray Group is strengthening its CSR initiatives as issues
forth engage in its corporate activities with the concerted
that take the highest managerial priority. We have drawn
commitment of all of executives and employees “to have
up the “Sixth CSR Roadmap,” which covers the three-year
the integrity to do the right thing in the right way.”
19
Toray Industries, Inc.
To Our Stockholders
and Investors
Overview of Toray Group’s Performance in Fiscal 2017
(The Fiscal Year Ended March 31, 2018)
Record High Sales and
Operating Income
that are designed to secure business expansion in growth
business fields as well as growth countries and regions,
while strengthening our competitiveness.
From here, we will report our performance in fiscal 2017.
As a result, consolidated net sales for fiscal 2017
In addition to signs of the economy picking up in emerg-
increased 8.8% compared with the previous fiscal year,
ing countries, the global economy in general, including the
to ¥2,204.9 billion. From a profit perspective on a year-on-
U.S. and Europe, continued along a recovery path in fiscal
year basis, operating income improved 6.5%, to ¥156.5
2017. On the domestic front, the Japanese economy also
billion. Net income attributable to owners of parent, on
maintained its gradual recovery on the back of improving
the other hand, fell 3.5%, to ¥95.9 billion. Taking the
employment and income conditions. Meanwhile, the rise
aforementioned into consideration, Toray Group achieved
in raw material and fuel prices had a negative impact on
record high net sales and operating income in the fiscal
Toray Group’s profits.
year under review.
Under these business circumstances, Toray Group
As far as the return of profits to shareholders is con-
embarked on the new medium-term management pro-
cerned, we have set the annual cash dividend at ¥15 per
gram, “Project AP-G 2019,” which spans the three-year
share, a year-on-year increase of ¥1 per share. This takes
period from April 2017 to the end of March 2020. Under
into account our performance in fiscal 2017.
this program, we are implementing growth strategies
Income Variance Factor Analysis
(Billion yen)
250
Difference in selling prices
of petrochemical-based
products, etc.
Difference in raw materials’
cost and fuel prices of
petrochemical-based products, etc.
Difference from foreign
currency translation of
overseas subsidiaries’ results
+19.3
-40.6
Difference in
quantity
146.9
+33.9
Other cost variance
-0.0
-13.8
+7.6
+3.2
156.5
Variance in
operating cost
Price change of products less
subject to price effect of
petrochemical-based raw
materials (net)
200
150
100
50
0
FY Mar/2017
+9.6
FY Mar/2018
“Petrochemical-based products, etc.” are the total of Fibers & Textiles, Performance Chemicals, and Carbon Fiber Composite Materials segments.
20
Annual Report 2018 The Medium-term Management Program
“Project AP-G 2019”
To Our Stockholders
and Investors
Toray Group’s Approach to Management
Based on a Long-term Perspective
2020” (Vision 2020) in 2011 in a bid to become a corpo-
rate group that continually increases revenues and profits
and provides high value for all stakeholders. Under Vision
Toray Group maintains a long-term perspective in the con-
2020, we have set our sights on sustainably increasing
duct of its business. Within the framework of its Long-
revenues and profits. In specific terms, we are targeting
term Corporate Vision, which looks 10 years into the
consolidated net sales of ¥3 trillion, operating income of
future, the Company identifies key medium-term issues
¥300 billion, and an ROE of 13% around 2020.
that need to be addressed over a span of three years as
The current medium-term management program,
a part of efforts to achieve its vision. At the same time,
“Project AP-G 2019” is the third stage of Vision 2020.
we work diligently to address short-term issues based on
Under “Project AP-G 2019,” we are carrying out the
annual budgets. In this sense, we do not focus on medi-
three conventional basic strategies of business expan-
um-term “plans,” but more on medium-term “programs”
sion in growth business fields, expansion and advance-
to address key “issues.” Rather than put in place a plan
ment of global business, and growth by strengthening
that is grounded in a set of numerical targets, our focus is
our competitiveness. At the same time, we are focus-
on medium-term issues. In this regard, the achievement
ing on creating new businesses that will help drive Toray
of numerical targets is simply a by-product of efforts
Group through a period of renewed growth during the
designed to implement programs aimed at addressing
2020s. As far as our performance targets are concerned,
specific issues.
we will look to achieve consolidated net sales of ¥2,700
Based on this understanding, Toray Group put in place
billion and consolidated operating income of ¥250 billion
the Long-term Corporate Vision “AP-Growth TORAY
in fiscal 2019, the last fiscal year of “Project AP-G 2019.”
Basic Issues of “Project AP-G 2019”
1
2
3
4
5
6
7
Proactively expand business in growth fields, countries, and regions
Improve profitability by continuously creating and expanding differentiated products
Steadily realize profit improvements through radical reforms both in business and
organizational structures
Continue “strengthening of cost competitiveness” to reinforce and strengthen
earning structure
Continue “pursuit of the ultimate limits” for the creation of new and innovative materials
and create large-scale new businesses
Thoroughly implement “safety, accident prevention, and environmental preservation” and
“business ethics and legal compliance” globally
Secure and develop human resources that can contribute to “strong workplace capability”
21
Toray Industries, Inc.
To Our Stockholders
and Investors
THREE BASIC
STRATEGIES
01 Business Expansion in Growth Business Fields
Toray Group is working diligently to put forward the two Group-wide Green Innovation Business
Expansion (GR) and Life Innovation Business Expansion (LI) projects.
The Green Innovation Business Expansion Project
In addition to preserving the global environment, Toray Group provides solutions that help address energy and
resource issues while targeting business expansion. As a result, the Company takes every opportunity to reduce
greenhouse gas (GHG) emissions, lower its environmental footprint, and to support the treatment of water, recy-
cling, and air purification. In fiscal 2017, net sales from GR Project businesses were ¥712.3 billion, up 13.4% com-
pared with the previous fiscal year.
Upgrading and Expanding the
Carbon Fiber Reinforced Plastics (CFRP)
Business Foundation That Contributes to
the Reduction of GHG Emissions
Toray Group and France-based Safran concluded an
implementation agreement for the supply of higher per-
formance carbon fiber composite materials for use in
next-generation aircraft engines in March 2018. By deep-
ening its direct contact and discussions with aircraft
engine manufacturers and continuing its development of
innovative composite materials, the Company is taking
steps to further expand its business by promoting avia-
tion and aircraft engine applications, which are projected
(LIBs) that commonly go into manufacturing mobile elec-
tronic devices, electric vehicles and other products. We
have focused on capturing a definitive share of the rapidly
expanding demand in recent years and are endeavoring
to secure a leading position in the global market for BSF.
Received an Order to Supply the Ultrafiltration
(UF) Membrane, TORAYFILTM, for the Large-
scale Wastewater Treatment Facility for
Production of Drinking Water in the U.S.
Toray Group received an order to supply hollow fiber UF
membrane modules TORAYFILTM for the largest waste-
water treatment facility for production of drinking water
to increase in the future, while working to enhance per-
in the U.S. in March 2018. Acclaimed for its high run-
formance, conserve energy, and lower costs.
Moreover, Toray Group reached an agreement to
acquire all of the shares of TenCate Advanced Composites
ning performance and durability, plans are in place to
commence shipments of TORAYFILTM from around 2019
and for the facility to start production in 2021. Currently,
Holding B.V. (TCAC) based in the Netherlands in March
the U.S. is plagued with an acute shortage of water. This
2018. With its main manufacturing bases in Europe and
is especially the case along the west coast where the
the U.S., TCAC is especially strong in carbon fiber com-
demand for wastewater reuse is projected to expand.
posite materials using thermoplastic resins that improve
Looking ahead, Toray Group will focus on securing proj-
the efficiency of molding parts. By introducing Toray
ect orders that help address these water issues as a
Group’s carbon fiber and polymer technologies and com-
global player that handles a comprehensive range of
bining the two companies’ supply chains, this acquisition
UF, reverse osmosis (RO) and microfiltration (MF) mem-
is expected to generate significant synergies going for-
branes as well as membrane bioreactor (MBR) systems.
ward. We will respond swiftly to demand expansion of
the market for small-sized aircraft and expand the busi-
ness further for industrial applications including automo-
biles in the medium to long term.
Boosting Battery Separator Film (BSF)
Production Capacity for
Electric Vehicles and Other Uses
Toray Group decided to increase its BSF production capac-
ity in the Republic of Korea by roughly 50% in October
2017. At the same time, steps are being taken to substan-
tially increase coating capacity. Battery separator films that
offer a high level of performance and reliability are widely
used as separators in the lithium-ion secondary batteries
Expansion of Green Innovation Businesses
(Billion yen)
1,000
800
600
400
200
0
FY
( ) net sales ratio
900.0
(33%)
657.1
(31%)
628.2
(31%)
712.3
(32%)
2015
Actual
2016
Actual
2017
Actual
2019
Target
22
Annual Report 2018 01 Business Expansion in Growth Business Fields
To Our Stockholders
and Investors
The Life Innovation Business Expansion (LI) Project
Making the most of its management resources, Toray Group is working to expand its business by enhancing the
quality of medical care, alleviating the burden of medical professionals, and contributing to the maintenance of
health and longevity. In fiscal 2017, net sales from LI Project businesses were ¥211.9 billion, up 8.4% compared
with the previous fiscal year.
Expanding Polypropylene (PP) Spunbond
Production Bases to Address the Demand
for Disposable Diapers in China
Advancing Clinical Trials while Working to
Secure Early Regulatory Approval of TRK-
950 as an Epoch-making Cancer Treatment
China has forged a position as the largest consumer of
Toray Group is advancing phase I clinical trials in the U.S.
disposable diapers. In addition to its existing local base
and France on TRK-950, a proprietary therapeutic agent
in East China, Toray Group acquired land for commer-
for the treatment for solid cancer. TRK-950 is a monoclo-
cial use in South China for the purpose of expanding its
nal antibody preparation that combines with and attacks
high-performance PP spunbond production capacity in
cancer cells. Developed by the Group’s New Frontiers
November 2017. Plans are in place for a new production
Research Laboratories, which was established in 2003,
facility to commence operations in fiscal 2019. Demand
TRK-950 is the culmination of efforts aimed at deepen-
for disposable diapers continues to expand in China as
ing and integrating Toray Group’s core technologies and
lifestyles improve on the back of rising incomes and the
a key tool in cultivating opportunities in the medical busi-
number of newborns increases following discontinuation
ness domain. Advancing global clinical development in
of the nation’s one-child policy. As a result, major san-
Europe and the U.S., the Group is working to secure the
itary product manufacturers are actively establishing or
early regulatory approval of TRK-950 as a first-in-class
expanding production facilities for disposable diapers in
cancer treatment drug.
China. In addition to capturing a definitive share of this
demand, Toray Group is accelerating the pace of global
PP spunbond business expansion where it boasts con-
siderable strengths from each of the production network
and quality perspectives.
General Sales of High-performance
Limited-use (Disposable) Protective Clothing
Building on its track record of developing products for
a wide range of applications including decontamination
work on an individual basis, Toray Group commenced
general sales of LIVMOA®, a line of highly breath-
able limited-use (disposable) protective clothing in May
2017. Recognized as highly breathable, LIVMOA® helps
to enhance comfort by reducing the sticky sensation
caused by humid conditions and is distinguished by its
particle absorption and dust-proofing properties.
Expansion of Life Innovation Businesses
(Billion yen)
300
200
100
0
FY
( ) net sales ratio
270.0
(10%)
195.5
(10%)
211.9
(10%)
159.6
(7%)
2015
Actual
2016
Actual
2017
Actual
2019
Target
Advanced Materials in LI Businesses*
Pharmaceuticals & Medical Devices
*Toray Group estimation
23
Toray Industries, Inc. To Our Stockholders
and Investors
THREE BASIC
STRATEGIES
02 Expansion and Advancement of Global Business
Looking at conditions in which Toray Group operates, the need for advanced technologies in such
wide-ranging fields as automobiles and energy is increasing in the U.S. and Europe. At the same
time, standards of living are improving and environmental regulations becoming more stringent in
China and emerging countries. Against this backdrop, Toray Group is working to expand its global
business by capturing profit opportunities. In fiscal 2017, overseas sales were ¥1,150.8 billion, up
10.4% compared with the previous fiscal year.
Acquired an Equity Interest in a Major
Knitted Fabrics Company Based in Hong
Kong; Company Included in the Scope of
Consolidation as an Equity-method Affiliate
environmental restrictions in the world. Building on the
experience of the Automotive Center (AMC), which is
located within Toray Group’s Nagoya Plant, and in order
to further drive expansion of Toray Group’s automo-
tive-related business, AMCEU will play the major role of
Toray Group acquired a 28% stake in Pacific Textiles
a core technology development base in Europe that is
Holdings Ltd. (Pacific Textiles), a Hong Kong-based com-
capable of handling new applications through R&D and
pany that engages in the manufacture and sale of knit-
offering one-stop service to customers in Europe.
ted, dyed and printed fabrics, for an acquisition cost of
approximately ¥59 billion in July 2017. The company has
been included in Toray Group’s scope of consolidation as
an equity-method affiliate. With a production scale that is
Initiating Steps to
Fully Expand Business in India
matched by only a handful of companies throughout the
In February 2018, Toray Group acquired land in Sri City in
world, Pacific Textiles is a highly profitable business entity
the State of Andhra Pradesh, India as a base to be used
thanks to its considerable cost and quality competitive
primarily for new business by its Indian subsidiary Toray
advantage that is making significant inroads targeting major
Industries (India) Private Limited (TID). Accordingly, Toray
apparel companies in Europe and the U.S. as well as spe-
Group will actively direct management resources toward
cialty store retailers of private label apparel (SPA). By acquir-
developing this land as an important base for its advanced
ing an equity interest, Toray Group will further strengthen
materials business. In business fields where demand is
its relationship with Pacific Textiles, expand its knitted fab-
expected to expand, Toray Group will work from this
rics business, and work vigorously to increase the sophis-
newly developed site to address domestic demand in
tication of its operations as a global integrated business.
India and to grow its global operations focusing mainly on
Newly Established a Polyphenylene Sulfide
(PPS) Resin Compound Base in Hungary
South Asia. As an initial step, a new base for the PP spun-
bond for hygiene products business targeting disposable
diapers will be established (operations scheduled to com-
mence in 2020). Thereafter, a new production facility for
Operations commenced at a new PPS resin compound
nylon and PBT resin compounds will be constructed to
production facility at the Hungarian plant of Toray Group’s
meet the demand for high-performance resins in line
U.S. subsidiary Zoltek Companies, Inc., the world’s larg-
with automobile market expansion (operations scheduled
est supplier of large tow carbon fibers in March 2018. This
to commence in September 2019).
represents Toray Group’s first resin compound production
facility in Europe. Working with its sales company Toray
Resins Europe GmbH, a company that was established
Overseas Net Sales (Total of Overseas Consolidated Subsidiaries)
in Germany to engage in marketing and technical service
(Billion yen)
functions in 2015, Toray Group will position this new pro-
1,500
(calculation based on 100 yen / US$ for all years listed below)
1,500.0
duction facility at the heart of efforts to expand the resin
business in Europe and to further cement the Group’s sta-
tus as the world’s leading manufacturer of PPS resins.
1,016.7
1,042.1
1,000
1,150.8
Planning to Open the Automotive Center
Europe in Germany
Toray Group has announced that it will open the
Automotive Center Europe (AMCEU) in August 2018
in Germany, as a part of efforts to strengthen its R&D
function in Europe, which stands at the forefront of
500
0
FY
2015
Actual
2016
Actual
2017
Actual
2019
Target
24
Annual Report 2018 THREE BASIC
STRATEGIES
03 Strengthening Competitiveness
In addition to the growth strategies of “business expansion in growth business fields” and “expan-
sion and advancement of global business,” Toray Group is promoting efforts to strengthen its com-
petitiveness from three specific perspectives: (1) total cost reduction, (2) strengthening its corporate
structure, and (3) strengthening sales and marketing.
To Our Stockholders
and Investors
Total Cost
Reduction
#Promote Total Cost Reduction (TC) Project on a Group-wide basis
#Activities of variable cost reduction (annual target at over 3.6%)
#Control fixed costs using the P-ratio* accounting method (P-ratio=under 0.96 each fiscal year)
# For innovation of the production process, identify themes by category in terms of “innova-
tive cost reduction,” “large-scale total cost reduction” and “capacity increase of existing
facilities” to achieve reduction effects by more than ¥50 billion in three years
Strengthening
Corporate
Structure
# Clarify issues of companies and businesses with profitability problems, and gather Toray
Group’s collective efforts to improve revenue and profit
> options include reducing or withdrawing from businesses with limited growth potential
or excessive competition
#Manage the Group’s assets effectively and expand revenue and profit
Strengthening
Sales and
Marketing
# Sales and marketing leads to build a “profit-making system” in cooperation with produc-
tion, technology, R&D departments and external partners
# Maximize the revenue and profit of existing businesses through improvements in price pol-
icies, distribution systems and brand initiatives
Strengthen the Corporate Structure as well
as Sales and Marketing while Promoting
Cost Reduction
of a Chinese subsidiary which manufactures textiles. In
addition to modifying an existing facility in its film busi-
ness, the decision has also been made to start produc-
tion of multilayered ceramic capacitor (MLCC) release
As a part of efforts to secure total cost reduction, Toray Group
films, a growth field.
is implementing the Group-wide Total Cost Reduction (TC)
As far as efforts to strengthen sales and marketing are
Project. In carrying out this project, the Company is looking
concerned, Toray Group entered into a technical coopera-
to reduce costs by a total of ¥220 billion over a three-year
tion agreement relating to OLED materials with Idemitsu
period from fiscal 2017 through a process of variable cost,
Kosan Co., Ltd. Moreover, the Company is proactively
fixed cost, and production process innovation.
collaborating with leading outside partners. This included
In order to strengthen its corporate structure, Toray
participation in a joint exhibition with UNIQLO for the first
Group is conducting a share and management transfer
time in New York.
Total Cost Reduction Results of FY2017
Variable Costs
Fixed Costs
Reduced: 28.0 billion yen
(Reduction ratio 3.2%)
Reduced: 25.0 billion yen
(P-ratio*=0.99)
Innovation of Production Processes Reduced: 16.3 billion yen
Total Reduced:
69.3billion yen
*P (Performance)-ratio=fixed cost growth rate/marginal profit growth rate. Target: less than 1.0 or monitored by division under budget.
25
Toray Industries, Inc.
To Our Stockholders
and Investors
Performance Forecasts for Fiscal 2018
Working Toward Further Increasing
Revenues and Profits
Under these conditions, consolidated net sales for
fiscal 2018 are projected to reach ¥2,450 billion. From a
profit perspective, operating income is forecast to come
In fiscal 2018, the global economy as a whole is expected
in at ¥165 billion and net income attributable to owners
to continue its gradual expansion, as the economies of
of parent at ¥98 billion. With the Corporate Mission of
the U.S., Europe, and other developed countries main-
continuously increasing cash dividends in line with the
tain their expansion and emerging economies in general
Company’s performance, Toray Group plans to pay an
perform strongly except for a slight slowdown in China.
annual dividend of ¥16 per share for fiscal 2018.
However, attention should be paid to risk factors such as
the protectionism trade policies of developed countries,
expansion of trade friction, and financial market turmoil
caused by moves toward monetary policy normaliza-
tion in the U.S. and Europe. The Japanese economy is
Proactively Undertaking
Investments Designed to Secure
Sustainable Growth on an Ongoing Basis
also expected to continue on a gradual recovery track on
In fiscal 2018, Toray Group will work diligently to realize the
the back of improving employment and income condi-
effects of the global increase in production and sales of
tions, though there are concerns that the economy may
such products as battery separator films for lithium-ion sec-
be affected by uncertainties in overseas economies and
ondary batteries (LIBs), PP spunbond for hygiene products
fluctuations in crude oil prices and in financial markets.
and carbon fiber composite materials. At the same time, the
Consolidated Business Forecast for Fiscal 2018
Billion yen
Net Sales
Operating Income
Net Income Attributable to Owners of Parent
Assumed exchange rate : 110 yen / US$
(Released August 6, 2018)
FY2018 (Forecast)
2,450.0
165.0
98.0
Changes
+245.1
+8.5
+2.1
Forecast by Segment for Fiscal 2018
Billion yen
Net Sales (Changes)
Operating Income (Changes)
Fibers & Textiles
1,000.0
(+86.4)
81.0
(+8.6)
Performance Chemicals
895.0
(+91.7)
79.0
(+7.6)
Carbon Fiber Composite Materials
215.0
(+37.1)
15.0
(-5.8)
Environment & Engineering
260.0
(+21.7)
16.0
(+2.7)
Life Science
Others
Adjustment
Consolidated
(Released August 6, 2018)
26
60.0
(+6.2)
1.0
(-0.9)
20.0
(+2.1)
4.0
(+1.1)
—
-31.0
(-4.8)
2,450.0
(+245.1)
165.0
(+8.5)
Annual Report 2018
Performance Forecasts for Fiscal 2018
To Our Stockholders
and Investors
Company will shift to high value-added products and culti-
vate new applications and customers across each of its busi-
Adopting a Policy of
Public Interest Capitalism
nesses. If synergies appear to be achievable through the
Toray Group recognizes that corporations are public insti-
use of the Group’s strengths, Toray Group will extend and
tutions. Based on this understanding, the Company is
supplement the growth of its existing businesses by flexi-
aiming to contribute to the growth and development of
bly pursuing M&A and alliance opportunities. Furthermore,
society at large including all stakeholders such as share-
every effort will be made to secure a business structure that
holders, customers, employees, and the local commu-
is insulated as much as possible from the effects of such
nity. Guided by the concept of public interest capitalism,
factors as changes in foreign currency exchange rates as
Toray Group is committed to securing the sustainable
well as raw material and fuel prices by making use of the
growth in concert with society. In other words, the
Group’s global business foundations. Toray Group will aim
Company will work diligently to develop and commercial-
to sustain its growth through capital expenditure, research
ize innovative technologies and advanced materials that
and development, and human resources development from
are capable of changing people’s lives. Every effort will
a medium- to long-term perspective.
be made to contribute to society by creating new value
As far as its capital expenditure is concerned, Toray
that addresses market needs, which will in turn lead to
Group is looking at engaging in investments totaling ¥500
further expansion of revenues and profits.
billion over a three-year period from fiscal 2017. At the
We ask all shareholders and investors for the long-
same time, in line with plans to undertake R&D expenses
term support and understanding of our management
of around ¥220 billion mainly in Green Innovation Business
style and endeavors.
Expansion and Life Innovation Business Expansion proj-
ects, Toray Group plans to undertake capital expenditures
(depreciation and amortization of ¥105 billion) of ¥180 bil-
lion and R&D expenses of ¥73 billion in fiscal 2018.
Capital Expenditures*
Depreciation
R&D Expenses
(Billion yen)
Consolidated Subsidiaries
(Billion yen)
Consolidated Subsidiaries
(Billion yen)
Consolidated Subsidiaries
200
150
100
50
0
FY
Toray
180.0
156.3
157.9
2016
2017
2018
Forecast
120
100
80
60
40
20
0
FY
Toray
98.0
91.1
105.0
2016
2017
2018
Forecast
80
60
40
20
0
FY
Toray
59.2
73.0
66.2
2016
2017
2018
Forecast
* Total of tangible assets and intangible assets (excluding goodwill)
Major Capital Expenditure Projects
FY March
2018
FY March
2019
Toray Advanced Materials Korea Inc.
High-functional polypropylene spunbond production facilities
Zoltek Companies, Inc.
Large tow carbon fiber ZOLTEKTM production facilities
Toray Battery Separator Film Korea Limited Battery separator film SETELATM production facilities
Toray Composite Materials America, Inc.
Carbon fiber TORAYCATM prepreg integrated production facilities
Toray Battery Separator Film Korea Limited Battery separator film SETELATM production facilities
Alcantara S.p.A.
AlcantaraTM production facilities
Zoltek Companies, Inc.
Large tow carbon fiber ZOLTEKTM production facilities
Toray Polytech (Foshan) Co., Ltd.
High-functional polypropylene spunbond production facilities
27
Toray Industries, Inc. Results by Segment for Fiscal 2017
Business Categories and Segments
Summary of Financial Results
C
o
r
e
G
r
o
w
t
h
D
r
i
i
v
n
g
B
u
s
i
n
e
s
s
I
i
n
t
e
n
s
i
v
e
l
y
D
e
v
e
l
o
p
n
g
a
n
d
E
x
p
a
n
d
n
g
B
u
s
i
n
e
s
s
e
s
i
Fibers &
Textiles
Performance
Chemicals
In Japan, demand for some industrial applications such as automobiles was
strong and apparel applications saw gradual improvement in store sales of final
products. Against this background, Toray Group not only strived to expand sales
in both apparel and industrial applications but also worked to expand the busi-
ness format that integrates fibers to textiles to final products while focusing on
strengthening cost competitiveness.
Overseas, business performance of some subsidiaries in Southeast Asia and
the Republic of Korea remained slow. On the other hand, materials for automo-
tive applications and hygiene products remained strong in general and the Group
expanded the integrated business for apparel applications.
In the resin business, shipment for automotive applications was strong in general,
mainly in Japan. Besides automotive applications, Toray Group also promoted
sales expansion of ABS and PPS resins. In the film business, shipment of battery
separator films for lithium-ion secondary batteries increased reflecting demand
growth, while films for electronic parts which are used for applications such as
smartphones continued to be favorable. In the electronic & information materi-
als business, demand for OLED panels increased and shipment of related mate-
rials expanded.
Carbon Fiber Composite
Materials
With the final demand for the aircraft remaining strong in the aerospace applica-
tions, shipments showed signs of recovery as the inventory adjustment in the
supply chain was completed. In the industrial applications, demand showed a
recovery trend primarily in the environment and energy-related field led by com-
pressed natural gas tank applications and wind turbine blade applications. The
segment was affected by increases in raw material prices as well as intensify-
ing competition.
Environment &
Engineering
In the water treatment business, demand for reverse osmosis membranes and
other products in general grew strongly in Japan and abroad.
In terms of domestic subsidiaries in the segment, industrial machinery and
electronics-related equipment performed strongly at an engineering subsidiary.
Life Science
In the pharmaceutical business, shipment of pruritus treatment REMITCH®*
expanded due to the impact of the introduction of a new dosage form and approval
of new indications. On the other hand, shipment of natural-type interferon beta
preparation FERON® and orally active prostacyclin derivative DORNER® remained
sluggish due to the impact of alternative medicines and generic drugs, and royalty
income on some products decreased.
In the medical devices business, shipment of dialyzers grew strongly.
* REMITCH® is a registered trademark of Torii Pharmaceutical Co., Ltd.
S
t
r
a
t
e
g
i
c
a
l
l
y
E
x
p
a
n
d
n
g
B
u
s
i
n
e
s
s
e
s
i
28
Annual Report 2018
Performance (Billions of yen)
* The figures in parentheses of each segment are composition ratios by segment.
Main Products
Net sales
913.6
(41％)
Operating
Income
72.4
(40％)
• Filament yarns, staple fibers, spun yarns, woven and
knitted fabrics of nylon, polyester, acrylic, and others
• Non-woven fabrics
• Ultra-microfiber non-woven fabric with suede texture
• Apparel products, etc.
Net sales
803.3
(36％)
Operating
Income
71.4
(39％)
Net sales
177.9
(8％)
Net sales
238.3
(11％)
Net sales
53.8
(2％)
Operating
Income
20.8
(11％)
Operating
Income
13.3
(7％)
Operating
Income
1.9
(1％)
• Nylon, ABS, PBT, PPS, and other resins and molded
products
• Polyolefin foam
• Polyester, polyethylene, polypropylene, and other films
and processed film products
• Raw materials for synthetic fibers, and other plastics
• Fine chemicals
• Electronic and information materials and graphic
materials, etc.
• Carbon fibers, carbon fiber composite materials, and
molded products from those materials, etc.
• Comprehensive engineering
• Condominiums
• Industrial equipment and machinery
• IT-related equipment
• Water treatment membranes and related equipment
• Materials for housing, building, and civil engineering
applications, etc.
• Pharmaceuticals
• Medical devices, etc.
Excludes other businesses, equivalent to ¥17.9 billion (1%) in net sales and ¥2.9 billion (2%) in operating income, and adjustment of operating income of -¥26.2 billion.
The composition ratio by segment of operating income is calculated excluding the adjustment amount.
29
Toray Industries, Inc. Core Growth Driving Business
Fibers & Textiles
2016
856.1
66.8
7.8%
(Billions of yen)
2017
Changes
2018 Forecast
913.6
+6.7%
1,000.0
72.4
7.9%
+8.5%
81.0
8.1%
Years ended March 31
Net sales
Operating income
Operating income to net sales
2018 forecasts announced on August 6, 2018.
Basic Policy
• Strengthen its earnings structure as a core growth driving business of Toray, and expand
business in growth business fields and regions
• Aim for significant growth in the segment through the further enhancement of global
operations
Earnings Opportunities and Risks
• Growing need for advanced materials contributing to the resolution for global environmental and
energy/resource issues, and health and longevity
• Changes in the global economy and personal spending trends
• Improving standards of living and tighter regulations in China and emerging economies as income
levels in those areas rise
• Raw materials and fuel prices trends
Basic Strategies for Achieving the Medium-term Management
Program “AP-G 2019” Targets
• Maintain and reinforce domestic business foundation and processing platform in production areas,
and further strengthen business competitiveness
• Reinforce business foundation of existing operations at overseas locations, and expand business in
growth business fields and regions
• Strengthen Toray Group’s global operations and create new business areas by developing and
expanding business on multiple levels combining its strength of diverse product lines, supply chain,
and global sales
> Aim to achieve significant growth by the global fibers/textiles/final products integrated business
format and SCM, reinforce value chain of strategic products, and expand new business areas
Fiscal 2018 Outlook
In apparel applications, we are focused on enhancing our business model, including expansion of our
business format that integrates fibers to textiles to final products. In industrial applications we will
expand sales in growth regions on the back of enhanced capacity in growth fields such as hygiene
materials and automotive applications.
In addition to continuing to pass on rise in raw material prices to selling prices, we aim to bolster
our business structure through cost reductions and other measures, enhance the global business,
and expand earnings as expected as a core growth driving business.
Net Sales
(Billions of yen)
913.6
Operating Income
(Billions of yen)
72.4
Operating income to
net sales
7.9%
ROA
(Operating income/Assets)
9.6%
30
Annual Report 2018
Core Growth Driving Businesses/Strategically Expanding Businesses
Performance Chemicals
2016
724.6
61.8
8.5%
(Billions of yen)
2017
Changes
2018 Forecast
803.3
+10.9%
895.0
71.4
+15.5%
79.0
8.9%
8.8%
Years ended March 31
Net sales
Operating income
Operating income to net sales
2018 forecasts announced on August 6, 2018.
Basic Policy
• Expand business by expanding sales of high value-added products in growth business fields
and maximum utilization of global bases
• Strengthen earnings base by business structure reform
Earnings Opportunities and Risks
• Growing need for advanced materials contributing to the resolution of global environmental and
energy/resource issues
• Changing in the demand trends of end products such as automobiles, including electric vehicles,
LCD TVs and smartphones, and changes in technological trends in various components.
• Raw materials price trends
Basic Strategies for Achieving the Medium-term Management
Program “AP-G 2019” Targets
n Resins, Chemicals Business
• Allocate management resources and promote business expansion in growing businesses includ-
ing PPS resins, resin compounds overseas, and automotive materials
n Films Business
• Invest in facilities for lithium-ion battery separator films and promote sales expansion through
product development
• Reorganize manufacturing of PET films, increase value of existing products by utilizing global
operations, and enhance sales expansion
n Electronic & Information Materials Business
• Expand sales of OLED related materials and accelerate technology development and commer-
cialization of products beyond the LCD display field
Fiscal 2018 Outlook
Amid ongoing stability in global automobile production, we target sales expansion in automotive
application in the resins business as demand for plastic resins expands in line with the trend in auto-
mobiles toward electrification and reduced weight. We also focus on expanding sales on the back of
enhanced capacity at TORAYPEFTM.
In the films business, by utilizing our global operation, we will expand sales of PET films par-
ticularly for high value-added products including electronic components. We focus on the sales
expansion of battery separator films for lithium-ion secondary batteries to meet growing demand by
increasing capacity utilization on the back of sequential capacity expansions enacted in fiscal 2017.
For the electronic & information materials business, we target the sales expansion of OLED
related materials in line with growth in the overall market.
In addition to continuing to pass on rise in raw material prices to selling prices, we will strive
toward reducing overall costs.
31
Net Sales
(Billions of yen)
803.3
Operating Income
(Billions of yen)
71.4
Operating income to
net sales
8.9%
ROA
(Operating income/Assets)
7.6%
Toray Industries, Inc.
Strategically Expanding Businesses
Carbon Fiber Composite Materials
Years ended March 31
Net sales
Operating income
(Billions of yen)
2016
161.6
34.0
2017
Changes
2018 Forecast
177.9
+10.1%
215.0
20.8
-13.3%
15.0
Operating income to net sales
14.8%
11.7%
7.0%
2018 forecasts announced on August 6, 2018.
Basic Policy
• Further expand the business as the world’s number-one manufacturer of carbon fibers
Earnings Opportunities and Risks
• Growing need for advanced materials contributing to the resolution of global environmental and
energy/resource issues
• Demand trends in end products, including automobiles, compressed natural gas tanks, wind tur-
bine blades, and aircraft
• Global supply and demand balance for carbon fiber
• Trends in raw materials and fuel prices, foreign currency exchange rates
Basic Strategies for Achieving the Medium-term Management
Program “AP-G 2019” Targets
n Aerospace Applications
• Further strengthen existing partnerships
• Capture new programs
n Industrial Applications
• Reinforce dominant market share by leveraging comprehensive strengths in lineup of regular tow
and large tow products
• Reinforce dominant market share in the wind-turbine blade applications by strengthening alliance
with major customers, supported by the cost competitiveness in large tow products
• Develop intermediate products/molding technologies and enhance the supply chain to meet the
full-scale expansion in automotive application demand
Fiscal 2018 Outlook
• For aerospace applications, given the completion of the inventory adjustment in the supply chain in
fiscal 2017, we expect an expansion in carbon fiber composite material demand amid steady final
demand for aircraft.
• For industrial applications, we are targeting sales expansion amid a recovery in overall demand,
particularly for environmental and energy-related products such as wind turbine blades and com-
pressed natural gas tanks. We will expand sales of wind turbine blade applications, where demand
is expanding, making good use of the sequential expansions in capacity from the fourth quarter of
fiscal 2017 in large tow products.
• In addition to continuing to pass on rise in raw material prices to selling prices, we will to strive
toward reducing overall costs.
Net Sales
(Billions of yen)
177.9
Operating Income
(Billions of yen)
20.8
Operating income to
net sales
11.7%
ROA
(Operating income/Assets)
4.5%
32
Annual Report 2018 Intensively Developing and Expanding Businesses
Environment & Engineering
2016
212.5
11.7
5.5%
(Billions of yen)
2017
Changes
2018 Forecast
238.3
+12.1%
260.0
13.3
+13.5%
16.0
5.6%
6.2%
Years ended March 31
Net sales
Operating income
Operating income to net sales
2018 forecasts announced on August 6, 2018.
Basic Policy
• Expand business in the environment and energy field with focus on water treatment mem-
branes and facility design capabilities
Earnings Opportunities and Risks
• Growing need for advanced materials that can contribute to the resolution of global environmental
and energy/resource issues, and related machinery to manufacture them
• Political instability in areas suffering from water shortages
• Crude oil price trends
• Capex trends at mainstay customers
Basic Strategies for Achieving the Medium-term Management
Program “AP-G 2019” Targets
n Water Treatment Business
• Expand business and strengthen competitiveness in the membrane business
• Enhance development of reverse osmosis membrane products and strengthen cost
competitiveness
• Expand sales of UF membranes in China and the U.S.A.
• Strengthen the business foundation in the water treatment system and plant business
n Engineering Business
• Expand plant business and industrial machinery (in the environment and energy fields and the
life science field)
• Make use of external resources in growth areas
• Strengthen cost competitiveness
• Accelerate overseas expansion
Fiscal 2018 Outlook
• In the water treatment business, as to reverse osmosis membranes, we target sales expansion
of drinking water use by seawater desalination and brine water desalination, and industrial applica-
tions including pure water production for industrial use, as well as in the field of wastewater reuse.
As to UF/MF membranes, we target sales promotion for water purification applications and prepro-
cessing applications in wastewater reuse as well as desalination of sea water. We are focused on
expanding sales of MBR membranes for wastewater reuse applications in emerging economies
such as India and the countries of South and Central America.
• For the engineering subsidiary, we focus on an expansion in plant construction in the environmental
and energy field as well as in the life science field. In the industrial machinery business, we target
sales expansions particularly in the fields of electric vehicles and semiconductors, where demand
is expected to rise.
33
Net Sales
(Billions of yen)
238.3
Operating Income
(Billions of yen)
13.3
Operating income to
net sales
5.6%
ROA
(Operating income/Assets)
5.2%
Toray Industries, Inc. Intensively Developing and Expanding Businesses
Life Science
Years ended March 31
Net sales
Operating income
2016
54.2
2.1
Operating income to net sales
4.0%
2018 forecasts announced on August 6, 2018.
2017
53.8
1.9
3.6%
(Billions of yen)
Changes
2018 Forecast
-0.6%
-9.6%
60.0
1.0
1.7%
Basic Policy
• Maintain and expand domestic market share, accelerate and strengthen overseas development
• Use selection and concentration to promote more efficient product development
Earnings Opportunities and Risks
• Growing need for advanced materials to improve quality of healthcare, ease burden on medical pro-
fessionals, and contribute to health and longevity
• Japanese government’s promotion of generic products and ongoing revision of National Health
Insurance drug price standards as well as reduction of the insurance reimbursement prices
• Laws and regulations trends in each country
Basic Strategies for Achieving the Medium-term Management
Program “AP-G 2019” Targets
n Pharmaceutical Business
• Maintain the domestic market share and develop overseas markets of oral antipruritus drug
REMITCH®*
• Create next-generation drugs using new processes
n Medical Devices Business
• Expand sales of dialyzer products in Japan and overseas
• Expand domestic sales and accelerate overseas development in critical care and cardiovascu-
lar products
• Quickly commercialize bio-devices
Fiscal 2018 Outlook
• While the pharmaceutical business appears to be facing headwinds from the emergence of generic
products, we expect the oral antipruritus drug REMITCH®* oral disintegrating tablets, which were
launched in June 2017, to maintain its domestic market share through appealing its superiority, and
we will concurrently target acceleration in overseas development. In regard to drug development
moving forward, we focus on a pipeline expansion in priority areas, including neurological diseases
as well as kidney diseases, autoimmune disorders and cancer, and research in innovative bio-phar-
maceuticals aiming at the creation of next-generation drugs.
• In the medical devices business, we target an expansion in the domestic and overseas dialysis busi-
ness thanks to the provision of one-stop services combining dialyzers developed based on Toray’s
hollow fiber technology with dialysis machinery and its management system, which can be used for
a variety of dialysis-related medical needs.
• In the medical products business, we focus on expanding sales through improvements in existing
products, indication expansion and the acceleration of overseas development, particularly in the pri-
ority areas of emergency care, intensive care (acute blood purification), and cardiovascular products.
As we look to an expansion in business moving forward, we will advance the development of new
medical devices based on the technologies related to advanced materials, in which Toray excels.
*REMITCH® is a registered trademark of Torii Pharmaceutical Co., Ltd
Net Sales
(Billions of yen)
53.8
Operating Income
(Billions of yen)
1.9
Operating income to
net sales
3.6%
ROA
(Operating income/Assets)
2.4%
34
Annual Report 2018 FOUNDED ON TECHNOLOGY
AND KNOWLEDGE
Toray Group’s medium-term management program, “Project AP-G 2019,” aims for the creation of new
technologies and materials, with particular focus on “Green Innovation” and “Life Innovation” businesses,
as well as the promotion of measures to manifest the essential value of these technologies and materi-
als. The company also maintains technological competitiveness by constructing a solid market entry bar-
rier with its intellectual property.
35
Toray Industries, Inc. R&D
R&D Philosophy
Since its very inception, Toray Group has continuously carried out R&D on advanced materials based on the firm conviction that R&D pro-
vide the key to building Toray of tomorrow. The company has accordingly continued to focus on R&D of advanced materials based on the
needs of the times. However, it inevitably takes a certain amount of time to develop and commercialize materials. Accordingly, we focus
on maintaining the ability to recognize the value of materials and the will to follow through in development. Our basic policy is pipeline
management, management based on R&D with a long-term focus, emphasizing not only on immediate profit-making themes, but the
next one, and the one after that as well. The phrase, “The Deeper, the Newer,” has been passed down as a key phrase at Toray, and is
part of the DNA of our researchers and engineers. The concept underlying this is that when you dig deep into something, the result will
be new discoveries and inventions. With this in mind, we continue to challenge the ultimate based on a grand vision for the times and
the needs of society, with the goal of creating innovation that has both economic and social value.
Characteristic of R&D of Toray
1
Culture of Commitment to Basic Research
Our culture prioritizes basic research that has to be based on a grand vision of the
times, recognizes the value of materials and is unswayed by current trends and so pro-
vides a fertile foundation for continuing to create innovative advanced materials like
our carbon fibers and reverse osmosis membranes.
2
Long-term and Persistent Efforts to Pursue Advanced Materials
and Technology to the Ultimate Limits
Our commitment to unceasing pursuit in R&D—exemplified in our strong preference
for advanced materials and belief that delving deeper into a single theme yields new
inventions and discoveries—has taken root in the form of persistent efforts over the
long term. We believe this “super-continuity” approach spurs innovation.
3
Specialist Teams in Many Fields
Toray’s teams of specialists have abundant knowledge and experience in a wide variety
of fields including polymer design, high-function technology, and drug discovery, for-
mulation, and pharmacology, which are applications of our core technologies.
4
Undivided R&D Organization
The Technology Center serves as the nexus for all R&D functions enabling advanced
materials created in one field to be rapidly applied to other fields.
5
Integrating Technologies by Industry-government-academia
Collaborative Research
Toray actively engages in technology fusion through external collaboration and open
innovation activities with industries, governments, and academic institutions in Japan
and overseas with the aim of continuing to create innovative advanced materials.
6
Strategic Partnerships with Industry Leaders
Toray produces first-to-market advanced materials in growth markets through collabo-
rations with leading companies and venture companies in Japan and overseas.
7
Advanced Analytical Capabilities
Toray works closely with Toray Research Center Inc., which has extensive achieve-
ments in commissioned analysis and research studies, to enhance the Company’s anal-
ysis capabilities for its R&D and manufacturing technology.
36
Annual Report 2018
R&D Organization at Toray Group
Toray has centralized all of its R&D functions into a single organization called the Technology Center. Bringing together specialists from
many fields in this undivided R&D organization makes it easier to create new innovations by integrating technologies. Moreover, the sys-
tem enables the company to exhibit combined strength by actively exploiting techniques and knowledge from many fields to solve prob-
lems in a single business area. It also enables to be rapidly applied to various advanced materials and technologies to multiple businesses.
On the other hand, under the direct control of the Technology Center are the Automotive & Aircraft Center, which develops advanced
materials for automobiles and aircraft applications, and the Environment & Energy Development Center, which focuses on technology
cooperation in the environment and energy fields. Through these organizations, the company is promoting open innovation with its cus-
tomers, business partners, and external organizations.
In addition, the Life Innovation business is led by the Life Innovation Business Strategic Planning Department, which promotes close
cooperation with, in addition to bases in Kobe and Minnesota (US), domestic and overseas medical institutions, diagnostic centers, med-
ical device firms, not to mention the Technology Center.
Executive
Committee
President
Executive
Vice President
Board of
Directors
Corporate
Strategic
Planning Division
Head Office Staff
Fibers & Textiles Division
Manufacturing
Division
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Resins & Chemicals
Division
Films Division
Torayca & Advanced
Composites Division
Electronic & Information
Materials Division
Pharmaceuticals &
Medical Products Division
Water Treatment &
Environment Division
Affiliated Companies
Division
Technology Center
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Fibers & Textiles Research
Laboratories
Films & Film Products
Research Laboratories
Chemicals Research
Laboratories
Composite Materials
Research Laboratories
Electronic & Imaging Materials
Research Laboratories
Global Environment
Research Laboratories
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Pharmaceutical
Research Laboratories
New Frontiers
Research Laboratories
Advanced Materials
Research Laboratories
Research & Development
Planning Dept
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Global R&D Bases
R&D Bases
China.............................3 locations
Republic of Korea........3 locations
Singapore.....................1 location
USA...............................5 locations
Europe. .................5 locations
Malaysia ..............1 location
Thailand ...............2 locations
India......................1 location
Technology Center Planning Dept.
Development Center
Environment & Energy Development Center
Automotive & Aircraft Center
Advanced Composite Center
Automotive Center
New Projects Development Division
Engineering Development Center
Advanced Textiles Development Center
Overseas Information Bases
USA........................3 locations
37
Toray Industries, Inc.
R&D
Toray’s Technical Fields — Development of Advanced Materials by
Integrating Toray’s Core Technologies
Toray Group’s core technologies are “organic synthetic chemistry,” “polymer chemistry,” “biotechnology” and “nanotechnology.” Based
on these, we are working toward greater depth and fusion of fundamental technologies such as polymerization, yarn-making, fibers appli-
cation processing, film processing, and organic synthesis, while expanding our operations from fibers and textiles to films, chemicals,
and plastic resins. We are also creating advanced materials and developing businesses in the fields of electronic & information materials,
carbon fiber composite materials, pharmaceuticals, medical devices, and water treatment.
Synthetic Fibers
Textile Technology
Textiles, Apparels
Fiber Technology
Fine Technology
Industrial Materials,
Amenity Materials
Man-made Suede
Carbonization Technology
Carbon Fibers
Molding Technology
Film Technology
Film Processing Technology
Dispersion Control Technique
Coating Technology
Material
Design
TORAY’s
Core
Technologies
Organic
Synthetic
Chemistry
Polymer
Chemistry
Fine Patterning
Microstructure Technology
Biotechnology
Surface Control Technology
Gene Utilization Technology
Medicinal Technology
Fermentation Technology
Nanotechnology
38
Advanced Composite
Materials
Engineering
Plastics
High-performance
Films
Electronic Materials
Printing Materials
High-performance
Membranes, Water
Treatment Systems
Artificial Organs,
Medical Devices
Biotools
Pharmaceuticals
Veterinary Medicines,
Fine Chemicals
Synthetic, Plastic
Raw Materials
Annual Report 2018
Material
Design
TORAY’s
Core
Technologies
Organic
Synthetic
Chemistry
Polymer
Chemistry
Nanotechnology
Textile Technology
Textiles, Apparels
Fiber Technology
Fine Technology
Carbonization Technology
Carbon Fibers
Film Technology
Film Processing Technology
Dispersion Control Technique
Coating Technology
Molding Technology
Fine Patterning
Synthetic Fibers
Industrial Materials,
Amenity Materials
Man-made Suede
Advanced Composite
Materials
Engineering
Plastics
High-performance
Films
Electronic Materials
Printing Materials
High-performance
Membranes, Water
Treatment Systems
Artificial Organs,
Medical Devices
Biotools
Pharmaceuticals
Veterinary Medicines,
Fine Chemicals
Synthetic, Plastic
Raw Materials
Biotechnology
Surface Control Technology
Microstructure Technology
Gene Utilization Technology
Medicinal Technology
Fermentation Technology
Fiscal 2017
R&D Expenses
¥66.2billion
R&D Expenses
(Billions of yen)
Toray Consolidated subsidiaries
66.2
59.5 58.8 59.2
55.5
13
14
15
16
17
(Fiscal)
Percentage
Breakdown of
Total R&D
Expenses
in Fiscal 2017
●
Fibers & Textiles business
8%
●
Performance Chemicals business
32%
●
Carbon Fiber Composite Materials business
11%
●
Environment & Engineering business
7%
●
Life Science business
6%
●
CORPORATE R&D
36%
Fiscal 2017 R&D Achievements
Fiscal 2017 Topics
Fibers & Textiles
Using our unique oil-resistant processing technology,
we have developed the LIVMOA™ 3500 series, a lim-
ited-use chemical protective clothing, to resist external
oil penetration. We have also developed WithRelief™,
a high-functional, skin-friendly insect-resistant tex-
tile, which is a quality that previous high-functional
insect-resistant materials did not possess. In addi-
tion, we have developed a high-permeability type
ENTRANT™, a high-performance textile with water
resistance and moisture permeability that is also about
50 times more breathable than previous products.
Performance Chemicals
We have developed a PET film with a smooth and
durable surface that is resistant to scratches thanks
to a hybrid coating formed through the combination
of super hard nanoparticles and a functional polymer
dispersing agent. We have also successfully devel-
oped a biaxially oriented PET film with the world’s high-
est level of thermal conductivity—about 2.5x the level
shown in previous products. In addition, for non-de-
structive X-ray testing and mammography applications,
we have developed an X-ray scintillator panel that pro-
duces clear and high-spatial resolution X-ray images.
Carbon Fiber Composite Materials
Toray’s newly developed fabrication technology for
carbon fiber reinforced plastic enables both improved
dimensional accuracy and the saving of energy. The
company has also decided to introduce process devel-
opment equipment to create a high-performance
carbon fiber for the next generation. With this equip-
ment, we will develop the world’s strongest yarn and
innovative technologies to improve productivity, and
aim to achieve balance with further high performance
and low costs.
Environment & Engineering
In collaboration with RIKEN, the company has developed
innovative technologies aimed at analyzing the phenom-
enon in which contaminants under a variety of conditions
will adhere to and clog reverse osmosis membranes.
This analysis contributed to our development of new
low-fouling membranes. As a method for treating and
reusing sewage and industrial wastewater, we have also
developed basic technologies for converting aeration
energy of the membrane separation activated sludge
process to highly efficient cleaning energy. The company
was also awarded from the Japan Chemical Industry
Association the 49th (fiscal 2017) JCIA Technology
Award (Grand Prize) for the development of high perfor-
mance reverse osmosis membranes.
Life Science
The company has developed orally disintegrating decay
(OD) tablets that can be taken with or without water
for anti-itching medication TRK-280. The company also
obtained approval for the domestic manufacture and
sale of REMITCH®* OD Tablets 2.5μg and started selling
them. Moreover, phase I clinical testing of the company’s
TRK-950, an antibody drug for cancers, was carried out in
the US and France. Toray also developed Prelina II RichTM,
a bifocal contact lens that improves focus correction.
*REMITCH® is a registered trademark of Torii Pharmaceutical Co., Ltd.
Developing CFRP Fabrication
Technologies to Achieve Improved
Dimensional Accuracy and the Saving
of Energy
Toray has developed innovative fabrication
technologies for carbon fiber reinforced plas-
tics (CFRP), which are usually molded by plac-
ing prepreg (an intermediate material in sheet
form) on a mold and cured using hot air heat-
ing. However, hot air heating has the disad-
vantage that it suffers from inefficient heat
transfer and it requires time to heat up. There
is also dimensional accuracy problem after
hardening in large, complex-shaped parts
with varying thicknesses.
However, the newly developed fabrica-
tion technology achieves an energy savings
of about 50% by placing a predetermined
number of sheet heaters on the mold’s sur-
face, with contact heating taking place under
vacuum pressure. The application of opti-
mum temperature distribution to each part
allows parts to be fabricated into a shape
and dimension closer to the original design,
and also requires less time. We will verify
this new technology and expand its use to
for aircraft, automotive, and general industri-
al-use applications.
Development of an X-ray Scintillator
Panel Enabling Clear X-ray Images
Toray has developed a pixelated X-ray scintil-
lator panel for delivering X-ray images that are
2-4 times higher spatial-resolution than those
produced by previous panels. In previous X-ray
scintillator panels, images could be blurry as
visible light created from the X-rays was spread
in all directions and detected by a wide range
of sensor pixels. To overcome this issue, we
applied our unique high-definition barrier rib for-
mation technology. Also, the new X-ray panel
uses technologies filling a barrier rib with scin-
tillator material uniformly and improving effi-
ciency of light utilization, which partitions the
scintillator into the size of the pixel of a sensor,
allowing limits on the spread of visible light.
This in turn allows the panel to produce even
higher spatial-resolution images.
This product can be used for X-ray mam-
mography and non-destructive X-ray eval-
uation, which could contribute to the early
detection of breast cancer and improved
product safety through the detection of small
defects and foreign matter in electronic com-
ponents, aircraft components, lithium-ion bat-
teries, and the like.
39
Toray Industries, Inc.
Intellectual Property
Basic Policies on Intellectual Property
Toray Group has formulated and executes the following four intellectual property strategies as its
basic policies on intellectual property.
1 Intellectual property strategies, as a part of the strategy trinity, that conform to
management principles
Toray Group regards intellectual property as one of its vital management resources. We integrate our
intellectual property strategies mutually and organically with our business strategies and R&D strat-
egies, and as part of this “trinity,” we designate intellectual property strategies as one of the most
important elements of our management strategies.
2 Promoting the procurement of rights
In order to protect Toray Group’s products and technologies and to ensure profits in terms of intel-
lectual property, we hold as many useful patent rights as possible and build patent portfolios. At the
same time, we pay close attention to efficient patenting by raising the quality of each patent and not
making needless applications.
3 Respecting the rights of others
Toray has operated a system for comprehensively investigating the relations between its own prod-
ucts and technologies and patents owned by other companies, and we thoroughly educate employ-
ees to prevent infringement on patent rights of other parties.
4 Rightful enforcement of our own rights
When Toray Group’s patent rights are infringed upon by another party, we take proper steps depend-
ing on the circumstances by exercising our patent rights, such as demanding that infringement
cease, receiving monetary profits from licensing, and using our patent rights for cross-licensing with
the patent rights of other parties.
Intellectual Property Strategies in Line with Our Management Strategies
1 Promoting global intellectual property strategies of Toray Group
We will promote Toray’s patent applications and patenting in countries other than Japan, particularly
in those growth countries and regions where we aim to achieve business expansion in the future.
Together with this, we will support global business growth by working to strengthen patent applica-
tions and patenting from overseas subsidiaries and affiliated companies to ensure the appropriate
protection of inventions created in our bases in each country. We will also establish Group-wide intel-
lectual property strategies that bind Toray Group’s research and technology development for each
business field. In addition, we will establish and strengthen patent and trademark management sys-
tems at each company in Toray Group.
2 Firmly maintaining our technological advantage through strategic patent applications and other
such efforts and rolling them out at subsidiaries and affiliated companies in Japan and overseas
At Toray Group, we are working to build patent portfolios with emphasis on the “Green Innovation
Business Expansion (GR) Project” and “Life Innovation Business Expansion (LI) Project” while avoid-
ing careless disclosure of technical information through the publication of patent applications. We
expect these initiatives to support our businesses in the growth fields as a powerful barrier against
entry in the future. We will also spread these efforts to our subsidiaries and affiliated companies in
Japan and overseas.
3 Executing intellectual property strategies that are organically linked to our business
In order to promote the execution of intellectual property strategies linked to our individual business
activities, Toray Group will strengthen participation in the patent activities of business divisions, and
together with this, will work on intellectual property education according to the needs of the individ-
ual business divisions.
4 Strengthening utilization of our brand and trademarks
Together with our aim to enhance the value of our technology through technology brands, we will
deal strictly with imitation products and other infringements of Toray Group’s trademarks amid surg-
ing growth in the number of online transactions.
5 Developing human resources to support global intellectual property activities
Toray carries out multifaceted and multilevel education for everyone from management to new
employees and front-line sales representatives, covering domestic and overseas patent systems and
practice. Additionally, at the Intellectual Property Division, together with encouraging the acquisition
of patent attorney qualification, we actively support staff in their efforts to strengthen their foreign
language capabilities and dispatch staff to overseas subsidiaries and affiliated companies.
We are also making concerted efforts to provide the same kind of intellectual property education
at subsidiaries and affiliated companies in and outside of Japan. Moreover, we will assign intellec-
tual property specialists to companies actively engaging in R&D and work to improve education for
researchers and engineers.
Intellectual Property
Strategies
Management
Strategies
R&D Strategies
Business Strategies
Patents Filed
5,639
5,383
5,022
1,580
1,643
1,537
3,846
3,996
3,442
15
16
17
(FY)
Patents Held to Date
2,389
2,444
578
613
1,733
518
1,866
1,776
1,215
15
16
17
(FY)
Domestic
Overseas
40
Annual Report 2018 Improve capacity to
address social issues
Toray Group will work to instill a
greater awareness of CSR among
employees, aiming to do its part
to address social issues—such as
global environmental problems
as well as health maintenance
and longevity. The Group will also
work to improve its ability not only
to seize upon opportunities, but
also to deal with risks.
Strengthen CSR activities
throughout the
entire supply chain
By facilitating CSR initiatives
group-wide, Toray Group will
work to instill CSR awareness
and promote CSR activities at
suppliers.
Step up efforts on
group-wide CSR activities
Now that Toray Group has
established comprehensive pol-
icies and material issues for
CSR as key performance indica-
tors, the Group will implement
CSR activities with an eye on
actual conditions at individual
Group companies.
Facilitate activities to
meet the expectations of
stakeholders
In order to gain a high degree of
trust from all stakeholders, Toray
Group will actively disclose non-fi-
nancial information and engage in
dialogue with stakeholders, and
make the most of this process in its
CSR activities.
SUSTAINABLE
MANAGEMENT SYSTEM
We at Toray Group recognize that business expansion and CSR are the two fundamentals of growth. In
addition to working to solve social issues through the performance of our business activities, we position
the promotion of CSR as a priority management issue and aim for sustainable growth based on a mutual
understanding with shareholders, customers, employees, business partners, local communities and all of
our stakeholders.
Toray Industries, Inc.
41
41
Toray Industries, Inc. Sustainable Management System
Toray Group Sustainability Vision
Toray Group provides innovative technologies and advanced materials that contribute to achieving
SDGs by addressing global issues.
Formulation of Toray Group Sustainability Vision
Since Toray’s founding in 1926, based upon our belief that materials can change our lives, we have delivered innovative technologies
and advanced materials that provide solutions to various challenges the world faces regarding the balance between development and
sustainability. Through this we have also been able to serve society, which is a foundation of our existence. This holds true for today
as well. Many of the projects that Toray Group promotes under its Medium-term Management Program work to contribute solutions to
global environmental issues and human longevity, and can be considered, by their very nature, to address sustainable development goals
(SDGs). Given this, and with an ever-greater awareness of sustainability issues, we have formulated Toray Group Sustainability Vision
that incorporates The World as Envisioned by Toray Group in 2050, and to achieve that, Toray Group Initiatives, as well as Quantitative
Targets for Fiscal 2030.
As we look to the year 2050, and in consideration of the value that it is capable of providing to the world, Toray Group is aiming for 1)
a net zero emissions world, where greenhouse gas emissions are completely offset by absorption; 2) a world where resources are sus-
tainably managed; 3) a world with a restored natural environment, with clean water and air for everyone; and 4) a world where everyone
enjoys good health and hygiene.
Formulation of KPIs and Contributing to Meeting SDGs and Other Global Objectives
To contribute to realizing the four above stated specific initiatives, Toray Group has formulated key performance indicators (KPIs) as it
approaches fiscal 2030. By incorporating these into issues to be addressed by management, and given the organic growth generated,
we will do our utmost to eliminate any negative impact on global sustainability, and in tandem with that, expand a supply of products that
contribute solutions to problems, while setting our sights on accomplishing SDGs and other global objectives.
Toray Group’s vision
for the world
Toray Group’s contributions
1
Accelerating measures
to counter climate change
2
Realizing sustainable,
recycling-based use of
resources and production
3
4
Providing clean water and air
Contributing to
better medical care and
hygiene for people worldwide
Toray
Group’s
innovative
technologies
and
advanced
materials
A net zero
emissions world,
where greenhouse
gas emissions are
completely offset by
absorption
A world where
resources are
sustainably
managed
A world with a
restored natural
environment, with
clean water and air for
everyone
A world where
everyone enjoys good
health and hygiene
42
Annual Report 2018 Quantitative Targets for Fiscal 2030 (The baseline year for quantitative targets is fiscal 2013)
• Supply four times more Green Innovation products (products
that help to solve issues related to the global environment,
resources, and energy)
(This will avoid eight times more CO2 emissions in the value
chain*1)
• Supply six times more Life Innovation products (products that
enhance public health, improve the quality of medical care, and
contribute to health maintenance and longevity)
• Triple the total annual volume of water treated using Toray’s
water treatment membranes*2
• Reduce greenhouse gas emissions in production activities
by 30% per unit of sales across the entire Toray Group by
introducing renewable energy or taking other initiatives*3
• Reduce water usage in production activities by 30% per unit of
sales across the entire Toray Group
*1 For CO2 emissions avoided in the value chain, Toray calculates the CO2 emissions reduced throughout the value chain of products
in accordance with the chemical sector guidelines of the Japan Chemical Industry Association, the International Council of Chemical
Associations (ICCA), and the World Business Council For Sustainable Development (WBCSD).
*2 Toray calculates water treated with Toray’s water treatment membranes by multiplying the amount of fresh water that its ultrafiltration
water treatment membranes can produce per day, including reverse osmosis (RO), ultrafiltration (UF) and membrane separation
bioreactors (MBR), by the number of membrane elements sold.
*3 In Japan, Toray works to surpass the reduction target set for the industrial sector by the Japanese government (absolute emissions
reduced by 7%), which is based on the Paris Agreement. With the use of renewable energies and other zero emission power sources
rising worldwide, Toray Group aims to employ zero-emission power sources at a rate equivalent to or better than the targets in each
country by 2030.
43
Toray Industries, Inc. Sustainable Management System
Sustainability in Toray Group
In order to achieve sustainable growth, corporations must do business in a way that earns the broad
trust of stakeholders. To live up to its philosophy, Toray Group implements its management strategies
hand-in-hand with its efforts to fulfill corporate social responsibilities.
Unification of Management Strategies and CSR
Link Management Strategies and CSR
Toray Group is committed to making a proactive contribution to social develop-
ment and environmental stewardship, providing high value to all stakeholders,
and aims to continually increase its revenues and profits. Therefore, through
its Medium-term Management Program Project AP-G 2019, it stresses the
importance of practicing corporate social responsibility through a commitment
to safety, accident prevention, environmental preservation, corporate eth-
Management
Philosophy
Realize
Realize
ics, and legal compliance. Meanwhile, the Group has set out the Sixth CSR
Execute
Execute
Road Map, which covers the same time frame as Project AP-G 2019. The road
map mandates the Group to expand its efforts to realize the creation of new
value and implement more robust environmental, social and governance (ESG)
practices. In addition, in fiscal 2015 Toray Group adopted its CSR materiality
(material issues for CSR) which incorporated input from thought leaders, and
reevaluated this process with the fiscal 2017 start of the Sixth CSR Road Map,
setting forth KPIs and managing its progress every fiscal year.
Management
Strategies
Social
Responsibility
CSR Committee
Human Rights Promotion Committee
Human rights promotion committees
Link
Ethics and Compliance Committee
in Japan
Global
Human Rights Promotion Committee
Affiliate Companies’ Compliance Meeting
Overseas Affiliate Companies’
Compliance Meetings
FY2011-FY2013
FY2014-FY2016
FY2017-FY2019
Long-term corporate vision
AP-Growth TORAY 2020
AP-G 2013
Reform and Proactive Management
—A New Growth Track
AP-G 2016
Innovation and Proactive Management
—Implementation of Growth Strategy
AP-G 2019
Innovation and Proactive Management
—To Achieve the Vision 2020 Goals
Fourth CSR Road Map
Integrated guidelines, defined
and announces KPIs
Fifth CSR Road Map
Expanded scope of KPIs to
entire Toray Group
Sixth CSR Road Map
Setting higher targets
Pursuing Our Corporate Philosophy and SDG Initiatives
SDGs and Toray’s Initiatives
Since its foundation in 1926, Toray has upheld a corporate philosophy of “contributing to society through creating new value,” and devel-
oped innovative materials from a long-term perspective based on the concept of being a “entity for society” and of “people-centric man-
agement.” Through providing the materials, Toray has aimed to help solve social issues that include global environmental problems.
In addition, operating throughout the globe, Toray has expanded overseas businesses with the idea of contributing to each country’s
industrial development, export growth, and increasing technological levels from a long-term perspective.
In this way, Toray Group’s initiatives taken to date are in keeping with finding solutions to global social problems that have been raised
as sustainable development goals (SDGs). Based on its corporate philosophy, Toray Group aims in the years ahead to contribute further
to solving social issues such as global environmental problems and realizing societies where people live long and healthy lives.
44
Committee and Implementation Organization
Group-wide committees
Company-wide committees
Division- and plant-level committees
B
o
a
r
d
o
f
D
i
r
e
c
t
o
r
s
P
r
e
s
i
d
e
n
t
Risk Management Committee
Safety, Health, and
Environment Committee
Product Safety and
Quality Assurance Committee
Security Trade Administration
Committee
Committees for non-CSR affairs
Divisional meetings, etc.
Local risk management committees
Traffic safety subcommittees
Safety and health committees
Environment and accident prevention
committees
Product safety committees
• Green Innovation Businesses
(trial introduction of tube-shaped planters Roll PlanterTM*1)
• Life Innovation Businesses
• Prevention of air pollution at plants
(reduction of atmospheric emissions of chemical substances)
• Support for science education at schools
• Workshops at the Science Museum, Tokyo, Japan
• Support through the Science Education Award sponsored by
Toray Science Foundation and science foundations in
three ASEAN countries and the Republic of Korea
• Promotion of women’s active participation (Toray Industries, Inc.)
• Support for events to train female high school students in science
and technology courses
• Green Innovation Businesses (securing safe drinking water with
water treatment membranes, and other activities)
• Water management in plants
• Green Innovation Businesses (contribution to dissemination of
renewable energy)
• Promotion of work-life balance
• Promotion of employment of the disabled and the elderly
• Respect for human rights in CSR Procurement Guidelines
• Establishment of Toray Group Policy for Human Rights
• Research grants to young researchers through Toray Science
Foundation and science foundations in three ASEAN countries and
the Republic of Korea
• Green Innovation Businesses (reinforcement of wooden roof with
para-aramid fiber, Kevlar®*2)
• Green Innovation Businesses (utilization of biological resources and
promotion of product recycling)
• Reduction of waste from production sites
• Green Innovation Businesses (curbing CO2 emissions
throughout the product lifecycle)
• Reduction of CO2 emissions at the manufacturing stage
• Prevention of water pollution at plants
• Green Innovation Businesses (waterless printing technology)
• Initiatives under the Toray Group Biodiversity Basic Policy
• Survey of bio-based raw material procurement
• Initiatives pursuant to Toray Group Basic Policy for Increasing
Green Areas (greening activities at plants)
• Various environmental preservation activities at
Headquarters, plants, etc.
Annual Report 2018
Management
Philosophy
Realize
Realize
Execute
Execute
Management
Strategies
Social
Responsibility
Link Management Strategies and CSR
Organizational Structure for Corporate Social Responsibility
Toray Group’s CSR Committee serves as a Group-wide deliberative organization for important issues concerning corporate social respon-
sibility. The committee promotes CSR activities in cooperation with five other Group-wide committees, assigns tasks along with the
themes in the CSR Guidelines to the five committees, and build a system for the Group as a whole promoting CSR.
Committee and Implementation Organization
Group-wide committees
Company-wide committees
Division- and plant-level committees
CSR Committee
FY2011-FY2013
FY2014-FY2016
FY2017-FY2019
Long-term corporate vision
AP-Growth TORAY 2020
AP-G 2013
AP-G 2016
AP-G 2019
Reform and Proactive Management
Innovation and Proactive Management
Innovation and Proactive Management
—A New Growth Track
—Implementation of Growth Strategy
—To Achieve the Vision 2020 Goals
Fourth CSR Road Map
Integrated guidelines, defined
and announces KPIs
Fifth CSR Road Map
Expanded scope of KPIs to
entire Toray Group
Sixth CSR Road Map
Setting higher targets
Link
Ethics and Compliance Committee
B
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a
r
d
o
f
D
i
r
e
c
t
o
r
s
P
r
e
s
d
e
n
t
i
Risk Management Committee
Safety, Health, and
Environment Committee
Product Safety and
Quality Assurance Committee
Security Trade Administration
Committee
Committees for non-CSR affairs
Human Rights Promotion Committee
in Japan
Global
Human Rights Promotion Committee
Affiliate Companies’ Compliance Meeting
Overseas Affiliate Companies’
Compliance Meetings
Human rights promotion committees
Divisional meetings, etc.
Local risk management committees
Traffic safety subcommittees
Safety and health committees
Environment and accident prevention
committees
Product safety committees
SDGs and Toray’s Initiatives
• Green Innovation Businesses
(trial introduction of tube-shaped planters Roll PlanterTM*1)
• Life Innovation Businesses
• Prevention of air pollution at plants
(reduction of atmospheric emissions of chemical substances)
• Support for science education at schools
• Workshops at the Science Museum, Tokyo, Japan
• Support through the Science Education Award sponsored by
Toray Science Foundation and science foundations in
three ASEAN countries and the Republic of Korea
• Promotion of women’s active participation (Toray Industries, Inc.)
• Support for events to train female high school students in science
and technology courses
• Green Innovation Businesses (securing safe drinking water with
water treatment membranes, and other activities)
• Water management in plants
• Green Innovation Businesses (contribution to dissemination of
renewable energy)
• Promotion of work-life balance
• Promotion of employment of the disabled and the elderly
• Respect for human rights in CSR Procurement Guidelines
• Establishment of Toray Group Policy for Human Rights
• Research grants to young researchers through Toray Science
Foundation and science foundations in three ASEAN countries and
the Republic of Korea
• Green Innovation Businesses (reinforcement of wooden roof with
para-aramid fiber, Kevlar®*2)
• Green Innovation Businesses (utilization of biological resources and
promotion of product recycling)
• Reduction of waste from production sites
• Green Innovation Businesses (curbing CO2 emissions
throughout the product lifecycle)
• Reduction of CO2 emissions at the manufacturing stage
• Prevention of water pollution at plants
• Green Innovation Businesses (waterless printing technology)
• Initiatives under the Toray Group Biodiversity Basic Policy
• Survey of bio-based raw material procurement
• Initiatives pursuant to Toray Group Basic Policy for Increasing
Green Areas (greening activities at plants)
• Various environmental preservation activities at
Headquarters, plants, etc.
*1 Roll PlanterTM is a registered trademark of Mitsukawa Co., Ltd.
*2 Kevlar® is a registered trademark of E. l. du Pont de Nemours and Company
45
Toray Industries, Inc.
Sustainable Management System
Environmental Management Initiatives
Promoting Life Cycle Management
In addressing global environmental issues, it is vital to consider the entire life cycle of prod-
ucts and services in order to reduce environmental impact while also delivering improved
economic and social value. To this end, Toray Group practices life cycle management. Life
cycle management is the basis for Toray’s Green Innovation products, and the Group has
adopted life cycle assessment*1 and Toray Eco-Efficiency Analysis (T-E2A)*2 tool and is work-
ing to ensure these are employed thoroughly in all of its businesses.
*1 Life cycle assessment (LCA) is a method for quantitatively assessing resources that have gone into a prod-
uct, its environmental burden, and the environmental impact the product has on the Earth and the ecosystem
throughout the life cycle of the product.
*2 T-E2A is an environmental analysis tool developed by Toray. It produces a map of multiple products plotted
along the axes of environmental impact and economic performance, enabling users to select the most environ-
mentally friendly and economical products.
Progress on the Fifth Medium-Term Environmental Plan
Toray Group is now implementing its Fifth Medium-Term Environmental Plan, which runs
from fiscal 2016 to fiscal 2020. The plan aims to further reduce the Group’s environmental
impact.
Amid further projected increases in production volumes for high-performance films and
carbon fiber, the Group will continue to pursue environmental initiatives in order to achieve
the challenging targets of the new plan.
Initiatives to Curb Global Warming
Toray has set its goal for the reduction of greenhouse gas emissions as “maintaining emis-
sions at least 15% below the fiscal 1990 level, by fiscal 2020” and implements planned
reduction measures. CO2 emissions in fiscal 2017 increased by 18,000 tons from the previ-
ous fiscal year’s level due to higher production in line with business expansion. Greenhouse
gas emissions rose 1.1%, to 2.03 million tons from the previous fiscal year, although this
was a reduction of 20.1% from the fiscal 1990 level, continuing to meet its reduction target.
Toray and its Group companies in Japan work to curb global warming with the goal of
reducing greenhouse gas emissions by 15% on a per-unit-of-sales basis by fiscal 2020, com-
pared to the fiscal 1990 level. Toray and its Group companies’ emissions of greenhouse gas
were down 1.1% in fiscal 2017 compared to the previous fiscal year. Greenhouse gas emis-
sions per unit of sales improved 3.1 points compared to the previous fiscal year and were
23.5% below the base year.
Fiscal 2017 greenhouse gas emissions for Toray Group worldwide were 5.48 million
tons-CO2 equivalent, a decline of 2.4% compared to the previous fiscal year. All Toray Group
manufacturing companies and plants will work to achieve the Group’s goal of reducing the
per-unit energy consumption rate by 2% each fiscal year and strive to reduce greenhouse
gas emissions throughout the Group.
Energy Conservation Measures
Toray has set a goal of reducing its per-unit energy consumption by 2% annually and vig-
orously works on energy conservation measures. In fiscal 2017, Toray increased energy
consumption by 4% compared to the previous fiscal year mainly on account of higher pro-
duction. However, it improved its per-unit energy consumption by 1.3% year on year as a
result of energy conservation measures taken at each plant, energy conservation diagnos-
tics performed by the Company’s own energy efficiency specialists, and other initiatives. This
was an improvement from the base year of 18.4%.
Utilizing Natural Energy and Converting to Natural Gas for Fuel
Toray Group is systematically switching to natural gas for fuel and deploying cogeneration
systems with the goal of conserving energy. In addition, in fiscal 2016, as an initiative for
effective use of renewable energy, Toray’s Nagoya Plant installed a small hydroelectric sys-
tem that generates power using the incoming industrial water pressure, and in fiscal 2017,
Toray’s Seta Plant installed a solar power generation system. Both systems have com-
menced operations.
Greenhouse Gas Emissions
and Greenhouse Gas
Emissions Per Unit of Sales
(Toray Group in Japan)
100.0
Base
value
277
84.0
84.0
79.7
Target
85.0
259
258
76.6
246
243
90
14
15
16
17
Greenhouse Gas Emissions
(10,000 tons-CO2 eq)
20
(FY)
Greenhouse Gas Emissions Per Unit of Sales
(index)
46
Annual Report 2018
Voluntary Initiatives to Reduce Atmospheric Emissions of
Chemical Substances
As a corporate group that does business in the chemicals sector, Toray Group places the
highest priority on reducing emissions of chemicals into the atmosphere in order to reduce
its environmental impact.
In fiscal 2017, Toray Group’s atmospheric emissions of PRTR Law-specified substances
were 873 tons, which represented a 67% reduction compared to the base year of fiscal
2000. VOC atmospheric emissions amounted to 1,108 tons, a 72% reduction compared to
fiscal 2000. The Group is executing reduction measures with the aim of achieving the objec-
tives of the Fifth Medium-Term Environmental Plan.
Initiatives to Prevent Air and Water Pollution
Toray Group implements ongoing initiatives at production sites to reduce sulfur oxide (SOx)
emissions by installing desulfurization equipment and switching to cleaner fuels, and reduce
chemical oxygen demand (COD) by expanding wastewater treatment facilities.
Initiatives for Managing Water Resources
Toray Group has always been working through its water treatment business to provide solu-
tions to water resource problems around the world. Toray Group practices the 3Rs (reduce,
reuse, recycle) in consuming water resources, and monitors the quality of water that
is released into public bodies of water. Additionally, at overseas-based Group companies
located in drought-stricken regions in particular, we conduct recycling of cooling and effluent
water and also work to reduce the volume of water used for industrial purposes.
In fiscal 2017, Toray Group used 228 million tons of water, an increase of 1% over the
Atmospheric Emissions
of PRTR Law-Specified
Substances
Base
value
2,624
(tons)
Target
787
873
752
695
663
00
14
15
16
17
20
(FY)
VOC Atmospheric Emissions
Base
value
3,973
(tons)
Target
1,192
previous fiscal year. Compared to the amount used per unit of sales in fiscal 2001, set to an
index value of 100, usage in fiscal 2017 stood at 54.0 points, an improvement of 5.5 points
955 1,006 994
1,108
from the previous fiscal year.
00
14
15
16
17
20
(FY)
Waste Recycling Rate
85.8%
Initiatives to Reduce Waste
Toray Group is carrying out zero emission initiatives as it works toward the realization of a
sustainable, recycling-based world. Under the Fifth Medium-Term Environmental Plan, the
Group worked to achieve its fiscal 2020 targets for rates of simply disposed waste*1, land-
fill waste*2 and recycled waste*3, which have been set as indicators for measuring progress
toward attaining zero emissions.
*1 Simply disposed waste rate = (incineration +landfill) / total waste
*2 Landfill waste rate = landfill waste / total waste
*3 Recycling rate = (recycled resources + resources with monetary worth) / (total waste + resources with mon-
etary worth)
Biodiversity Initiatives
Toray Group has positioned biodiversity, along with reducing greenhouse gas emissions, as
an important theme regarding global environmental problems, and pursues biodiversity ini-
tiatives in accordance with a three-year action road map and sets its priorities based on the
Group’s Biodiversity Initiatives. Plants at Toray and Group companies in Japan operate green-
ery policies and plans through around 2020, guided by Toray Group Basic Policy for Increasing
Green Areas*1. The plans encompass initiatives to conserve green areas as much as pos-
sible, including healthy natural forests*2, that have been protected since the plants began
operating. These sustainable greenery conservation initiatives also help to conserve the envi-
ronment for communities.
*1 Natural groves or forestation by species based on potential native vegetation
*2 Toray Group Basic Policy on Increasing Green Areas was established in 2012, evolving out of greenery policies
that were first established in 1973.
47
Toray Industries, Inc.
Sustainable Management System
Human Resource Development and Training
Committed to Human Rights
We at Toray Group believe respect for human rights is a mandatory management principle for
ensuring the continuity of corporate activities and building positive relationships with all of the
Group’s stakeholders. Based on this principle, in December 2017 we formulated Toray Group
Policy for Human Rights. The Group also works to promote and raise awareness of human
rights, for instance by declaring its commitment to the respect of human rights in its Corporate
Ethics and Legal Compliance Code of Conduct. In the Code, discrimination of any kind based on
race, creed, skin color, gender, religion, nationality, language, physical characteristics, socioeco-
nomic status, place of birth or any other personal characteristics is strictly forbidden in every
process from recruiting and hiring to work placement, treatment, training, and retirement.
Since fiscal 2014, the Group has also been tackling the issue of discrimination based on
gender identification and sexual orientation. In January 2017, the Group established a dedi-
cated hotline for LGBT (sexual minority) issues, Nijiiro Consultation Service.
Toray Group Policy for Human Rights
We at Toray Group believe that respect for human rights is a mandatory prin-
ciple for corporate management. Therefore, we respect international standards
such as the United Nations Universal Declaration of Human Rights and the
International Labor Organization’s standards in compliance with the laws and
regulations of countries and regions where we operate, and will endeavor to ful-
fill our duty of respect for human rights as a good corporate citizen.
1. We will respect human rights, character and individuality of employees and
eliminate harassment and discrimination in workplaces. Furthermore, we will
prohibit child labor, forced labor and unfair low-wage labor.
2. We will strive to promote respect for human rights throughout the entire sup-
ply chain related to our business activities. In addition, we will not be complicit
in infringing on the human rights.
3. We will endeavor to understand adverse human rights impacts associated with
our business activities and to avoid or reduce such influences.
4. If it becomes evident that we have caused or contributed to adverse human
rights impacts, we will promptly take appropriate actions.
5. We will promote educational activities about issues of human rights for every
employee and foster a proper understanding of issues among them.
Basic Policy on Human Resources Hiring
The success or failure of a company is decided by its people—employees shape its des-
tiny. Guided by this concept, Toray Group, both in and outside of Japan, regards human
resources as the most important management resources and considers securing and devel-
oping outstanding human resources capable of performing on a global stage as a fundamen-
tal management priority. Based on the following four goals, Toray Group is promoting human
resource development.
• Development of fair-minded individuals who act with high ethical standards and a
sense of responsibility
• Training of professionals with advanced expertise, technical skills and originality in
problem solving
• Development of leaders who act with foresight and a sense of balance
• Development of individuals, professionals, and leaders who can play an active role in
global business
To achieve these goals, Toray Group is taking deliberate measures to conduct a variety of
training that will strengthen and raise an array of capabilities for employees at every level
and field.
Training Expenditures per
Employee
99,069yen
48
Annual Report 2018 Women in Management
Positions
4.6%
Percent of Companies
Achieving Legally Mandated
Employment Rate of Persons
with Disabilities
60.0%
Percentage of Available
Annual Paid Leave Used by
Employees
88.4%
Diversity Promotion Initiatives
Fostering an Organizational Culture Conducive to
the Career Advancement of Women
Toray has long advanced the creation of workplace environments in which women will feel
comfortable in performing their duties. As of April 2018, women held 9.0% of unit manager
or higher positions, and 4.6% of section manager or higher positions. In fiscal 2016, based
on Japan’s Act on Promotion of Women’s Participation and Advancement in the Workplace,
enacted in that same year, Toray developed an action plan to increase the percentage of
female employees promoted to managerial positions by focusing on making and steadily
implementing individualized career plans and raising awareness of career development.
Under this action plan, Toray has set as its immediate target to ensure an average promotion
rate for women that is at least 80% that of men*1 for the five-year period from fiscal 2016 to
fiscal 2020. This figure is the Japanese Ministry of Health, Labour and Welfare’s yardstick for
determining whether or not excessive discrepancy exists based on gender.
*1 Promotion rate of women to managerial positions compared to that of men = Percentage of female employees
promoted to managerial positions / Percentage of male employees promoted to managerial positions
Percentage promoted to managerial positions = Individuals promoted to managerial positions / No. of employ-
ees who were initially hired into the G Course who are eligible for promotion to managerial position that year
Employment of Persons with Disabilities
Toray Group hires and employs persons with disabilities, from those with physical challenges
to persons with intellectual and mental challenges. The Group is making workplace improve-
ments to remove physical barriers for persons with handicaps as well as instituting safety
measures. Additionally, the Group provides comprehensive training upon work placement
and gathers feedback from persons with disabilities to make workplace improvements.
Further, Toray meets Japan’s legal minimum of 2.2% persons with disabilities, as do
60.0% of Toray Group companies in Japan. Group companies actively seek to hire persons
with disabilities through public organizations and job placement agencies. However, some
individual Group companies do not meet the mandated legal requirement, although the
Group companies collectively meet the minimum. Toray will continue to focus on this issue
moving forward.
Helping Employees Maintain Work-Life Balance
Toray has worked to further improve systems that help employees achieve a harmonious
balance between work and family life by offering a wider variety of lifestyle options for both
men and women. Toray has put in place systems that allow employees to work from home
or have lower-hour work schedules for child care or care giving, and a coreless flex system
for all Tokyo and Osaka head office employees.
As part of its commitment to workplace innovation to balance work and family life, Toray
strives to create a comfortable environment throughout its work sites. Since fiscal 2008,
(1) regular discussions are held in each workplace to raise awareness of different working
styles; (2) working late at night or on holidays is in principle prohibited; (3) all lights are turned
off at a certain time at night; and (4) Company-wide “no overtime days” take place one day
each month. Toray has also been working on ongoing initiatives to cut overtime hours and to
encourage employees to take annual paid leave. (Employees used 88.4% of available annual
paid leave in fiscal 2017).
Employee Health
Toray views employee health management as a management priority. Strategic initiatives are
now underway, including some undertaken in collaboration with the employee health insur-
ance association. Toray is also addressing mental health. Since fiscal 2011 the Company has
been independently implementing employee stress check-ups through an external provider,
and has added content in accordance with revisions to Japan’s Industrial Safety and Health
Act. Group companies in Japan also implement similar employee stress check-ups. In rec-
ognition of these efforts, in February 2018 Toray was certified as a Health and Productivity
Management Organization (White 500).
49
Toray Industries, Inc.
Sustainable Management System
Stakeholder Engagement
Toray Group has established Basic Policies to Promote Dialogue with Stakeholders. We are proactively
communicating with various stakeholders in all aspects of our corporate activities.
Engaging with Stockholders and Investors
Engaging with Customers
The Group actively communicates with institutional
Toray believes that the customer comes first. We
investors and securities company analysts by provid-
closely communicate with our customers, mainly
ing information materials when requested and holding
through our marketing and sales departments, and peri-
same-day results briefings when quarterly earnings are
odically conduct customer satisfaction surveys. The
announced. The Group also provides a wide variety of
results of these surveys are shared internally at Board
information about management policy and strategy as
meetings and through inhouse newsletters as we strive
well as financial and earnings information through its
to provide even higher quality customer service.
annual report, IR presentation materials, and information
pages on its website for stockholders and investors.
In fiscal 2017, Toray held four results briefings and
held 676 meetings with investors and analysts.
Engaging with Business Partners
Engaging with Employees
While providing materials and products as a manufac-
The Group communicates with employees through
turer of advanced materials, Toray Group must engage
in-house newsletters, intranet, company-wide bulle-
in upstream management of its supply chains to bet-
tin boards and other media. To share information and
ter fulfill the needs of its customers, including the areas
deepen understanding of management and business
of production facilities and procured raw materials and
topics, messages from the President, Japanese, English,
resources. Accordingly, the Group has established its
and Chinese versions of in-house newsletters, and expla-
Basic Purchasing Policies and Basic Distribution Policies
nations of management and business topics and projects
to emphasize this approach and ensure fair business
are made available via all types of media. In addition, in
activities. Throughout the Group we are promoting
2017, we established TORAY NAVI Lite, an intranet site
proper and fair transactions, adherence to laws, environ-
geared toward Group companies in and outside of Japan,
mental preservation, respect for human rights, improve-
representing the construction of global infrastructure for
ments in quality and other policies in initiatives with
the sharing of information.
regard to corporate responsibility in procurement, pur-
chasing, and distribution.
Engaging with the Mass Media
Engaging with Local Communities
Toray recognizes that public relations and corporate
Toray Group strives to engage in more active dialogue
communication activities have a role in fulfilling respon-
with nearby residents in a variety of settings, including
sibilities for information disclosure as well as influ-
participating in events sponsored by local governments
encing public opinion. Accordingly, Toray’s Corporate
and inviting local residents onto plant grounds for sum-
Communications Department reports directly to the
mer festivals. Following Toray Group Social Initiative
President, and actively engages with a wide range of
Policies, we aim for our social contribution activities to
media organizations, acting as the public’s point of con-
contribute to sustainable development while meeting the
tact with the Company. Based on Toray’s Information
expectations of local communities. A specific example
Disclosure Principles, the department provides fair and
of this is the establishment of Toray Science Foundation
impartial information, even if it may cast the Company in
in Japan, and similar foundations in Malaysia, Thailand,
a bad light, in a timely and appropriate manner.
Indonesia and the Republic of Korea, which contribute to
In fiscal 2017, the Company issued 187 press releases
raising the level of science and technology in these coun-
and responded to 318 media requests for information.
tries. We also actively promote sports in Asia by co-spon-
soring the Shanghai International Marathon.
50
Annual Report 2018
External Evaluation
Toray was included in the following SRI indices as of March 31, 2018.
Dow Jones Sustainability Index Asia Pacific
MSCI ESG Indexes
Toray is included in the Asia Pacific Index of the Dow Jones
Toray is included in the MSCI ESG Indexes. MSCI provides insti-
Sustainability Indices (DJSI), an SRI index administered by U.S.-
tutional investors (from pension funds to hedge funds) across
based Dow Jones and Switzerland-based RobecoSAM.
the globe with various tools to support investment decisions.
Ethibel Pioneer & Excellence Registers
Toray is included in the Ethibel Pioneer and
Ethibel Excellence investment registers of
Forum Ethibel, a Belgian non-profit organi-
zation that promotes socially responsible
investment.
Morningstar Socially Responsible Investment Index
(MS-SRI)
Toray is included in the Morningstar Socially Responsible
Investment (MS-SRI) Index. Morningstar Japan K.K. selects
150 listed companies in Japan that have been assessed for out-
standing social responsibility, indexing the prices of their shares.
MS-SRI is the first SRI index in Japan.
Sompo Japan Nipponkoa Asset Management (SNAM) Sustainability Index
Toray is included in the SNAM Sustainability Index managed by Sompo Japan Nipponkoa Asset Management (SNAM). The SNAM
Sustainability Index is an SRI index fund for pension funds and institutional investors that broadly invest in corporations that rate highly
for environmental, social, and governance (ESG).
51
Toray Industries, Inc. Sustainable Management System
Corporate Governance
Basic Policy
From the outset, one of Toray Group’s managerial principles has
commitment “To provide our shareholders with dependable and
been that the purpose of a company is to contribute to society.
trustworthy management.” In addition, the Corporate Guiding
The Group has developed a Management Philosophy that incor-
Principles stipulate the Group’s commitment to “Obtaining the
porates this principle.
trust of society and meeting the expectations by acting fairly
The Group systematizes the Management Philosophy as a
while maintaining high ethical standards and a strong sense of
Corporate Philosophy, Corporate Missions, and Corporate Guiding
responsibility and maintaining transparency in management.”
Principles. Among these, the Corporate Missions call for desir-
When establishing the corporate governance structure, the
able relationships with stakeholders and enunciate the Group’s
Group seeks to realize these philosophies as its basic policy.
Systems for Executing and Supervising Management
Toray is a company with Board of Corporate Auditors, and the
entirely independent of the Board of Directors as a system to
members of the Board and corporate auditors are elected at the
secure transparency and fairness of oversight and decision-making.
general meeting of stockholders.
Toray established the Governance Committee as an advisory
Members of the Board and corporate auditors, as officers
organ to the Board of Directors in order to report to the Board
directly elected at the general meeting of stockholders, clearly
of Directors on important issues regarding the Company’s cor-
recognize fiduciary responsibility to stockholders who have
porate governance over the mid- to long-term. The Governance
entrusted the management and appropriately fulfill their respec-
Committee consists of the Chairman of the Board, President, and
tive roles while discharging accountability about management
all of the outside directors, and an outside director serves as a
status to stockholders and other stakeholders.
chairperson. Deliberation at the Governance Committee encom-
Toray’s Board of Directors consists of 19 members. Since
passes matters regarding the Company’s overall corporate gover-
Toray Group supplies a wide range of industries with basic mate-
nance matters, including the following.
rials and globally plays an active part in a broad scope of business
fields, it is necessary to evaluate various risks multilaterally based
• Structure of the Board of Directors and the Board of
on expertise relevant to the worksites, not only for management
Corporate Auditors
judgment and decision-making but also for oversight. To that end,
• Evaluation of the management and operation of the Board
the Board of Directors formulates a structure in which members
of Directors
of the Board familiar with Toray Group businesses oversee man-
• Policy on nominating candidates for members of the Board
agement and make decisions from various viewpoints.
and corporate auditors
Furthermore, the Board of Corporate Auditors oversees the exe-
• Remuneration system for members of the Board and cor-
cution of operations by the members of the Board based on profes-
porate auditors
sional knowledge in fields such as finance, accounting and law in
• Basic policy on electing member of the senior manage-
addition to an understanding about businesses, from a standpoint
ment, including the President
Corporate Governance System
Election
Election
Election
General Stockholders Meeting
Accounting Auditor
Audit
Board of Corporate Auditors
(Corporate Auditors)
Audit
Audit
Oversight & Decision-making Functions
Board of Directors
Governance Committee
Report
Auditing Department
President
Business Execution Functions
Conference Organs
Executive Committee
Internal Audit
Business Execution Divisions
Company-wide Committees
Ethics and Compliance
Committee
CSR Committee
Divisions, offices
and plants in Japan
Japanese subsidiaries
and affiliates
Overseas subsidiaries
and affiliates
Departmental Committees
52
Annual Report 2018
Election of Outside Directors
At Toray, we ensure objectivity and transparency of corporate
standards for independence and meet the independence require-
governance by establishing and disclosing standards for indepen-
ments set by the Tokyo Stock Exchange.
dence of outside directors and outside corporate auditors. Toray’s
We, therefore, have submitted notification to the Tokyo Stock
outside directors and outside corporate auditors meet Toray’s
Exchange of their status as independent officers.
The following table outlines the basis for election of our outside directors/corporate
auditors and details of their independence.
Kunio Ito
(Director)
Ryoji Noyori
(Director)
Toshio Nagai
(Corporate auditor)
Kazuya Jono
(Corporate auditor)
• Is highly expert in accounting and business administration as a university professor
• Has extensive experience as a corporate outside director
• No matters affect his independence from Toray
• Has extensive experience as a university professor and highly specialized expertise in organic synthetic
chemistry, which is a core Toray technology
• Has experience as a corporate outside director
• No matters affect his independence from Toray
• Has an excellent track record of high standing in the legal profession and a solid character and judgment,
so we believe he can audit appropriately from an objective standpoint
• No matters affect his independence from Toray
• Has held key positions in the corporate world and has solid character and judgment, so we believe he can
audit appropriately from an objective standpoint
• Formerly employed by Sumitomo Mitsui Banking Corporation and Citibank Japan Ltd. (current Citibank,
N.A., Tokyo Branch); Toray has regular banking transactions with both banks. With respect to Sumitomo
Mitsui Banking Corporation, over three years have passed since he retired from the board, and we have no
borrowing from Citibank, N.A., therefore independence is not affected. Toray’s balance of borrowing from
Sumitomo Mitsui Banking Corporation (including syndicated loans) as of 31 March 2018 is 0.7% of total
assets, which is not high compared with other banks.
Basic Policy on Internal Control System
To realize the Management Philosophy, the Company shall estab-
• Toray shall establish Security Trade Control Program, one of the
lish a structure to execute its business legally and effectively by
most important legal compliance issues, and establish an orga-
improving its internal control system according to the following
nization dedicated to security export control.
basic policy as a structure to enable it to appropriately establish
organization, formulate regulations, communicate information,
2. System to ensure the efficient execution of duties
and monitor the execution of operations.
by members of the Board
1. System to ensure that the execution of duties by
members of the Board and employees complies
with laws and regulations and the Company’s
Articles of Incorporation
• Toray shall establish the Authority of Top Management to stipulate
matters with respect to which decision-making authority is reserved
by the Board of Directors and matters with respect to which deci-
sion-making is delegated to the President, General Managers,
etc., from among matters necessary for decision-making.
• Toray shall establish the Ethics and Compliance Committee, as
• Toray shall establish the Executive Committee as deliberative
one of the company-wide committees to promote observance
organs for important matters decided by the Board of Directors
of corporate ethics and legal compliance, and shall take other
or the President. The Executive Committee shall be responsi-
measures to improve the required internal systems, including
ble for the general direction of policy, and shall be in charge of
the establishment of dedicated organizations.
issues related to implementation.
• Toray shall establish the Corporate Ethics and Legal Compliance
Code of Conduct as specific provisions to be observed by
3. System for preserving and managing information
members of the Board and employees, and shall take other
measures to improve the required guidelines, etc. Especially
pertaining to the execution of duties by the
members of the Board
with regard to eliminating relations with antisocial forces, the
• Toray shall establish regulations for important documents and
Company shall act as one to stand firmly against them.
important information related to management, confidential
• Toray shall establish an internal reporting system (whistle-blow-
information and personal information, and appropriately pre-
ing system) for the reporting of the discovery of violation of
serve and manage them in accordance with the rules.
laws, regulations, or the Company’s Articles of Incorporation.
53
Toray Industries, Inc. Sustainable Management System
Corporate Governance
4. Regulations and other systems pertaining to
members of the Board, etc. and employees of the subsidiaries
controls over risks of loss
is appropriately reported to the Company.
• Toray shall identify potential risks in business activities, promote
company-wide risk management to strive to reduce the level of
risk under normal business conditions, and prevent future cri-
ses, as well as improve regulations and establish an internal
committee to enable immediate implementation in the event
6. System for reporting to corporate auditors
and systems for ensuring that persons who
report to corporate auditors are not treated
disadvantageously because of their reporting
of a major crisis.
• Members of the Board, etc. and employees of Toray Group and
• Toray shall establish an internal control system for financial
corporate auditors of subsidiaries shall report matters regard-
reporting that ensures the reliability of financial reporting.
ing the execution of duties to corporate auditors in response to
requests from the corporate auditors.
5. System for ensuring appropriate business
• Department in charge of the internal reporting system (whis-
operations within subsidiaries
tle-blowing system) shall regularly report the status of internal
• To establish a system under which subsidiaries report to the
whistle-blowing in Toray Group to the corporate auditors.
Company on matters regarding the execution of duties by mem-
• Toray shall stipulate regulations to the effect that members of
bers of the Board, etc. of the subsidiaries, the Company shall
the Board and employees who report to corporate auditors shall
provide regulations on the regular reporting of important man-
not be subjected to any disadvantageous treatment because of
agement information to the Company and regularly hold con-
the said reporting, and shall provide subsidiaries with guidance
ferences at which the Company’s management receives direct
to help them stipulate the same regulations.
reports on the status of the management of the subsidiaries.
• To establish regulations and other systems pertaining to con-
trols over risks of loss for subsidiaries, the Company shall pro-
vide subsidiaries with guidance to help them to establish risk
7. Items pertaining to the handling of expenses and
liabilities arising from the execution of duties by
corporate auditors
management systems appropriate for their respective business
• Toray shall pay expenses, etc. incurred from the execution of
forms and business environments, and shall receive regular
duties by corporate auditors.
reports on the status of their activities.
• To establish a system for ensuring that members of the
8. Items pertaining to employees assisting with
Board, etc. of subsidiaries effectively execute their duties, the
Company shall provide regulations on the scope under which
the Company can reserve its authority over the execution of
business operations. In addition, the Company shall endeavor
to grasp management information in a unified manner and
corporate auditors’ duties, items pertaining to the
independence of said employees from members of
the Board, and items pertaining to the assurance
of effectiveness of instructions from the corporate
auditors to said employees
provide assistance and guidance necessary for subsidiaries
• Toray shall assign a full-time employee to provide assistance
by determining divisions, etc. with control over its respective
if and when corporate auditors request assistance. The said
subsidiaries.
employee shall exclusively follow the corporate auditors’ com-
• To establish a system for ensuring that the execution of duties by
mands and instructions, and the Company shall consult with
members of the Board, etc. and employees of subsidiaries com-
corporate auditors in advance with respect to the personnel
plies with laws and regulations and the Articles of Incorporation,
arrangements for the said employee.
the Company shall thoroughly familiarize its subsidiaries with
the Company’s Corporate Ethics and Legal Compliance Code of
9. Other systems for ensuring effective
Conduct as a code of conduct in common for Toray Group. At
the same time, the Company shall request the subsidiaries to
implementation of audits by corporate auditors
• Corporate auditors shall attend Board of Directors meetings and
establish their own codes of conduct, guidelines, etc. in con-
other important meetings so that they may ascertain import-
sideration of the laws and regulations, business practices, busi-
ant decision-making processes and the execution of operations.
ness forms, and other factors in their respective countries. In
• Corporate auditors shall hold regular meetings with members of
addition, the Company shall direct its subsidiaries to establish
the Board and management and conduct regular visiting audits
systems under which the status of internal whistle-blowing by
of Toray offices, plants, and subsidiaries.
Remuneration for members of the Board
Given their roles, remuneration for internal members of the Board
Remuneration is set at a level that enables the Company to
consists of monthly remuneration, a bonus and stock acquisition
secure superior human resources and further motivate them to
rights as stock options. Remuneration for outside directors con-
improve performance, referring to the results of a survey of other
sists of monthly remuneration only.
companies’ remuneration by an external third-party organization.
54
Annual Report 2018 With respect to monthly remuneration, the maximum limit of total
Stock Acquisition Rights as stock options to members of the Board
remuneration is determined at general meetings of stockholders.
is resolved at the general meeting of stockholders, and within that
Within the scope of the maximum limit, monthly remuneration to
limit, the total number of Stock Acquisition Rights to be allocated
each member of the Board is determined by the President based
to the members of the Board shall be decided at the Board of
on the Company’s internal regulations with a resolution at a Board
Directors meeting based on the Company’s internal regulations.
of Directors meeting.
Given their roles, remuneration for corporate auditors consists
The provision and the total amount of bonuses are determined
of monthly remuneration only. Remuneration is set at a level that
each time at a general meeting of stockholders. Particulars of
enables the Company to secure superior human resources, refer-
the agenda at the general meeting of stockholders are resolved
ring to the results of a survey of other companies’ remuneration
by the Board of Directors through conference among the senior
by an external third-party organization.
management, including the President, in consideration of the
With respect to monthly remuneration, the maximum limit
consolidated and non-consolidated business results for each fis-
of total remuneration is determined at general meetings of
cal year plus the historical record. A bonus to each member of the
stockholders. Within the scope of the maximum limit, monthly
Board is determined by the President according to each mem-
remuneration to each corporate auditor is determined through
ber’s performance based on the Company’s internal regulations
consultation by corporate auditors based on the Company’s inter-
with a resolution at a Board of Directors meeting.
nal regulations.
The maximum limit of total number of Stock Acquisition Rights
The Governance Committee continuously reviews the remu-
as well as the limit of remuneration relating to the granting of the
neration system for members of the Board and corporate auditors.
Details of Remuneration in Fiscal 2017
Position
Total
remuneration
(millions of yen)
Total remuneration by type (millions of yen)
Basic
Bonuses
Stock options as
remunerations
Recipients
Members of the Board (excluding outside directors)
1,360
Corporate auditors (excluding outside corporate auditors)
Outside directors
Outside corporate auditors
80
24
19
906
80
24
19
214
—
—
—
240
—
—
—
26
3
2
2
Notes: 1. Recipients included three members of the Board and one corporate auditor who retired during fiscal 2017.
2. Total amounts of remuneration do not include the ¥93 million paid in salaries to eight employee-directors.
Total Remuneration Received by Members of the Board and Corporate Auditors
Name
Total consolidated
remuneration
(millions of yen)
Position
Status of
company
Akihiro Nikkaku
157
Member of the Board
Filing company
Total consolidated remuneration by type (millions of yen)
Basic
104
Bonuses
Stock options as
remuneration
29
24
Note: Total remuneration only includes persons receiving more than ¥100 million.
Status of Compliance Initiatives
Toray Group recognizes the absolute importance of compliance
execution of their own duties and guides the entire Group’s
with laws, regulations, and social norms. Top management takes
approach to compliance.
a clear position on corporate ethics and legal compliance in the
Framework for Promoting Corporate Ethics and Legal Compliance
Toray has established the Ethics and Compliance Committee,
relating to corporate ethics, while advancing initiatives through
as a company-wide committee, chaired by the President. The
the joint efforts of labor and management. Acting as leaders,
Committee deliberates on policies and discusses measures
divisional and departmental general managers at each worksite
55
Toray Industries, Inc.
Sustainable Management System
Corporate Governance
adopt a top-down approach toward promoting initiatives.
Group companies outside Japan prepare national and
Affiliate Companies’ Compliance Meeting as well as Overseas
regional editions of the Corporate Ethics and Legal Compliance
Affiliate Companies’ Compliance Meetings have been estab-
Handbooks. Every executive and employee of Group compa-
lished as subordinate organizations of the Ethics and Compliance
nies outside Japan receives a copy of the handbook to ensure
Committee with respect to subsidiaries and affiliates in Japan
that they are fully informed of the corporate policy on the code
and overseas. These meetings study and promote compliance
of conduct.
activities implemented in each company, country, and region.
Toray established and is advancing the following common
In addition, the Corporate Ethics and Legal Compliance Code
company-wide challenges related to corporate ethics and legal
of Conduct is a strict set of standards that every Toray Group
compliance for fiscal 2017. Activities are also being undertaken
executive and employee closely follows when performing corpo-
based on Toray’s common company-wide challenges at subsid-
rate activities. In the event that a violation is discovered, strict dis-
iaries and affiliates in Japan and overseas.
cipline is carried out in consultation with the Company’s Rewards
and Sanctions Committee. Toray has put together the Corporate
• Implemented self-monitoring and mutual inspection system
Ethics and Legal Compliance Handbook, which explains the code
for internal control
and gives details of the compliance helpline, to ensure com-
• Provided thorough training on security trade controls
prehensive understanding for all Toray and its Japanese Group
• Provided all employees with comprehensive information on
companies’ executives and employees, including contracted,
antitrust laws and anti-bribery rules around the world
part-time and temporary workers.
• Implemented initiatives to ensure strict compliance
Status of Risk Management Initiatives
Toray has established a Risk Management Committee as a
Risk Management Committee. Furthermore, the Overseas Crisis
subordinate organization under the CSR Committee. The CSR
Management Committee and the local Crisis Management
Operations Department serves as a secretariat office for the Risk
Committees, in charge of managing overseas travel for employ-
Management Committee, by which Toray monitors the progress
ees and collecting information on overseas risk during normal
of risk reduction across Toray Group under normal business con-
business conditions, have now been similarly organized as subor-
ditions, and maintains a framework for planning, drafting, and pro-
dinate organizations of the Risk Management Committee.
moting company-wide risk management measures. In addition,
Toray established local risk management committees as subordi-
Toray Group Risk Management System
nate organizations of the Risk Management Committee at each
of Toray’s divisions, departments, offices, and plants. These com-
mittees have taken actions to reduce risk by implementing com-
pany-wide measures together with individually established risk
measures.
However, in response to an incident where quality data was
overwritten at a Group company in Japan, Toray once again
recognized that strengthening risk management group-wide
has emerged as an urgent management issue. Subsequently,
Toray established a dedicated organization within the Corporate
Strategic Planning Division, which is under the direct control of
the President, in April 2018 as part of the management strat-
egy for the purpose of strengthening and promoting risk man-
agement throughout Toray Group to a greater degree than in the
past, closely communicating with the top management. Toray
has since transferred the risk management functions from the
CSR Operations Department to this organization.
Chairperson: Corporate Strategic Planning Division manager
Risk Management Committee
(Secretariat office:
Corporate Strategic Planning Division)
Directions on
implementation
policy
Activity
reports
Risk management committees
at divisions, departments,
offices and plants
Directions on
implementation
policy
Activity
reports
Overseas Crisis Management
Committee
(Secretariat office: Group
Management Department)
Directions on
implementation
policy
Activity
reports
Local Crisis Management
Committees in
each country and region
As an organization to deliberate and provide information
regarding risk management throughout Toray Group, in May
Quick Response System During Emergencies
Toray Group has established Crisis Management Regulations, a
2018 Toray also established the Risk Management Committee
set of clear fundamental principles that form the basis of a com-
(company-wide committee) with Corporate Strategic Planning
pany-wide response in the event of a major crisis. The Group
Division manager as chairperson. This company-wide Committee
works to ensure the thorough implementation of these regula-
absorbed the responsibilities of the original Risk Management
tions when required. Moreover, the Group reviews the regula-
Committee and inherited the local risk management committees
tions as appropriate to prepare for new risks that emerge due to
that were formed as subordinate organizations of the original
changes in the social environment.
56
Annual Report 2018
Along with the changes made to the risk management sys-
tem in April 2018, Toray significantly overhauled the risk manage-
Addressing Existing Major Risks
In terms of addressing existing major risks, such as legal com-
ment system during normal business operations and the quick
pliance, fluctuations in raw material prices, business strate-
response system for emergencies, and revised these regulations
gies, economic condition and currency fluctuations, and security
in June 2018. In particular, a rule was established calling upon
export controls, the staff divisions and departments, and related
divisions and departments in which an emergency has occurred
group-wide committees whose normal business activities serve
to always report first to the Corporate Strategic Planning Division
directly as risk measures continuously undertake and follow-up
so that rapid management decisions can be made in the event of
on activities to reduce risk.
an emergency.
Toray has also recognized the security control for overseas
business travels and measures against political instability and ter-
Detecting Major Foreseeable Risks
Toray vigilantly maintains an eye on trends in Japan and around
rorism as material risk issues for some time, and continues to
the world in order to detect risks which may give a significant
keep employees informed with up-to-date information under the
impact on the management of Toray Group. When a relevant risk
direction of the responsible division or department as part of the
is detected, Toray Corporate Strategic Planning Division takes
Group’s emergency responses.
the lead in drafting a response measure without delay and imple-
ments the necessary measures throughout the Group.
Addressing Priority Risks
Once every three years, Toray identifies and assesses compa-
ny-wide risks, and reviews the priority risks based on the results
Educating Employees
In order to cultivate an awareness of risk management among
of this action. In terms of the selected priority risks, Toray pro-
employees, Toray has set up the implementation of risk manage-
motes activities to reduce risks through a three-year PDCA cycle.
ment education as one of the KPIs for the Sixth CSR Road Map.
Fiscal 2017 was the final fiscal year of the third PDCA cycle.
Based on the situation of the individual countries, in fiscal 2017
The remaining issues from the past two years of this PDCA cycle
Toray implemented e-learning and group education with a focus
were reorganized, and Toray advanced the necessary measures
on human rights issues and activities aimed at reducing risks at
for each risk. Moreover, Toray conducted its fourth company-wide
the individual companies.
risk identification and assessment, and selected the fourth Toray
Group priority risks, covering three years starting from fiscal 2018,
as the priority risks to be shared throughout the Group.
Preparedness for Major Earthquakes
Toray Group continues to maintain and review its business con-
From fiscal 2018, Toray will work to reduce these priority risks
tinuity plan (BCP) for large-scale earthquakes, which has been
throughout Toray Group, including Group companies in Japan and
identified as one of the priority risks.
overseas.
Supply Chain Risk Reduction
In fiscal 2017, Toray analyzed the responses to the CSR procure-
For the important products selected for each business in com-
pliance with the procedures for developing BCPs for designated
priority products in the case of an earthquake, in fiscal 2017 Toray
formulated BCPs, and continued with the systematic quake-resis-
ment survey distributed to its suppliers, after which a suppli-
tant upgrading of our plant buildings.
er-specific assessment sheet was drawn up for each supplier and
Moreover, Toray Group has conducted drills to establish a
shared with each Group company. Moreover, Toray followed-up
temporary Group-wide headquarters based on a scenario involv-
on the CSR procurement progress status of each Group com-
ing a large-scale earthquake every year since fiscal 2012. In fiscal
pany outside of Japan, and provided support as necessary, includ-
2017, Toray held a drill based on a scenario involving a massive
ing sending CSR procurement survey templates from the Head
earthquake along the Nankai Trough. This drill involved the oper-
Office to those companies in which initiatives were insufficient.
ation of the employee safety confirmation system introduced at
In addition, Toray reviews the usage status of conflict minerals
Toray and its Group companies in Japan. The drill also included
and the country of origin for all of its products every year. Toray
realistic specifications, including intentionally not disclosing some
also conducted this survey in fiscal 2017.
aspects of the scenario beforehand in order to harden the rapid
Maintaining Information Security
Toray provides security education to employees every year as
judgment skills of those on the ground. In conjunction with this
drill, Toray also reviewed those operations considered to be of
highest priority for the Head Office staff divisions and depart-
a means of managing information management (leaks) risks. In
ments in order to maintain the minimum amount of corporate
addition to providing this education, in fiscal 2017, Toray con-
functionality during a disaster.
ducted a simulation exercise involving targeted e-mail attacks
In addition, Toray Group also deployed Toray Disaster Map
for all employees in seeking to nurture and elevate the security
System following the Great East Japan Earthquake in order to
awareness among the employees.
rapidly and accurately map the extent of damage based on loca-
tion data for business partners and Toray Group.
57
Toray Industries, Inc.
Sustainable Management System
Board of Directors and Corporate Auditors
(As of June 26, 2018)
President
and Representative
Member of the Board
Akihiro Nikkaku
Executive Vice President
and Representative
Member of the Board
Koichi Abe
Executive Vice President
and Representative
Member of the Board
Ryo Murayama
Executive Vice President
and Representative
Member of the Board
Yukichi Deguchi
Senior Vice President
(Member of the Board and Member
of the Executive Committee)
Mitsuo Ohya
Senior Vice President
(Member of the Board and Member
of the Executive Committee)
Hiroshi Otani
Senior Vice President
(Member of the Board and Member
of the Executive Committee)
Toru Fukasawa
Senior Vice President
(Member of the Board and Member
of the Executive Committee)
Kazuo Morimoto
Senior Vice President
(Member of the Board and Member
of the Executive Committee)
Osamu Inoue
Senior Vice President
(Member of the Board)
Yasuo Suga
Senior Vice President
(Member of the Board)
Hirofumi Kobayashi
Senior Vice President
(Member of the Board)
Tetsuya Tsunekawa
Senior Vice President
(Member of the Board)
Takashi Fujimoto
Senior Vice President
(Member of the Board)
Kazuyuki Adachi
Vice President
(Member of the Board)
Shigeki Taniguchi
Vice President
(Member of the Board)
Hideki Hirabayashi
Vice President
(Member of the Board)
Hiroshi Enomoto
Vice President
(Member of the Board)
Kunio Ito*1
Vice President
(Member of the Board)
Ryoji Noyori*1
Corporate Auditor
Shogo Masuda
Corporate Auditor
Shoshiro Taneichi
Corporate Auditor
Toshio Nagai*2
Corporate Auditor
Kazuya Jono*2
*1 Kunio Ito and Ryoji Noyori are outside directors.
*2 Toshio Nagai and Kazuya Jono are outside corporate auditors.
58
Annual Report 2018 Organization
(As of July 1, 2018)
Board of Directors
Corporate Strategic Planning Division
President & Executive Vice Presidents
Legal & Compliance Division
General Administration & Communications Division
Executive Committee
Personnel & Industrial Relations Division
Finance & Controller’s Division
Quality Assurance Division
Auditing Dept.
Intellectual Property Division
Information Systems Division
Purchasing & Logistics Division
Corporate Marketing Planning Dept.
Automotive Material Strategic Planning Dept.
Global Environment Business Strategic Planning Dept.
Life Innovation Business Strategic Planning Dept.
Branches
Affiliated Companies Division
Fibers & Textiles Division
Resins & Chemicals Division
Board of Corporate Auditors
Films Division
Corporate Auditors
Torayca & Advanced Composites Division
Electronic & Information Materials Division
Pharmaceuticals & Medical Products Division
Water Treatment & Environment Division
HS Business Development Dept.
Technology Center
Manufacturing Division
Engineering Division
Research & Development Division
59
Toray Industries, Inc. Toray Group Worldwide Network
(As of March 31, 2018)
Toray Group operates businesses in 26
countries and regions including Japan.
Consolidated subsidiaries
Subsidiaries accounted for by equity method
Total subsidiaries
Affiliates accounted for by equity method
Companies subject to consolidation
Japan Overseas Total
162
101
34
60
222
135
22
35
257
157
61
26
87
13
100
EUROPE
United Kingdom
Consolidated Subsidiaries
l Toray Textiles Europe Ltd. (TTEL)
n Toray International U.K. Ltd. (TIUK)
France
Consolidated Subsidiaries
n l Toray Films Europe S.A.S. (TFE)
n Toray Carbon Fibers Europe S.A. (CFE)
Switzerland
Subsidiary Accounted for by Equity Method
l Toray Membrane Europe AG (TMEu)
Italy
Consolidated Subsidiary
l Alcantara S.p.A.
Subsidiaries Accounted for by Equity Method
n Toray International Italy S.r.l. (TIIT)
n Composite Materials (Italy) S.r.l. (CIT)
n Delta-Tech S.p.A. (DELTA)
Czech Republic
Consolidated Subsidiary
n l Toray Textiles Central Europe s.r.o. (TTCE)
Germany
Consolidated Subsidiaries
n Euro Advanced Carbon Fiber Composites
GmbH (EACC)
n Toray International Europe GmbH (TIEU)
Others
ASIA
China
Consolidated Subsidiaries
n Toray Industries (China) Co., Ltd. (TCH)
l Toray Fibers (Nantong) Co., Ltd. (TFNL)
l Toray Sakai Weaving & Dyeing (Nantong)
Co., Ltd. (TSD)
l Toray Polytech (Nantong) Co., Ltd. (TPN)
n l Toray Plastics (China) Co., Ltd. (TPCH)
n l Toray Plastics (Shenzhen) Ltd. (TPSZ)
n l Toray Plastics (Chengdu) Co., Ltd. (TPCD)
n l Toray Plastics Precision (Hong Kong) Ltd.
(TPPH)
n l Toray Plastics Precision (Zhongshan) Ltd.
(TPPZ)
n Toray Industries (H.K.) Ltd. (THK)
n Toray International (China) Co., Ltd. (TICH)
n Toray Film Products (Hong Kong) Ltd. (TFH)
n Toray Film Products (Zhongshan) Ltd. (TFZ)
l Toray BlueStar Membrane Co., Ltd. (TBMC)
n Toray Medical (Qingdao) Co., Ltd. (TMQ)
Others
Affiliate Accounted for by Equity Method
n Yihua Toray Polyester Film Co., Ltd. (YTP)
Taiwan
Consolidated Subsidiary
n Toray Advanced Film Kaohsiung Co., Ltd.
(TAFK)
Subsidiaries Accounted for by Equity Method
n Toray International Taipei Inc. (TITP)
Others
Republic of Korea
Consolidated Subsidiaries
l n l Toray Advanced Materials Korea Inc. (TAK)
l STEMCO, Ltd. (STEMCO)
l n l Toray Chemical Korea Inc. (TCK)
Affiliates Accounted for by Equity Method
l STECO, Ltd. (STECO)
Others
60
Malaysia
Consolidated Subsidiaries
l Penfabric Sdn. Berhad (PAB)
l n l Penfibre Sdn. Berhad (PFR)
n l Toray Plastics (Malaysia) Sdn. Berhad (TPM)
Others
Subsidiary Accounted for by Equity Method
n Toray Industries (Malaysia) Sdn. Berhad
(TML)
Affiliate Accounted for by Equity Method
n Toray BASF PBT Resin Sdn. Berhad (TBPR)
Singapore
Consolidated Subsidiary
n Toray International Singapore Pte. Ltd. (TISP)
Japan
Consolidated Subsidiaries
l n Ichimura Sangyo, Co., Ltd.
l n l Toray Fine Chemicals Co., Ltd.
n l Toyo Plastic Seiko Co., Ltd.
n l Toray Advanced Film Co., Ltd.
l Toray KP Films Inc.
n Soda Aromatic Co., Ltd.
l l Toray Engineering Co., Ltd.
n Toray Carbon Magic Co., Ltd.
l Toray Construction Co., Ltd.
l Suido Kiko Kaisha, Ltd.
n Toray Medical Co., Ltd.
n Toray Research Center Inc.
n Toray International, Inc.
n Chori Co., Ltd.
Others
Subsidiaries Accounted for by Equity Method
n Toyo Business Support Inc.
Others
Affiliates Accounted for by Equity Method
l n l Du Pont-Toray Co., Ltd.
l Toray Opelontex Co., Ltd.
n l Dow Corning Toray Co., Ltd.
n Sanyo Chemical Industries, Ltd.
Others
Indonesia
Consolidated Subsidiaries
l P.T. Acryl Textile Mills (ACTEM)
l P.T. Century Textile Industry Tbk (CENTEX)
l P.T. Easterntex (ETX)
l P.T. Indonesia Synthetic Textile Mills (ISTEM)
l P.T. Indonesia Toray Synthetics (ITS)
l P.T. Toray Polytech Jakarta (TPJ)
Subsidiaries Accounted for by Equity Method
n P.T. Toray Industries Indonesia (TIN)
Others
Affiliates Accounted for by Equity Method
n P.T. Petnesia Resindo (PNR)
Others
Thailand
Consolidated Subsidiaries
l Luckytex (Thailand) Public Co., Ltd. (LTX)
l Thai Toray Textile Mills Public Co., Ltd. (TTTM)
l n l Thai Toray Synthetics Co., Ltd. (TTS)
Subsidiaries Accounted for by Equity Method
n Toray Industries (Thailand) Co., Ltd. (TTH)
n Carbon Magic (Thailand) Co., Ltd. (CMTH)
NORTH AMERICA
U.S.A.
Consolidated Subsidiaries
l Toray Fluorofibers (America), Inc. (TFA)
n Toray Plastics (America), Inc. (TPA)
n Toray Resin Co. (TREC)
n Toray Composite Materials America, Inc.
(CMA)
n Zoltek Companies, Inc. (Zoltek)
l Toray Membrane USA, Inc. (TMUS)
n Toray International America Inc. (TIAM)
Others
Mexico
Consolidated Subsidiary
n Toray Resin Mexico, S.A. de C.V. (TRMX)
n Regional Supervisory Organization
l Fibers & Textiles
n Performance Chemicals
l IT-related Products
n Carbon Fiber Composite Materials
l Environment & Engineering
n Life Science & Other Businesses
n Trading
Major Office in Japan
Overseas Offices
Osaka Head Office
Nakanoshima Mitsui Building,
3-3, Nakanoshima 3-chome,
Kita-ku, Osaka 530-8222,
Japan
Telephone: 81 (6) 6445-4101
Facsimile: 81 (6) 7688-4001
U.S.A.
Toray Industries (America), Inc.
(TAM)
9th Fl., 461 Fifth Ave., New York,
NY 10017, U.S.A.
Telephone: 1 (212) 697-8150
Facsimile: 1 (212) 972-4279
Germany
Toray Industries, Europe Office
GmbH (TEU)
Hugenottenallee 175, 63263
Neu-Isenburg, Germany
Telephone: (49) 6102-7999-1000
Facsimile: (49) 6102-7999-1008
China
Toray Industries, Inc., Beijing
Office
Beijing Fortune Bldg., No. 702, 5,
Dong San Huan Bei-Lu, Chao Yang
District, Beijing 100004, China
Telephone: 86 (10) 6590-8961—3
Facsimile: 86 (10) 6590-8964
Republic of Korea
Toray Industries, Inc., Seoul Office
36Fl., FKI Tower, 24, Yeoui-daero,
Yeongdeungpo-gu, Seoul, 07320
Republic of Korea
Telephone: 82 (2) 707-0381—2
Facsimile: 82 (2) 707-0067
India
Toray Industries (India) Private Limited
(TID)
12th Fl., Prestige Polygon, 471 Anna
Salai, Teynampet, Chennai 600035, Tamil
Nadu, INDIA
Telephone: 91 (44) 4003-6100
Facsimile: 91 (44) 4003-6101
Brazil
Toray do Brasil Ltda. (TBL)
Av. Paulista, 1048-Conj 71 Bela Vista Sao
Paulo - SP 01310-100, Brasil
Telephone/Facsimile: 55 (11) 4314-7792
Annual Report 2018
FINANCIAL SECTION
CONTENTS
62 Ten-Year Summary of Selected Financial Data
64 Management’s Discussion and Analysis
70 Consolidated Balance Sheets
72 Consolidated Statements of Income
72 Consolidated Statements of Comprehensive Income
73 Consolidated Statements of Changes in Net Assets
74 Consolidated Statements of Cash Flows
75 Notes to Consolidated Financial Statements
102 Independent Auditor’s Report
Toray Industries, Inc.
61
Ten-Year Summary of Selected Financial Data
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31
Net sales*1, 3
Fibers & Textiles
Performance Chemicals
Carbon Fiber Composite Materials
Environment & Engineering
Life Science
Others
Plastics & Chemicals
IT-related Products
Life Science & Other Businesses
Operating income
Income (loss) before income taxes
Net income (loss) attributable to owners of parent
Net cash provided by operating activities
Depreciation and amortization
Capital expenditures
Total assets
Property, plant and equipment, net
Interest-bearing liabilities
Net assets
Per share of common stock:
Net income (loss) attributable to owners of parent:
Basic
Diluted
Cash dividends
Net assets
Ratios:
Operating income to net sales
Net income (loss) attributable to owners of parent to net sales
Equity ratio
Return on equity
Debt/equity ratio (times)
Common stock price range:
High
Low
2009
2010
2011
¥ 1,471,561
¥ 1,359,631
¥ 1,539,693
568,996
525,204
584,115
—
70,390
160,207
—
—
377,644
229,421
64,903
36,006
(19,751)
(16,326)
38,447
83,764
92,349
—
50,676
159,787
46,656
14,140
332,735
230,433
—
40,107
(2,415)
(14,158)
166,215
74,904
57,073
—
67,018
178,183
52,430
13,621
382,299
262,027
—
100,087
82,893
57,925
129,214
70,479
55,942
1,523,603
1,556,796
1,567,470
596,261
663,945
512,610
580,344
632,160
518,216
531,595
493,509
640,970
¥
(11.66)
¥
(10.12)
¥
—
7.50
335.04
2.45
(1.11)
30.8
(3.1)
1.42
—
5.00
336.65
2.95
(1.04)
30.3
(3.0)
1.34
¥
¥
694
350
591
390
¥
36.41
34.43
7.50
363.90
6.50
3.76
37.8
10.9
0.83
643
420
Number of employees
37,924
37,936
38,740
*1 Effective from the year ended March 31, 2011, “Revised Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (Accounting
Standards Board of Japan (ASBJ) Statement No.17, March 27, 2009) and “Guidance on the Accounting Standard for Disclosures about Segments of an Enterprise
and Related Information” (ASBJ Guidance No. 20, March 21, 2008) are applied. Accordingly, segment information for the year ended March 31, 2010 is restated.
*2 Effective from the year ended March 31, 2014, certain overseas subsidiaries applied IAS 19 “Employee Benefits” (revised on June 16, 2011). As this change in
accounting policy is applied retrospectively, the related financial data for 2013 reflect the retrospective application.
*3 Toray Group changed the reportable segments from the year ended March 31, 2018. Accordingly, the actual figures for the year ended March 31, 2017 are restated
to reflect the changes in reportable segments.
62
Annual Report 2018
2012
2013*2
2014
2015
2016
2017
2018
¥ 1,588,604
¥ 1,592,279
¥ 1,837,778
¥ 2,010,734
¥ 2,104,430
¥ 2,026,470
¥ 2,204,858
Millions of yen
638,375
632,150
755,474
856,676
892,039
—
69,914
170,247
55,554
13,295
397,815
243,404
—
107,721
101,091
64,218
104,410
67,443
98,384
—
77,620
178,355
56,599
14,127
395,835
237,593
—
83,436
77,828
48,477
100,815
67,588
99,135
—
113,342
180,197
58,205
14,277
470,542
245,741
—
105,253
97,760
59,608
161,455
78,743
118,207
—
158,365
179,988
57,039
14,321
496,370
247,975
—
123,481
114,469
71,021
141,282
81,480
124,929
—
186,196
183,324
55,841
14,720
521,238
251,072
—
154,480
137,808
90,132
196,142
91,168
136,556
856,124
724,648
161,608
212,548
54,150
17,392
—
—
—
146,893
139,012
99,418
173,958
89,073
152,039
913,610
803,310
177,949
238,256
53,803
17,930
—
—
—
156,464
136,612
95,915
129,180
95,815
153,324
1,581,501
1,731,933
2,119,683
2,357,925
2,278,386
2,396,785
2,592,914
561,923
481,906
674,149
627,240
532,002
778,626
781,235
654,163
855,593
700,258
830,612
704,253
881,434
716,399
927,029
816,325
944,625
1,080,757
1,024,909
1,100,176
1,169,188
Yen
¥
59.97
59.90
15.00
681.92
%
7.10
4.35
42.1
9.1
0.75
Yen
¥
39.41
37.46
10.00
384.90
¥
29.75
28.90
10.00
444.45
¥
36.59
35.70
10.00
527.32
¥
44.33
44.28
11.00
616.70
¥
56.38
56.31
13.00
591.50
¥
62.17
62.10
14.00
638.64
6.78
4.04
39.7
10.5
0.77
631
511
5.24
3.04
41.8
7.2
0.73
654
421
¥
5.73
3.24
40.5
7.5
0.76
786
584
¥
¥
6.14
3.53
41.8
7.7
0.71
7.34
4.28
41.5
9.3
0.74
7.25
4.91
42.6
10.1
0.70
¥
1,057.5
¥
1,146.0
¥
1,027.5
¥
1,208.0
626
871.7
854.0
903.1
40,227
42,584
45,881
45,789
45,839
46,248
45,762
63
Toray Industries, Inc.
Management’s Discussion and Analysis
OVERVIEW
INCOME ANALYSIS
For the year ended March 31, 2018, the U.S. and European econ-
omy continued to register a gradual recovery. There were signs
of the economy picking up in many emerging countries. The
Japanese economy, in general, continued on its gradual recovery
track on the back of improving employment and income situation.
In the meantime, the rise in raw material and fuel prices had a
negative impact on Toray Group’s profits.
Under such circumstances, Toray Group, in April 2017,
embarked on the new medium-term management program
“Project AP-G 2019” that spans over three years from fiscal year
2017 to 2019 and has been implementing the growth strategy
with focus on taking advantage of growth business fields, pursu-
ing business expansion in growth countries and regions as well
as further bolstering its cost competitiveness.
As a result, Toray Group posted record net sales and operating
income.
Net Sales
Net sales for the year ended March 31, 2018 were in ¥2,204.9 bil-
lion, up by ¥178.4 billion (8.8%) from the previous year. Regarding
the sales by business segment, net sales in the Fibers & Textiles,
Performance Chemicals, Carbon Fiber Composite Materials,
Environment & Engineering and Others segments increased,
while those in the Life Science segments decreased.
Costs and Expenses
The ratio of total costs and expenses to net sales for the year
ended March 31, 2018 was 92.9%, slightly up by 0.2 percentage
points year on year.
Net sales and cost of sales increased from the previous year
by 8.8% and 9.5%, respectively. As a result, the cost of sales ratio
rose by 0.5 percentage points to 79.3%.
Selling, general and administrative expenses increased by
¥17.3 billion (6.1%) to ¥300.4 billion. The ratio of selling, general
and administrative expenses to net sales declined by 0.3 percent-
age points to 13.6%.
R&D expenses increased by ¥7.0 billion (11.8%) to ¥66.2 billion.
Net Sales by Segment
Net Sales by Segment
Operating Income by Segment
Operating Income by Segment
(Billions of yen)
2,500
(Billions of yen)
2,500
2,104.4
2,204.9
2,204.9
2,104.4
2,010.7
2,026.5
2,026.5
2,000
2,000
2,010.7
1,837.8
1,837.8
1,592.3
1,592.3
1,500
1,500
1,000
1,000
500
500
0
0
(Billions of yen)
200
(Billions of yen)
200
154.5
154.5
146.9
156.5
156.5
146.9
150
150
123.5
123.5
105.3
105.3
83.4
83.4
100
100
50
50
0
0
-50
-50
Mar/ ‘13
‘14
Mar/ ‘13
‘15
‘14
‘16
‘15
‘17
‘16
‘18
‘17
‘18
Mar/ ‘13
‘14
Mar/ ‘13
‘15
‘14
‘16
‘15
‘17
‘16
‘18
‘17
‘18
■ Fibers & Textiles ■ Performance Chemicals ■ Plastics & Chemicals
■ IT-related Products ■ Carbon Fiber Composite Materials
■ Environment & Engineering ■ Life Science ■ Others
■ Fibers & Textiles ■ Performance Chemicals ■ Plastics & Chemicals
■ IT-related Products ■ Carbon Fiber Composite Materials
■ Environment & Engineering ■ Life Science ■ Others
■ Fibers & Textiles ■ Performance Chemicals ■ Plastics & Chemicals
■ IT-related Products ■ Carbon Fiber Composite Materials
■ Environment & Engineering ■ Life Science ■ Others
■ Adjustment
■ Fibers & Textiles ■ Performance Chemicals ■ Plastics & Chemicals
■ IT-related Products ■ Carbon Fiber Composite Materials
■ Environment & Engineering ■ Life Science ■ Others
■ Adjustment
*1 Toray Group changed the reportable segments from the year ended March 31, 2018. Accordingly, the actual figures for the year ended March 31, 2017 are restated
to reflect the changes in reportable segments.
Total Assets and Net Assets
Total Assets and Net Assets
*2 Operating income by segment that is not attributable to any segment is included in “Adjustment.”
Interest-bearing Liabilities and D/E Ratio
Interest-bearing Liabilities and D/E Ratio
(Billions of yen)
2,800
(Billions of yen)
2,800
2,357.9
64
2,119.7
2,119.7
2,357.9
2,278.4
2,396.8
2,278.4
2,100
2,100
1,731.9
1,731.9
(%)
80
2,592.9
(%)
80
2,592.9
2,396.8
60
60
41.8
41.8
40.5
41.8
40.5
41.8
41.5
42.6
41.5
42.6
42.1
1,400
1,400
42.1
40
40
1,169.2
1,100.2
1,169.2
1,080.8
944.6
1,080.8
1,024.9
1,100.2
1,024.9
944.6
778.6
778.6
700
700
20
20
(Billions of yen)
900
(Billions of yen)
900
(Times)
1.20
(Times)
1.20
816.3
816.3
700.3
704.3
700.3
716.4
704.3
716.4
654.2
654.2
600
600
532.0
532.0
0.90
0.90
0.76
0.76
0.74
0.74
0.75
0.75
0.73
0.73
0.71
0.71
0.70
0.70
300
300
0.60
0.60
0
0
0
0
0.30
0.30
Mar/
‘13
Mar/
‘14
‘13
‘15
‘14
‘15
‘16
‘16
‘17
‘18
‘17
Mar/
‘13
Mar/
‘14
‘13
‘15
‘14
‘16
‘15
‘17
‘16
‘18
‘17
‘18
0
0
‘18
■ Total Assets ■ Net Assets —Equity Ratio
■ Total Assets ■ Net Assets —Equity Ratio
■ Interest-bearing Liabilities
■ Interest-bearing Liabilities
—D/E Ratio
—D/E Ratio
Cash Flows
Cash Flows
(Billions of yen)
(Billions of yen)
200
200
150
150
161.5
161.5
141.3
196.1
141.3
196.1
174.0
174.0
129.2
129.2
100
100.8
100
100.8
50
50
0
0
-6.7
-6.7
-50
-50
-100
-100
-107.5
-107.5
-150
-150
-200
-200
-250
-250
41.7
41.7
38.7
38.7
0.6
0.6
-53.4
-53.4
-57.5
-57.5
-140.7
-140.7
-154.4
-135.2
-154.4
-135.2
-186.7
-186.7
-214.8
-214.8
Mar/
‘13
Mar/
‘14
‘13
‘15
‘14
‘16
‘15
‘17
‘16
‘18
‘17
‘18
■ Cash Flows from Operating Activities
■ Cash Flows from Operating Activities
■ Cash Flows from Investing Activities
■ Cash Flows from Investing Activities
—Free Cash Flows
—Free Cash Flows
Annual Report 2018
Operating Income and Net Income
Operating income climbed by ¥9.6 billion (6.5%) year on year to
¥156.5 billion, the ratio of operating income to net sales declined
slightly by 0.2 percentage points to 7.1%. Operating income by
business segment increased in the Fibers & Textiles, Performance
Chemicals, Environment & Engineering and Others segments,
while decreasing in the Carbon Fiber Composite Materials and
Life Science segments.
In net other income (expenses), Toray Group reported net
expenses of ¥19.9 billion in the year ended March 31, 2018, up
by ¥12.0 billion (151.9%) from the previous year. Interest and
dividend income increased by ¥0.2 billion (4.2%) to ¥5.2 billion,
and interest expense also climbed by ¥0.4 billion (9.4%). As a
result, net financial income of ¥0.1 billion was recorded in the
year ended March 31, 2018, down ¥0.2 billion compared with
the previous year. Equity in earnings of unconsolidated subsid-
iaries and affiliated companies rose year on year by ¥1.7 billion
(22.8%) to ¥9.2 billion. Net loss on sales and disposal of property,
plant and equipment climbed by ¥2.1 billion (42.5%) to ¥7.1 bil-
lion. Loss on impairment of fixed assets increased by ¥1.0 billion
(34.8%) to ¥3.9 billion. Net gain on sales and loss on write-down
of investment securities grew by ¥0.5 billion (16.7%) to ¥3.4 bil-
lion. In the year ended March 31, 2018, the Group posted a loss
on liquidation and devaluation of subsidiaries and affiliated com-
panies of ¥3.6 billion and environmental expenses of ¥2.6 billion.
As a result of the aforementioned, income before income
taxes declined by ¥2.4 billion (1.7%) year on year to ¥136.6 bil-
lion. After deductions for income taxes and net income attrib-
utable to non-controlling interests, net income attributable to
owners of parent amounted to ¥95.9 billion, down ¥3.5 billion
(3.5%) year on year.
Net income per share was ¥59.97, a decrease of ¥2.2. In light
of profit conditions for the year ended March 31, 2018 and out-
look for the next year, the total annual dividend for the year ended
March 31, 2018 was set at ¥15.00 per share. This comprised an
interim cash dividend of ¥7.00 per share and a year-end cash divi-
dend of ¥8.00 per share.
Business Performance by Segment
Toray Group changed the reportable segments from the year
ended March 31, 2018. The following analysis bases on the new
reportable segments and the accordingly restated figures for the
year ended March 31, 2017.
Fibers & Textiles
In Japan, demand for some industrial applications such as auto-
mobiles was strong and apparel applications saw gradual improve-
ment in store sales of final products. Against this background,
Toray Group not only strived to expand sales in both apparel and
industrial applications but also worked to expand the business
format that integrates fibers to textiles to final products while
focusing on strengthening cost competitiveness.
Overseas, business performance of some subsidiaries in
Southeast Asia and Republic of Korea remained slow. On the
other hand, materials for automotive applications and hygiene
products remained strong in general and the Group expanded the
integrated business for apparel applications.
As a result, overall sales of Fibers & Textiles segment
increased 6.7% to ¥913.6 billion from the previous year and oper-
ating income rose 8.5% to ¥72.4 billion.
Performance Chemicals
In the resin business, shipment for automotive applications was
strong in general, mainly in Japan. Besides automotive applica-
tions, Toray Group also promoted sales expansion of ABS and
PPS resins. In the film business, shipment of battery separa-
tor films for lithium-ion secondary batteries increased reflect-
ing demand growth, while films for electronic parts which are
used for applications such as smartphones continued to be favor-
able. In the electronic & information materials business, demand
for OLED panels increased and shipment of related materials
expanded.
As a result, overall sales of Performance Chemicals segment
increased 10.9% to ¥803.3 billion from the previous year and
operating income increased 15.5% to ¥71.4 billion.
65
Toray Industries, Inc.
Carbon Fiber Composite Materials
With the final demand for the aircraft remaining strong in the aero-
space applications, shipments showed signs of recovery as the
inventory adjustment in the supply chain was completed. In the
industrial applications, demand showed a recovery trend primar-
ily in the environment and energy-related field led by compressed
natural gas tank applications and wind turbine blade applications.
The segment was affected by increases in raw material prices as
well as intensifying competition.
As a result, overall sales of Carbon Fiber Composite Materials
segment increased 10.1% to ¥177.9 billion from the previous
year while operating income fell 13.3% to ¥20.8 billion.
Environment & Engineering
In the water treatment business, demand for reverse osmosis
membranes and other products in general grew strongly in Japan
and abroad.
In terms of domestic subsidiaries in the segment, industrial
machinery and electronics-related equipment performed strongly
at an engineering subsidiary.
As a result, overall sales of Environment & Engineering seg-
ment increased 12.1% to ¥238.3 billion from the previous year
and operating income rose 13.5% to ¥13.3 billion.
Life Science
In the pharmaceutical business, shipment of pruritus treatment
REMITCH®* expanded due to the impact of the introduction
of a new dosage form and approval of new indications. On the
other hand, shipment of natural-type interferon beta prepara-
tion FERON® and orally active prostacyclin derivative DORNER®
remained sluggish due to the impact of alternative medicines and
Net Sales by Segment
generic drugs, and royalty income on some products decreased.
In the medical devices business, shipment of dialyzers grew
(Billions of yen)
strongly.
2,500
As a result, overall sales of Life Science segment declined
0.6% to ¥53.8 billion from the previous year and operating
2,026.5
income fell 9.6% to ¥1.9 billion.
2,000
2,204.9
2,104.4
2,010.7
1,837.8
*REMITCH® is a registered trademark of Torii Pharmaceutical Co., Ltd.
1,592.3
1,500
Others
Net sales increased 3.1% to ¥17.9 billion from the previous year
and operating income as well increased 10.4% to ¥2.9 billion.
1,000
FINANCIAL POSITION
500
0
Analysis of Assets, Liabilities and Net Assets
As of March 31, 2018, Toray Group’s total assets stood at
¥2,592.9 billion, up ¥196.1 billion from the end of the previ-
‘17
ous year. Current assets rose ¥86.0 billion as trade notes and
accounts receivable as well as inventories increased, while
■ Fibers & Textiles ■ Performance Chemicals ■ Plastics & Chemicals
■ IT-related Products ■ Carbon Fiber Composite Materials
■ Environment & Engineering ■ Life Science ■ Others
Mar/ ‘13
‘15
‘18
‘16
‘14
Operating Income by Segment
(Billions of yen)
200
156.5
154.5
146.9
123.5
105.3
83.4
150
100
50
0
-50
Mar/ ‘13
‘14
‘15
‘16
‘17
‘18
■ Fibers & Textiles ■ Performance Chemicals ■ Plastics & Chemicals
■ IT-related Products ■ Carbon Fiber Composite Materials
■ Environment & Engineering ■ Life Science ■ Others
■ Adjustment
Total Assets and Net Assets
Interest-bearing Liabilities and D/E Ratio
(%)
80
2,592.9
2,357.9
2,278.4
2,396.8
(Billions of yen)
2,800
2,100
2,119.7
1,731.9
41.8
40.5
41.8
41.5
42.6
42.1
1,080.8
1,024.9
1,100.2
1,169.2
944.6
778.6
1,400
700
0
60
40
20
0
(Billions of yen)
900
600
532.0
300
0
(Times)
1.20
816.3
700.3
704.3
716.4
654.2
0.76
0.73
0.74
0.75
0.71
0.70
0.90
0.60
0.30
Mar/
‘13
‘14
‘15
‘16
‘17
‘18
Mar/
‘13
‘14
‘15
‘16
‘17
‘18
■ Total Assets ■ Net Assets —Equity Ratio
* Effective from the year ended March 31, 2014, certain overseas subsidiar-
ies applied IAS 19 “Employee Benefits” (revised on June 16, 2011). As this
change in accounting policy is applied retrospectively, the related financial data
for 2013 reflect the retrospective application.
■ Interest-bearing Liabilities
—D/E Ratio
66
196.1
174.0
41.7
38.7
129.2
-57.5
Cash Flows
(Billions of yen)
200
161.5
141.3
100.8
-6.7
0.6
-53.4
-107.5
150
100
50
0
-50
-100
-150
-200
-250
-140.7
-154.4
-135.2
-186.7
-214.8
Mar/
‘13
‘14
‘15
‘16
‘17
‘18
■ Cash Flows from Operating Activities
■ Cash Flows from Investing Activities
—Free Cash Flows
Annual Report 2018
Net Sales by Segment
(Billions of yen)
2,500
2,204.9
2,104.4
2,026.5
2,010.7
1,837.8
1,592.3
2,000
1,500
1,000
500
0
noncurrent assets expanded ¥110.2 billion due to increases in
property, plant and equipment and investment securities.
Total liabilities rose ¥127.1 billion from the end of the previ-
ous year to ¥1,423.7 billion, due primarily to an increase in inter-
est-bearing debts.
Net assets expanded by ¥69.0 billion compared with the end
of the previous year to ¥1,169.2 billion, reflecting an increase
in retained earnings due to net income for the year. Net assets
less non-controlling interests and stock acquisition rights stood
at ¥1,090.7 billion. The equity ratio at the end of the year came to
42.1%, a 0.5 percentage-point decrease compared with the level
154.5
at the end of the previous year.
Operating Income by Segment
(Billions of yen)
200
146.9
156.5
150
123.5
105.3
CASH FLOWS
83.4
100
50
For the year ended March 31, 2018, net cash used in investing
activities exceeded net cash provided by operating activities by
¥57.5 billion. Meanwhile, net cash provided by financing activi-
ties came to ¥61.8 billion owing mainly to the increase in inter-
est-bearing liabilities. As a result, after counting exchange rate
changes and cash and cash equivalents at subsidiaries not pre-
viously included in consolidation, cash and cash equivalents as
of March 31, 2018 amounted to ¥134.3 billion, up by ¥2.9 billion
(2.2%) compared with the end of the previous year on a consol-
idated basis.
Mar/ ‘13
‘14
-50
‘15
‘16
‘17
‘18
0
‘16
‘15
‘14
Mar/ ‘13
Cash Flows from Operating Activities
‘18
‘17
Net cash provided by operating activities decreased by ¥44.8 bil-
■ Fibers & Textiles ■ Performance Chemicals ■ Plastics & Chemicals
lion (25.7%) compared with the previous year to ¥129.2 billion.
■ IT-related Products ■ Carbon Fiber Composite Materials
Major cash-increasing factors included income before income
■ Environment & Engineering ■ Life Science ■ Others
taxes of ¥136.6 billion, down ¥2.4 billion, and depreciation and
amortization of ¥95.8 billion, up ¥6.7 billion. Major cash-decreas-
ing factors, on the other hand, were the increase in trade receiv-
Total Assets and Net Assets
ables of ¥62.0 billion, up ¥37.0 billion, and income taxes paid of
¥34.3 billion, up ¥6.0 billion.
(Billions of yen)
2,800
Cash Flows from Investing Activities
2,396.8
Net cash used in investing activities totaled ¥186.7 billion, up
¥51.4 billion (38.0%) compared with the previous year. Major
2,100
cash-decreasing factors included capital expenditures of ¥147.9
billion, up ¥4.0 billion, and purchases of investment securities of
¥67.3 billion, up ¥62.7 billion.
(%)
80
2,592.9
1,731.9
2,119.7
2,357.9
2,278.4
60
41.8
40.5
41.8
41.5
42.6
42.1
40
944.6
778.6
700
1,100.2
1,080.8
1,024.9
1,169.2
1,400
Cash Flows from Financing Activities
Net cash provided by financing activities came to ¥61.8 billion,
a turnaround of ¥79.8 billion from the net cash used in financ-
ing activities of the previous year. Major cash-increasing fac-
tors included proceeds from long-term debt of ¥178.9 billion, up
¥128.0 billion. The major cash-decreasing factor, on the other
hand, was repayment of long-term debt of ¥111.4 billion, up
¥62.1 billion.
Mar/
‘15
‘13
‘14
‘16
‘17
‘18
20
0
0
■ Fibers & Textiles ■ Performance Chemicals ■ Plastics & Chemicals
■ IT-related Products ■ Carbon Fiber Composite Materials
■ Environment & Engineering ■ Life Science ■ Others
■ Adjustment
■ Total Assets ■ Net Assets —Equity Ratio
Operating Income by Segment
(Billions of yen)
200
156.5
154.5
146.9
123.5
105.3
83.4
150
100
50
0
-50
Mar/ ‘13
‘14
‘15
‘16
‘17
‘18
■ Fibers & Textiles ■ Performance Chemicals ■ Plastics & Chemicals
■ IT-related Products ■ Carbon Fiber Composite Materials
■ Environment & Engineering ■ Life Science ■ Others
■ Adjustment
Interest-bearing Liabilities and D/E Ratio
(Billions of yen)
900
600
532.0
300
0
(Times)
1.20
816.3
700.3
704.3
716.4
654.2
0.76
0.73
0.74
0.75
0.71
0.70
0.90
0.60
0.30
Mar/
‘13
‘14
‘15
‘16
‘17
‘18
■ Interest-bearing Liabilities
—D/E Ratio
Total Assets and Net Assets
Interest-bearing Liabilities and D/E Ratio
(Times)
1.20
816.3
700.3
704.3
716.4
654.2
(Billions of yen)
900
600
532.0
0.76
0.73
0.74
0.75
0.71
0.70
300
0
0.90
0.60
0.30
Cash Flows
(Billions of yen)
200
196.1
174.0
41.7
38.7
129.2
-57.5
161.5
141.3
100.8
-6.7
0.6
-53.4
-107.5
-140.7
-154.4
-135.2
-186.7
-214.8
150
100
50
0
-50
-100
-150
-200
-250
Mar/
‘13
‘14
‘15
‘16
‘17
‘18
Mar/
‘13
‘14
‘15
‘16
‘17
‘18
Mar/
‘13
‘14
‘15
‘16
‘17
‘18
■ Total Assets ■ Net Assets —Equity Ratio
■ Interest-bearing Liabilities
—D/E Ratio
■ Cash Flows from Operating Activities
■ Cash Flows from Investing Activities
—Free Cash Flows
67
Net Sales by Segment
(Billions of yen)
2,500
2,204.9
2,104.4
2,026.5
2,010.7
1,837.8
1,592.3
Mar/ ‘13
‘14
‘15
‘16
‘17
‘18
■ Fibers & Textiles ■ Performance Chemicals ■ Plastics & Chemicals
■ IT-related Products ■ Carbon Fiber Composite Materials
■ Environment & Engineering ■ Life Science ■ Others
(%)
80
2,592.9
2,357.9
2,278.4
2,396.8
(Billions of yen)
2,800
2,100
2,119.7
1,731.9
41.8
40.5
41.8
41.5
42.6
42.1
1,080.8
1,024.9
1,100.2
1,169.2
944.6
778.6
60
40
20
0
Cash Flows
(Billions of yen)
161.5
141.3
100.8
-6.7
0.6
-53.4
-107.5
196.1
174.0
41.7
38.7
129.2
-57.5
-140.7
-154.4
-135.2
-186.7
-214.8
Mar/
‘13
‘14
‘15
‘16
‘17
‘18
■ Cash Flows from Operating Activities
■ Cash Flows from Investing Activities
—Free Cash Flows
2,000
1,500
1,000
500
0
1,400
700
0
200
150
100
50
0
-50
-100
-150
-200
-250
Toray Industries, Inc.
BUSINESS RISKS
Operational and other risks faced by Toray Group that could have
a major influence on the decisions of investors are described
below. Toray Group works constantly to avoid such potential
risks, minimize their impact, and build a system to enable swift
responses and accurate information disclosure on the occurrence
of unforeseen situations. Please note that the risks described
below are those identified by Toray Group when this annual
report was produced, and do not represent all the operational and
other risks that could affect Toray Group.
(1) Domestic and overseas demand and market trends
As a supplier of basic materials to a broad range of industries,
Toray Group is exposed to various factors that could cause a sharp
drop in demand for its products. These include changes in both
worldwide and regional supply-demand conditions, increased use
of substitute materials, and changes to the purchasing policies of
business partners. In addition to severe competition with other
companies, Toray Group’s various businesses also face the risk
of new players entering the market. Price fluctuations, stemming
from the reduction of National Health Insurance (NHI) drug prices
and reimbursement prices, also affect the pharmaceuticals and
medical products business. Although Toray Group takes steps to
maintain its competitive advantage, a decline in demand for, or fall-
ing prices of, such items, or the appearance of a credit risk affect-
ing Toray Group’s business partners, could have a negative impact
on Toray Group’s results of operations and financial conditions.
(2) Rising prices of fuel and raw materials
The prices of petrochemical raw materials and fuel used by Toray
Group are subject to significant fluctuations. If Toray Group is
unable to fully pass the increases in such prices on to its product
prices, or cannot raise its product prices due to lack of progress
in shifting to high-value-added products, its results of operations
and financial conditions could be negatively affected.
(3) Capital expenditures, joint ventures,
alliances and acquisitions
Toray Group makes capital expenditures in a wide range of busi-
ness fields. Its other activities include formation of various joint
ventures or strategic alliances with third parties, as well as busi-
ness acquisitions.
When Toray Group becomes involved in capital expenditures,
joint ventures, alliances and acquisitions, it considers the poten-
tial for profitability and return on investment. However, there is
not necessarily any guarantee that the outcome will be consis-
tent with expectations. If unforeseen market changes or signif-
icant discrepancies between actual results and initial business
plans occur due to sudden changes in the operating environment,
there could be a loss on impairment of fixed assets or equity in
losses of unconsolidated subsidiaries and affiliated companies.
As a result, Toray Group’s results of operations and financial con-
ditions could be negatively affected.
(4) Foreign currency, interest rate and
securities market fluctuations
Foreign currency exchange rate fluctuations affect Toray Group’s
consolidated financial statements when the financial statements
of the overseas operations presented in local currencies are
translated into yen. Toray Group takes measures, such as enter-
ing forward exchange contracts, to alleviate risks associated
with transactions denominated in foreign currencies. However,
unforeseen exchange rate fluctuations could have an impact on
Toray Group’s results of operations and financial conditions.
Moreover, rapid and unforeseen changes in interest rates and
other aspects of financial market turmoil, as well as changes in
the value of securities and pension assets held by Toray Group,
may have an impact on Toray Group’s results of operations and
financial conditions.
68
Annual Report 2018 (5) Changes in assumptions on which forecasts are
based that might affect employee retirement
benefit obligations and deferred tax assets
Toray’s consolidated financial statements contain employee
retirement benefit obligations based on future pension payments
calculated in accordance with certain criteria, as well as deferred
tax assets stated according to likely tax refunds based on taxable
income estimates for the future fiscal years. However, if changes
in the criteria used to calculate pension payments were to occur,
or if fluctuations arose in the estimates of future taxable income,
Toray Group’s results of operations and financial conditions could
be affected.
(6) Overseas operations
Toray Group is developing a broad geographical presence, with
operations in various countries of Asia, Europe, and the Americas.
Some of the major potential risks associated with various regions
are summarized below. If such risks were to become reality,
Toray Group’s results of operations and financial conditions could
be negatively affected.
— Unforeseen introduction, changes or abolition of laws and reg-
ulations such as changes in taxation systems
— Unforeseen economic or political events
— Social upheaval, including acts of terror or war
(7) Product liability
Toray Group strives to supply the world’s best-in-class product
quality. However, it cannot always guarantee against a major
unforeseen quality problem. If quality related serious situations
were to occur, Toray Group’s results of operations and financial
conditions could be negatively affected.
(8) Lawsuits
In the course of conducting its wide range of business activities,
Toray Group faces the risk of being targeted by legal action per-
taining to various matters such as intellectual property, product
liability, environment, and labor issues. If Toray Group were sub-
ject to a major lawsuit, its results of operations and financial con-
ditions could be negatively affected.
(9) Laws and regulations, taxes, competition policies and
internal controls
Various laws and regulations apply in the countries and regions
where Toray Group conducts its business. These laws and reg-
ulations include regulations related to the environment, com-
mercial trading, labor, intellectual property, taxation and foreign
exchange, investment approval protocols and import/export
controls, and policies on competition based on antitrust laws.
Through the establishment and maintenance of internal control
systems, Toray Group endeavors to comply with all such laws
and regulations. However, changes to such laws and regulations,
including the introduction of new environmental regulations and
taxes, as well as changes to the corporate income tax rate could
affect Toray Group’s results of operations and financial condi-
tions. Also, if Toray Group is judged as having violated such laws
and regulations, is subject to government sanctions initiated by
a fair trade commission, receives a notice of correction from tax
authorities, has an employee who engages in illicit behavior, or
is unable to uphold internal controls pertaining to financial state-
ments, its results of operations and financial conditions could be
negatively affected.
(10) Natural disasters and accidents
Toray Group places top priority on safety, accident prevention,
and environmental preservation. To minimize losses caused by
the suspension of production, Toray Group conducts regular acci-
dent prevention inspections, maintenance of its manufacturing
facilities, and safety activities. However, the advent of a major
natural disaster or unprecedented accident could cause damage
to Toray Group’s manufacturing facilities, or could cause inad-
equate supply of raw materials, which could have a negative
impact on its results of operations and financial conditions.
(11) Information security risk
Toray Group’s information systems and networks are fundamen-
tally essential elements in the execution of the Group’s business
operations and every security precaution is taken in their devel-
opment and operation. However, if such an incident as a work
stoppage, a loss of trust in the Group, and a leak of confiden-
tial information were caused by unauthorized access, data alter-
ation, theft or deletion, an interruption of system operations, or
any other information security threats, Toray Group’s earnings
and financial conditions could be negatively affected.
69
Toray Industries, Inc. Consolidated Balance Sheets
Toray Industries, Inc. and Consolidated Subsidiaries
March 31, 2018 and 2017
Assets
Current assets:
Cash (Note 5)
Time deposits (Notes 4 and 5)
Trade receivables (Notes 5 and 7):
Notes receivable
Accounts receivable
Inventories (Note 3)
Deferred tax assets (Note 10)
Prepaid expenses and other current assets (Notes 5 and 6)
Allowance for doubtful accounts
Total current assets
Property, plant and equipment (Notes 4 and 13):
Land
Buildings
Machinery and equipment
Construction in progress
Other
Accumulated depreciation
Property, plant and equipment, net
Intangible assets (Note 13):
Goodwill
Other
Total intangible assets
Investments and other assets:
Millions of yen
Thousands of
U.S. dollars (Note 2)
2018
2017
2018
¥ 108,379 ¥
97,920
$ 1,020,518
32,722
45,191
308,117
55,499
53,213
434,050
372,909
439,673
409,332
25,641
26,438
58,739
63,911
(2,037)
(2,205)
522,589
4,087,100
4,140,047
241,441
553,098
(19,181)
1,152,666 1,066,709
10,853,729
78,370
79,831
737,947
631,681
602,423
5,948,032
1,902,003 1,859,050
17,909,633
120,514
107,562
115,121
111,307
1,134,783
1,084,002
2,847,689 2,760,173
26,814,397
(1,920,660) (1,878,739)
(18,085,311)
927,029
881,434
8,729,087
40,146
45,779
28,501
31,516
68,647
77,295
378,023
268,371
646,394
Investments in unconsolidated subsidiaries and affiliated companies (Note 5)
172,315
113,206
Investment securities (Notes 4, 5 and 6)
Long-term loans receivable
Deferred tax assets (Note 10)
Other (Notes 4 and 8)
Allowance for doubtful accounts
201,314
186,512
1,447
1,566
12,902
13,513
59,555
59,813
(2,961)
(3,263)
1,622,552
1,895,612
13,625
121,488
560,782
(27,881)
Total investments and other assets
444,572
371,347
4,186,177
Total assets
¥ 2,592,914 ¥ 2,396,785
$ 24,415,386
See accompanying notes to consolidated financial statements.
70
Annual Report 2018
Liabilities and Net Assets
Current liabilities:
Millions of yen
Thousands of
U.S. dollars (Note 2)
2018
2017
2018
Short-term bank loans (Notes 4, 5 and 7)
¥ 135,936 ¥ 132,014
$ 1,280,000
Current portion of long-term debt (Notes 4, 5 and 7)
Commercial paper (Note 5)
Trade payables (Notes 5 and 7):
Notes payable
Accounts payable
Income taxes payable (Note 10)
Accrued liabilities
Other current liabilities (Notes 4 and 10)
Total current liabilities
63,203
110,244
46,000
19,000
595,132
433,145
38,433
40,814
361,893
207,117
188,378
1,950,254
13,966
18,560
62,363
58,244
109,508
102,722
676,526
669,976
131,507
587,222
1,031,149
6,370,301
Long-term debt (Notes 4, 5 and 7)
567,657
450,757
5,345,169
Deferred tax liabilities (Note 10)
48,361
43,320
455,377
Net defined benefit liability (Note 8)
101,786
103,459
958,437
Customers’ guarantee deposits and other liabilities (Note 4)
29,396
29,097
276,798
Total liabilities
1,423,726 1,296,609
13,406,083
Commitments and contingent liabilities (Note 12)
Net assets (Note 11):
Stockholders’ equity:
Common stock:
Authorized—4,000,000,000 shares
Issued—1,631,481,403 shares
Capital surplus
Retained earnings
Treasury stock, at cost
Total stockholders’ equity
Accumulated other comprehensive income:
Net unrealized gains (losses) on securities
Net deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Stock acquisition rights (Note 9)
Non-controlling interests
Total net assets
Total liabilities and net assets
147,873
147,873
117,572
121,091
763,504
691,290
1,392,401
1,107,081
7,189,303
(20,631)
(20,822)
(194,266)
1,008,318
939,432
9,494,520
74,290
66,513
699,529
(901)
21
4,830
13,764
4,158
1,542
82,377
81,840
1,334
1,205
77,159
77,699
(8,484)
45,480
39,153
775,678
12,561
726,544
1,169,188 1,100,176
11,009,303
¥ 2,592,914 ¥ 2,396,785
$ 24,415,386
71
Toray Industries, Inc.
Consolidated Statements of Income
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017
Net sales
Costs and expenses:
Millions of yen
Thousands of
U.S. dollars (Note 2)
2018
2017
2018
¥ 2,204,858 ¥ 2,026,470
$ 20,761,375
Cost of sales (Notes 3, 8, 13 and 14)
1,748,017 1,596,472
16,459,670
Selling, general and administrative expenses (Notes 8, 9, 13 and 14)
300,377
283,105
2,828,409
Operating income
Other income (expenses):
Interest expense
Interest and dividend income
Equity in earnings of unconsolidated subsidiaries and affiliated companies
Loss on sales and disposal of property, plant and equipment, net
Loss on impairment of fixed assets (Note 15)
Gain on sales and loss on write-down of investment securities, net
Loss on liquidation and devaluation of subsidiaries and affiliated companies
Environmental expenses
Other, net
Income before income taxes
Income taxes (Note 10):
Current
Deferred
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent
See accompanying notes to consolidated financial statements.
2,048,394 1,879,577
19,288,079
156,464
146,893
1,473,296
(5,091)
(4,654)
5,222
9,221
(7,084)
(3,944)
3,445
(3,591)
(2,597)
5,010
7,506
(4,971)
(2,925)
2,951
—
—
(15,433)
(10,798)
(19,852)
(7,881)
(47,938)
49,171
86,827
(66,704)
(37,137)
32,439
(33,814)
(24,454)
(145,320)
(186,930)
136,612
139,012
1,286,365
34,851
31,361
(1,419)
1,708
33,432
33,069
103,180
105,943
(7,265)
(6,525)
328,164
(13,362)
314,802
971,563
(68,409)
¥
95,915 ¥
99,418
$
903,154
Consolidated Statements of Comprehensive Income
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017
Net income
Other comprehensive income (Note 16)
Net unrealized gains (losses) on securities
Net deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of unconsolidated subsidiaries and
affiliated companies accounted for by the equity method
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of parent
Non-controlling interests
See accompanying notes to consolidated financial statements.
72
Millions of yen
Thousands of
U.S. dollars (Note 2)
2018
2017
2018
¥ 103,180
¥ 105,943
$ 971,563
8,100
(997)
(5,820)
2,635
5,131
643
(14,114)
6,305
(1,770)
(1,950)
76,271
(9,388)
(54,802)
24,812
(16,667)
2,148
(3,985)
20,226
¥ 105,328
¥ 101,958
$ 991,789
¥ 96,452
¥ 95,914
$ 908,211
8,876
6,044
83,578
Annual Report 2018
Consolidated Statements of Changes in Net Assets
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017
Stockholders’ equity
Accumulated other comprehensive income
Millions of yen
Common
stock
Capital
surplus
Retained
earnings
Treasury
stock,
at cost
Total
stockholders’
equity
Net
unrealized
gains
(losses) on
securities
Net
deferred
gains (losses)
on hedges
Foreign
currency
translation
adjustments
Remeasure-
ments of
defined
benefit plans
Total
accumulated
other compre-
hensive
income
Stock
acquisition
rights
Non-
controlling
interests
Total net
assets
¥ 147,873
¥ 119,180
¥ 614,334
¥ (21,163)
¥ 860,224
¥ 61,272
¥ (490)
¥ 29,270
¥ (4,708)
¥ 85,344
¥ 1,181
¥ 78,160
¥ 1,024,909
(22,396)
99,418
(43)
1,911
43
(66)
(25)
366
(22,396)
99,418
(25)
323
1,911
(23)
(22,396)
99,418
(25)
323
1,911
(23)
—
¥ 147,873
¥ 147,873
1,911
¥ 121,091
¥ 121,091
76,956
¥ 691,290
¥ 691,290
341
¥ (20,822)
¥ (20,822)
79,208
¥ 939,432
¥ 939,432
5,241
¥ 66,513
¥ 66,513
511
¥ 21
¥ 21
(15,506)
¥ 13,764
¥ 13,764
6,250
¥ 1,542
¥ 1,542
(3,504)
¥ 81,840
¥ 81,840
24
¥ 1,205
¥ 1,205
(461)
¥ 77,699
¥ 77,699
75,267
¥ 1,100,176
¥ 1,100,176
5,241
511
(15,506)
6,250
(3,504)
24
(461)
(3,941)
(22,402)
95,915
(1,299)
2
(3,521)
(3)
194
(22,402)
95,915
(3)
196
(3,521)
(1,299)
(22,402)
95,915
(3)
196
(3,521)
(1,299)
—
¥ 147,873
(3,519)
¥ 117,572
72,214
¥ 763,504
191
68,886
¥ (20,631) ¥ 1,008,318
7,777
¥ 74,290
(922)
¥ (901)
(8,934)
¥ 4,830
2,616
¥ 4,158
537
¥ 82,377
129
¥ 1,334
(540)
69,012
¥ 77,159 ¥ 1,169,188
7,777
(922)
(8,934)
2,616
537
129
(540)
126
Stockholders’ equity
Accumulated other comprehensive income
Thousands of U.S. dollars (Note 2)
Common
stock
Capital
surplus
Retained
earnings
Treasury
stock,
at cost
Total
stockholders’
equity
Net
unrealized
gains
(losses) on
securities
Net
deferred
gains (losses)
on hedges
Foreign
currency
translation
adjustments
Remeasure-
ments of
defined
benefit plans
Total
accumulated
other compre-
hensive
income
Stock
acquisition
rights
Non-
controlling
interests
Total net
assets
$ 1,392,401 $ 1,140,217 $ 6,509,322
$ (196,064) $ 8,845,876
$ 626,299
$ 198
$ 129,605
$ 14,520
$ 770,621
$ 11,347
$ 731,629 $ 10,359,473
(210,942)
903,154
(12,232)
19
(33,154)
(28)
1,827
(210,942)
903,154
(28)
1,846
(33,154)
(12,232)
(210,942)
903,154
(28)
1,846
(33,154)
(12,232)
—
679,981
$ 1,392,401 $ 1,107,081 $ 7,189,303
(33,136)
73,230
(8,682)
(84,124)
24,633
5,056
1,215
(5,085)
1,186
1,798
648,644
$ (194,266) $ 9,494,520
73,230
$ 699,529
(8,682)
$ (8,484)
(84,124)
$ 45,480
24,633
$ 39,153
5,056
$ 775,678
1,215
$ 12,561
(5,085)
649,831
$ 726,544 $ 11,009,303
Balance as of April 1, 2016
Changes in:
Dividends
Net income attributable
to owners of parent
Purchase of treasury stock
Disposition of treasury stock
Change in equity attributable
to parent arising
from transaction with
non-controlling shareholders
Other
Items other than
stockholders’ equity, net
Total changes
Balance as of March 31, 2017
Balance as of April 1, 2017
Changes in:
Dividends
Net income attributable
to owners of parent
Purchase of treasury stock
Disposition of treasury stock
Change in equity attributable
to parent arising
from transaction with
non-controlling shareholders
Other
Items other than
stockholders’ equity, net
Total changes
Balance as of March 31, 2018
Balance as of April 1, 2017
Changes in:
Dividends
Net income attributable
to owners of parent
Purchase of treasury stock
Disposition of treasury stock
Change in equity attributable
to parent arising
from transaction with
non-controlling shareholders
Other
Items other than
stockholders’ equity, net
Total changes
Balance as of March 31, 2018
See accompanying notes to consolidated financial statements.
73
Toray Industries, Inc. Consolidated Statements of Cash Flows
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017
Cash flows from operating activities:
Income before income taxes
Adjustments to reconcile income before income taxes to net cash
provided by operating activities:
Depreciation and amortization
Loss on impairment of fixed assets
Interest and dividend income
Equity in earnings of unconsolidated subsidiaries and affiliated companies
Interest expense
Loss (gain) on sales and disposal of property, plant and equipment, net
Loss (gain) on sales and write-down of investment securities, net
Increase (decrease) in net defined benefit liability
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Other, net
Subtotal
Interest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Purchases of investment securities
Proceeds from sales of property, plant and equipment
Proceeds from sales of investment securities
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Cash dividends paid
Payments from changes in ownership interests in subsidiaries that do not
result in change in scope of consolidation
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Millions of yen
Thousands of
U.S. dollars (Note 2)
2018
2017
2018
¥ 136,612
¥ 139,012
$ 1,286,365
95,815
89,073
3,944
(5,222)
(9,221)
5,091
7,084
(3,239)
193
(61,969)
(31,492)
2,925
(5,010)
(7,506)
4,654
4,971
(3,010)
(234)
(24,993)
(16,483)
11,594
17,982
3,271
(3,714)
902,213
37,137
(49,171)
(86,827)
47,938
66,704
(30,499)
1,817
(583,512)
(296,535)
109,171
30,800
152,461
197,667
1,435,603
16,111
(5,052)
(34,340)
9,175
(4,572)
(28,312)
151,704
(47,571)
(323,352)
129,180
173,958
1,216,384
(147,925)
(143,894)
(1,392,891)
(67,274)
2,996
13,421
12,097
(4,616)
2,114
7,009
4,145
(633,465)
28,211
126,375
113,908
(186,685)
(135,242)
(1,757,863)
30,520
8,621
287,382
178,912
50,929
1,684,670
(111,446)
(24,439)
(49,323)
(24,316)
(1,049,397)
(230,122)
(10,480)
(3,064)
(1,294)
(865)
61,773
(18,018)
(1,924)
(847)
2,344
19,851
(98,682)
(12,185)
581,667
(18,117)
22,072
Cash and cash equivalents at beginning of year
131,405
109,778
1,237,335
Beginning balance of cash and cash equivalents at subsidiaries not
previously included in consolidation
566
1,712
5,330
Increase in cash and cash equivalents resulting from
merger with unconsolidated subsidiaries
—
64
—
Cash and cash equivalents at end of year
¥ 134,315
¥ 131,405
$ 1,264,736
See accompanying notes to consolidated financial statements.
74
Annual Report 2018
Notes to Consolidated Financial Statements
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017
1. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Toray
Industries, Inc. (the Company) and its consolidated subsidiaries
have been prepared in accordance with the provisions set forth
in the Financial Instruments and Exchange Act of Japan and its
related accounting regulations, and in conformity with account-
ing principles and practices generally accepted in Japan, which
are different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards.
For the preparation of consolidated financial statements, the
accounting policies and procedures applied to a parent company
and its subsidiaries for similar transactions and events under sim-
ilar circumstances should be unified, in principle. However, finan-
cial statements prepared by overseas subsidiaries in accordance
with International Financial Reporting Standards or the generally
accepted accounting principles in the United States tentatively
may be used for the consolidation process. In addition, some
items should be adjusted in the consolidation process so that net
income is accurately accounted for, unless they are not material.
Certain items presented in the original consolidated financial
statements in Japanese have been reclassified for the conve-
nience of readers outside Japan.
b) Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of the Company and substantially all of its subsidiaries.
Assets and liabilities of the consolidated subsidiaries are reval-
ued to fair market value when the Company acquires control over
the subsidiaries.
Investments in unconsolidated subsidiaries and affiliated com-
panies are accounted for by the equity method.
All intercompany accounts and transactions have been elimi-
nated in consolidation. The difference between the acquisition cost
and the underlying net assets of the subsidiaries is recognized as
goodwill and amortized principally over its estimated useful life not
exceeding twenty years on a straight-line method.
c) Cash and Cash Equivalents
Cash and cash equivalents at March 31, 2018 and 2017 include
cash, short-term time deposits which may be withdrawn on
demand without diminution of principal and highly liquid invest-
ments with original maturities of three months or less.
Cash and cash equivalents consisted of:
Millions of yen
Thousands of
U.S. dollars
Cash
Time deposits
Less—Time deposits with
maturities of over
3 months
Marketable securities with
original maturities of
3 months or less
Cash and cash equivalents
2018
2017
¥ 108,379 ¥ 97,920 $ 1,020,518
32,722 45,191 308,117
2018
(6,786)
(11,746)
(63,898)
—
40
—
¥ 134,315 ¥ 131,405 $ 1,264,736
d) Financial Instruments
Derivatives:
All derivatives are stated at fair value, with changes in fair
value included in net income or loss for the period in which
they arise, except for derivatives that are designated as
“hedging instruments” (see Hedge Accounting below).
Securities:
Held-to-maturity debt securities that the Company and its consol-
idated subsidiaries have the intent to hold to maturity, are stated
at cost after accounting for premium or discount on acquisition,
which are amortized over the period to maturity.
Other securities for which market quotations are available
are stated at fair value. Net unrealized gains or losses on these
securities are reported as a separate item in net assets at a
net-of-tax amount.
Other securities for which market quotations are unavailable
are stated at cost, except as stated in the paragraph below.
In cases where the fair value of held-to-maturity debt secu-
rities or other securities has declined significantly and such
impairment of the value is not deemed temporary, those secu-
rities are written down to fair value and the resulting losses are
included in net income or loss for the period.
Hedge Accounting:
Gains or losses arising from changes in fair value of derivatives
designated as “hedging instruments” are deferred as a sepa-
rate item of net assets at a net-of-tax amount and included in
net income or loss in the same period during which the gains
and losses on the hedged items or transactions are recognized.
The derivatives designated as hedging instruments by the
Company and its consolidated subsidiaries are principally inter-
est rate swaps and forward foreign exchange contracts. The
related hedged items are trade accounts receivable and pay-
able, long-term bank loans and debt securities issued by the
Company and its consolidated subsidiaries.
The Company and its consolidated subsidiaries have a policy
to utilize the above hedging instruments in order to reduce their
exposure to the risk of interest rate and foreign currency fluctua-
tions. Thus, their purchases of the hedging instruments are lim-
ited to, at maximum, the amounts of the hedged items.
The Company and its consolidated subsidiaries evaluate
the effectiveness of hedging activities by reference to the
accumulated gains or losses on the hedging instruments
and the related hedged items from the commencement of
the hedges.
e) Allowance for Doubtful Accounts
In the Company and its domestic consolidated subsidiaries, an
allowance for doubtful accounts, including receivables and loans,
is determined from the amounts considered unlikely to be recov-
ered, estimated from past actual bad debt ratio records for general
receivables and from studying the probability of recovery in individ-
ual cases where there is concern over claims.
75
Toray Industries, Inc.
f) Inventories
Inventories are stated at the lower of acquisition cost, principally
determined by the moving average method, or net selling value
to reflect any decreased profitability of inventories.
g) Property, Plant and Equipment
Property, plant and equipment are stated at cost.
Depreciation for property, plant and equipment (except leased
assets) is principally computed by the straight-line method at rates
based on estimated useful lives that are as follows:
Buildings
3–60 years
Machinery and equipment 3–15 years
Principally, a depreciation method of leased assets is identical
to the method applicable to its own fixed assets.
h) Income Taxes
Income taxes of the Company and its domestic consolidated sub-
sidiaries consist of corporate income taxes, local inhabitants taxes
and enterprise taxes. Deferred income taxes are determined using
the asset and liability approach, where deferred tax assets and lia-
bilities are recognized for temporary differences between the tax
basis of assets and liabilities and their reported amount in the finan-
cial statements. The Company also provides for the anticipated tax
effect of future remittances of retained earnings from subsidiaries
and affiliated companies.
The Company and some of its consolidated subsidiaries adopt
the consolidated taxation system.
i) Consumption Taxes
Transactions subject to consumption taxes are recorded at
amounts exclusive of consumption taxes.
j) Retirement Benefits
The Company and its domestic consolidated subsidiaries have
an unfunded lump-sum benefit plan, a funded contributory pen-
sion plan and a defined contribution pension plan covering all eli-
gible employees.
Under the terms of the unfunded lump-sum benefit plan, eli-
gible employees are entitled under most circumstances, upon
mandatory retirement or earlier voluntary severance, to indemni-
ties based on compensation at the time of severance and years
of service.
The funded contributory pension plan and the defined contri-
bution pension plan provide, in general, pension payments for life
commencing from age 60.
To provide for the payment of retirement benefits to employ-
ees, net defined benefit liability is recognized at an amount equal
to the expected retirement benefit obligations net of the fair value
of pension assets at the end of the period.
Past service cost is amortized as incurred using the straight-
line method over a certain period within the employees’ average
remaining years of service (primarily 12 years).
Actuarial gains and losses are amortized from the following
fiscal year after recognition using the straight-line method over a
certain period within the employees’ average remaining years of
service (primarily 12 years).
Unrecognized actuarial gains and losses and unrecognized
76
past service cost are recognized in remeasurements of defined
benefit plans in accumulated other comprehensive income under
the net assets section, net of deferred taxes.
Allowance for retirement benefits for members of the Board
and corporate auditors of the Company and certain of its domes-
tic consolidated subsidiaries is provided based on the compa-
nies’ pertinent rules and is calculated as the estimated amount
which would be payable if all the executives were to retire at
the balance sheet date. Any amounts payable to the executives
upon retirement are subject to approval at the annual stockhold-
ers’ meeting. The amount is included in “customers’ guarantee
deposits and other liabilities” on the consolidated balance sheets.
k) Appropriation of Retained Earnings
Cash dividends are recorded in the fiscal year when the proposed
appropriation of retained earnings is approved by the Board of
Directors and/or stockholders.
l) Foreign Currency Transactions
All monetary assets and liabilities denominated in foreign cur-
rencies, whether long-term or short-term, are translated into
Japanese yen at the exchange rates prevailing at the balance
sheet date. Resulting gains and losses are included in net income
or loss for the period.
m) Translation of Foreign Currency Financial Statements
Translation of foreign currency financial statements of over-
seas subsidiaries into Japanese yen for consolidation purposes
is made by using the current exchange rates prevailing at their
balance sheet dates, with the exception that the translation of
stockholders’ equity is made by using historical rates. Revenue
and expense accounts are principally translated at the average
exchange rates during the year. Differences in yen amounts
arising from the use of different rates are presented as “for-
eign currency translation adjustments” in net assets except for
the portion belonging to non-controlling shareholders, which is
included in “non-controlling interests” in net assets.
n) Standards Issued but Not Yet Adopted
Accounting Standard and Implementation Guidance on
Revenue Recognition
On March 30, 2018, the Accounting Standards Board of Japan
(ASBJ) issued “Accounting Standard for Revenue Recognition”
(ASBJ Statement No. 29) and “Implementation Guidance on
Accounting Standard for Revenue Recognition” (ASBJ Guidance
No. 30).
(1) Overview
This is a comprehensive accounting standard for revenue rec-
ognition. The standard establishes the following five-step model
that an entity applies when recognizing revenue from customers:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obli-
gations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a
performance obligation.
Annual Report 2018
(2) Scheduled Date of Adoption
The Company is currently deciding the date of adopting this
accounting standard and implementation guidance.
(3) Impact of Adoption
The Company is currently evaluating the effect of adopting this
accounting standard and implementation guidance on its consoli-
dated financial statements.
o) Changes in Accounting Estimates
In accounting for retirement benefits, the actuarial gains and
losses and past service costs, which were previously amortized
primarily over 13 years, are now amortized primarily over 12
years effective from the year ended March 31, 2018 because of
a decrease in the employees’ average remaining years of service.
This change resulted in increases of ¥2,540 million ($23,917
thousand) and ¥2,573 million ($24,228 thousand) in operating
income and income before income taxes, respectively, for the
year ended March 31, 2018.
The impact of this change on each reportable segment is
explained in Note 17. SEGMENT INFORMATION in the Notes to
the Consolidated Financial Statements.
2. U.S. DOLLAR AMOUNTS
The Company and its domestic consolidated subsidiaries maintain
their accounting records in yen. The U.S. dollar amounts included
in the accompanying consolidated financial statements and notes
thereto represent the arithmetic results of translating yen into U.S.
dollars at the rate of ¥106.2 to $1.00, the approximate exchange
rate prevailing on March 31, 2018. The inclusion of such U.S. dol-
lar amounts is solely for the convenience of readers outside Japan
and is not intended to imply that the assets and liabilities that orig-
inated in yen have been or could be readily converted, realized or
settled in U.S. dollars at this or at any other rate.
3. INVENTORIES
At March 31, 2018 and 2017, inventories consisted of the following:
Merchandise and finished goods
Work in process
Raw materials and supplies
Millions of yen
Thousands of
U.S. dollars
2018
2017
2018
¥ 248,513
92,501
98,659
¥ 439,673
¥ 235,127
78,646
95,559
¥ 409,332
$ 2,340,047
871,008
928,992
$ 4,140,047
Losses recognized and charged to cost of sales as a result of valuation at March 31, 2018 and 2017 were ¥2,578 million ($24,275 thou-
sand) and ¥6,246 million, respectively.
4. SHORT-TERM BANK LOANS, LONG-TERM DEBT AND LEASE OBLIGATIONS
Short-term bank loans at March 31, 2018 and 2017 represented bank overdrafts and short-term notes. The Company is not required to
pay commitment fees on unused balances of the bank overdraft agreements.
Long-term debt and lease obligations at March 31, 2018 and 2017 were as follows:
Loans principally from banks and insurance companies with interest rates
primarily from 0.01% to 11.50%, maturing serially through 2026:
Unsecured
Secured
¥ 388,821
546
¥ 420,399
592
$ 3,661,215
5,141
Millions of yen
Thousands of
U.S. dollars
2018
2017
2018
Lease obligations maturing serially through 2036:
Unsecured
3,529
Yen notes with an interest rate of 0.42% due 2018
Yen notes with an interest rate of 0.96% due 2018
Yen notes with an interest rate of 0.93% due 2022
Yen notes with an interest rate of 1.01% due 2023
Yen notes with an interest rate of 0.25% due 2024
Yen notes with an interest rate of 0.38% due 2027
Zero coupon convertible bonds due 2019
Zero coupon convertible bonds due 2021
Yen notes with a floating interest rate of 6 month Japanese yen TIBOR + 0% due 2024
Less amounts due within one year
—
4
20,000
20,000
40,000
60,000
50,000
50,000
1,488
634,389
63,646
¥ 570,743
4,384
10
—
20,000
20,000
—
—
50,000
50,000
—
565,385
111,376
¥ 454,009
33,230
—
38
188,324
188,324
376,648
564,972
470,810
470,810
14,011
5,973,531
599,303
$ 5,374,228
77
Toray Industries, Inc.
At March 31, 2018, assets pledged as collateral were as follows:
Time deposits
Property, plant and equipment, net
Investment securities
Others
Millions of yen
Thousands of
U.S. dollars
¥ 922
1,312
1,279
568
¥ 4,081
$ 8,682
12,354
12,043
5,348
$ 38,427
The annual maturities of long-term debt and lease obligations subsequent to March 31, 2018 were as follows:
Years ending March 31:
2019
2020
2021
2022
2023
2024 and thereafter
5. FINANCIAL INSTRUMENTS
Conditions of Financial Instruments
a) Policy in Relation to Financial Instruments
The policy of the Company and its consolidated subsidiaries is
to manage funds only by short-term deposits, etc. and to raise
funds by borrowing from banks and issuing corporate bonds.
The Company and its consolidated subsidiaries use derivatives
to hedge risks associated with foreign currency exchange rates
and fluctuations of borrowing interest rates and do not enter into
derivative transactions for speculative or trading purposes.
b) Contents and Risk of Financial Instruments and Risk
Management System
Trade receivables are operating receivables and therefore are
exposed to customer credit risk. Under its internal regulations,
the Company carefully manages the payment periods for receiv-
ables and outstanding balances of all customers and regularly
monitors the credit standing of major clients. Consolidated sub-
sidiaries also monitor and manage the credit standings of their cli-
ents. Operating receivables and payables denominated in foreign
currencies that arise from the global business operations are also
exposed to foreign currency exchange risk. The Company and
its consolidated subsidiaries hedge this risk mainly through the
use of forward exchange contracts against positions after net-
ting receivables and payables denominated in the same foreign
currencies. Likewise, the Company and its consolidated subsid-
iaries mainly use currency swaps to hedge the foreign currency
exchange risk of bank loans denominated in foreign currencies.
Investment securities are mostly the shares of corporations
with which the Group has business relationships and are exposed
to the risk of market price fluctuations. The fair value of the invest-
ment securities and financial positions of the issuing entities (cli-
ents) are regularly monitored.
Trade payables are operating payables, most of which are due
and payable within one year.
78
Millions of yen
Thousands of
U.S. dollars
¥ 63,646
$ 599,303
93,260
90,674
78,091
71,746
236,972
878,154
853,804
735,320
675,574
2,231,375
¥ 634,389
$ 5,973,531
Short-term bank loans and commercial paper are financing
instruments mainly for operating transactions, while long-term
bank loans and bonds (due within ten years, in principle) are pri-
marily for capital expenditures. Bank loans and bonds are exposed
to the risk of interest rate fluctuation. Those with floating rates
bear the risk of higher nominal interest expenses when interest
rates rise, whereas those with fixed rates bear the risk of higher
real interest expenses when interest rates fall. The Company and
its consolidated subsidiaries use derivative transactions (interest
rate swap transactions) to minimize the risk of interest rate fluc-
tuation, taking into consideration the balance between fixed inter-
est rates and floating interest rates.
Hedging instruments, hedged items, the policy for utilizing such
hedging instruments and the method for evaluating the effective-
ness of hedging activities are described in Note 1. SIGNIFICANT
Instruments, Hedge
ACCOUNTING POLICIES d) Financial
Accounting in the Notes to the Consolidated Financial Statements.
Derivative transactions are executed and managed in accor-
dance with the internal regulations prescribing the authorization
for transactions. To mitigate the credit risk, the Company and its
consolidated subsidiaries carry out derivative transactions only
with highly rated financial institutions.
c) Supplemental Explanation on Fair Value of Financial
Instruments
The fair value of financial instruments is based on market prices,
or reasonable estimate of fair value for instruments for which
market prices are not available. Estimates of fair value are sub-
ject to fluctuation because they employ various factors and
assumptions. In addition, the contract amount of derivatives in
Note 7. DERIVATIVES in the Notes to the Consolidated Financial
Statements is not an indicator of market risk associated with
derivative transactions.
Annual Report 2018
Fair Value of Financial Instruments
Carrying value, fair value and unrealized gain (loss) as of March 31, 2018 and 2017 were as follows.
In addition, financial instruments, for which it is extremely difficult to measure the fair value, are not included. (Please refer to Note 2
below).
Cash and time deposits
Trade receivables
Investment securities
Held-to-maturity debt securities
Investment securities in subsidiaries and affiliated companies
Other securities
Assets
Trade payables
Short-term bank loans
Commercial paper
Bonds *1
Long-term bank loans *2
Liabilities
Derivative transactions *3
Hedge accounting is not applied
Hedge accounting is applied
Derivative transactions
Cash and time deposits
Trade receivables
Investment securities
Held-to-maturity debt securities
Investment securities in subsidiaries and affiliated companies
Other securities
Assets
Trade payables
Short-term bank loans
Commercial paper
Bonds *1
Long-term bank loans *2
Liabilities
Derivative transactions *3
Hedge accounting is not applied
Hedge accounting is applied
Derivative transactions
—
—
1
—
—
—
Millions of yen
2018
Carrying value
Fair value
Unrealized gain (loss)
¥ 141,101
¥ 141,101
¥
489,549
489,549
100
75,608
191,975
101
62,736
191,975
(12,872)
—
¥ 898,333
¥ 885,462
¥ (12,871)
¥ 245,550
¥ 245,550
¥
135,936
46,000
241,493
389,367
135,936
46,000
263,419
386,972
21,926
(2,395)
¥ 1,058,346 ¥ 1,077,877
¥ 19,531
¥
(614)
¥
(614)
(1,479)
(1,479)
¥
(2,093)
¥
(2,093)
¥
¥
—
—
—
Millions of yen
2017
Carrying value
Fair value
Unrealized gain (loss)
¥ 143,111
¥ 143,111
¥
426,122
426,122
100
22,001
177,825
103
20,788
177,825
—
—
3
(1,213)
—
¥ 769,159
¥ 767,949
¥ (1,210)
¥ 229,192
¥ 229,192
¥
132,014
19,000
140,010
420,991
132,014
19,000
162,942
420,261
—
—
—
22,932
(730)
¥ 941,207
¥ 963,409
¥ 22,202
¥
(135)
¥
(135)
101
¥
(34)
¥
101
(34)
¥
¥
—
—
—
79
Toray Industries, Inc.
Cash and time deposits
Trade receivables
Investment securities
$ 1,328,635 $ 1,328,635
$
4,609,689
4,609,689
Held-to-maturity debt securities
942
951
—
—
9
Investment securities in subsidiaries and affiliated companies
711,940
590,734
(121,205)
Thousands of U.S. dollars
2018
Carrying value
Fair value
Unrealized gain (loss)
Other securities
Assets
Trade payables
Short-term bank loans
Commercial paper
Bonds *1
Long-term bank loans *2
Liabilities
Derivative transactions *3
Hedge accounting is not applied
Hedge accounting is applied
Derivative transactions
1,807,674
1,807,674
—
$ 8,458,879 $ 8,337,684
$ (121,196)
$ 2,312,147 $ 2,312,147
$
1,280,000
1,280,000
433,145
433,145
—
—
—
2,273,945
2,480,405
206,460
3,666,356
3,643,804
(22,552)
$ 9,965,593 $ 10,149,501
$ 183,908
$
(5,782)
$
(5,782)
(13,927)
(13,927)
$
(19,708)
$
(19,708)
$
$
—
—
—
*1 Bonds include bonds due within one year.
*2 Long-term bank loans include long-term bank loans due within one year.
*3 Receivables and payables arising from derivative transactions are indicated in net amounts. Total net payables, if any, are shown in parentheses.
Notes:
1. Estimation method for fair value of financial instruments and items related to securities and derivative transactions
Assets
Cash and time deposits and Trade receivables
Carrying value is used for fair value since the items will be settled within the short term and the fair value is approximately equal
to the carrying value.
Investment securities
Securities are valued at quoted market price. Debt securities, etc. are valued at quoted market price or at the price provided by cor-
respondent financial institutions. For information on securities classified by holding purpose, please refer to Note 6. SECURITIES
of the Notes to the Consolidated Financial Statements.
Liabilities
Trade payables, Short-term bank loans and Commercial paper
Carrying value is used for fair value since the items will be settled within the short term and the fair value is approximately equal
to the carrying value.
Bonds
The fair value of bonds with market price is based on market price. The fair value of bonds without market price is estimated by
discounting the principal amounts and interest based on interest rates adjusted for the remaining periods and credit risk of the
bonds. However, for floating-rate bonds and fixed-rate bonds converted to floating using interest rate swaps accounted for under
the special accounting method for interest rate swaps, the fair value is approximately equal to the carrying value because the inter-
est rates are adjusted periodically. Therefore, the fair value is based on the carrying value.
Long-term bank loans
The fair value of long-term bank loans is estimated by discounting the principal amounts and interest based on estimated inter-
est rates if similar new loans were entered into in the current period. The fair value of long-term bank loans for which the spe-
cial accounting method for interest rate swaps is applied is estimated by discounting the total principal amount and interest
(accounted for together with the interest rate swaps) based on estimated interest rates if similar new loans were entered into in
the current period. For long-term bank loans at floating interest rates, however, the fair value is approximately equal to the carrying
value because the interest rates are adjusted periodically. Therefore, the fair value is based on the carrying value.
Derivative transactions
Please refer to Note 7. DERIVATIVES in the Notes to the Consolidated Financial Statements.
80
Annual Report 2018
2. Financial instruments for which it is extremely difficult to determine the fair value
Unlisted equity securities
Unlisted debt securities
Millions of yen
2018
2017
¥ 83,414
¥ 78,266
2,000
2,000
Thousands of
U.S. dollars
2018
$ 785,443
18,832
These securities have no quoted market price and the fair value is extremely difficult to determine. Therefore, they are not included in
the preceding table.
3. Redemption schedule for receivables and investment securities with maturities at March 31, 2018 and 2017
Cash and time deposits
Trade receivables
Investment securities
Held-to-maturity debt securities
Other securities
Cash and time deposits
Trade receivables
Investment securities
Held-to-maturity debt securities
Other securities
Cash and time deposits
Trade receivables
Investment securities
Held-to-maturity debt securities
Other securities
Millions of yen
2018
Due within
one year
Due after one year
through five years
Due after five years
through ten years
Due after
ten years
¥ 141,101
489,401
7
—
¥ 630,509
¥ —
148
81
12
¥ 241
¥ —
—
12
53
¥ 65
¥ —
—
—
—
¥ —
Millions of yen
2017
Due within
one year
Due after one year
through five years
Due after five years
through ten years
Due after
ten years
¥ 143,111
426,112
9
40
¥ 569,272
¥ —
10
79
1
¥ 90
¥ —
—
12
60
¥ 72
¥ —
—
—
—
¥ —
Thousands of U.S. dollars
2018
Due within
one year
Due after one year
through five years
Due after five years
through ten years
Due after
ten years
$ 1,328,635
4,608,296
$ —
1,394
66
763
—
113
$ 5,936,996
$ 2,269
$ —
—
113
499
$ 612
$ —
—
—
—
$ —
4. The redemption schedule for long-term debt is disclosed in Note 4. SHORT-TERM BANK LOANS, LONG-TERM DEBT AND LEASE
OBLIGATIONS of the Notes to the Consolidated Financial Statements.
81
Toray Industries, Inc.
6. SECURITIES
At March 31, 2018 and 2017, information on securities classified as held-to-maturity debt securities was as follows:
Held-to-maturity debt securities
Carrying
value
¥ 100
Fair
value
¥ 101
Unrealized
gains
Unrealized
losses
¥ 2
¥ 1
Carrying
value
$ 942
Fair
value
$ 951
Unrealized
gains
Unrealized
losses
$ 19
$ 9
Millions of yen
2018
Thousands of U.S. dollars
2018
Held-to-maturity debt securities
Millions of yen
2017
Carrying
value
¥ 100
Fair
value
¥ 103
Unrealized
gains
Unrealized
losses
¥ 3
¥ 0
At March 31, 2018 and 2017, information on securities classified as other securities was as follows:
Millions of yen
2018
Thousands of U.S. dollars
2018
Carrying
value
Acquisition
cost
Unrealized
gains
Unrealized
losses
Carrying
value
Acquisition
cost
Unrealized
gains
Unrealized
losses
Other securities
¥ 191,975 ¥ 87,263
¥ 104,906
¥ 194
$ 1,807,674 $ 821,685 $ 987,815
$ 1,827
Millions of yen
2017
Carrying
value
Acquisition
cost
Unrealized
gains
Unrealized
losses
Other securities
¥ 177,825
¥ 84,862
¥ 95,378
¥ 2,415
82
Annual Report 2018 7. DERIVATIVES
The Company and its consolidated subsidiaries had the following derivative contracts outstanding at March 31, 2018 and 2017:
Hedge accounting is not applied
Millions of yen
Thousands of U.S. dollars
Forward foreign exchange contracts:
Buying U.S. dollar
Buying euro
Buying Thai baht
Buying Malaysian ringgit
Buying Japanese yen
Selling U.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
Selling Thai baht
Selling Indonesian rupiah
Selling Japanese yen
Foreign currency swaps:
Contract
amount
2018
Fair
value
Unrealized
gain (loss)
Contract
amount
2018
Fair
value
Unrealized
gain (loss)
¥ 10,350
¥ (252)
¥ (252)
$ 97,458 $ (2,373)
$ (2,373)
1,865
370
212
1,077
(32)
3
(2)
2
(32)
3
(2)
2
17,561
(301)
3,484
1,996
10,141
28
(19)
19
(301)
28
(19)
19
14,057
117
117
132,363
1,102
1,102
1,532
10
402
179
87
5,806
32
0
(9)
(1)
(0)
(60)
32
0
(9)
(1)
(0)
(60)
14,426
94
3,785
1,685
819
301
0
(85)
(9)
(0)
54,670
(565)
301
0
(85)
(9)
(0)
(565)
Receiving U.S. dollar, paying Thai baht
3,592
(412)
¥
—
¥ (614)
(412)
¥ (614)
33,823
(3,879)
(3,879)
$
— $ (5,782)
$ (5,782)
Forward foreign exchange contracts:
Buying U.S. dollar
Buying euro
Buying Thai baht
Buying Japanese yen
Selling U.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
Selling Japanese yen
Foreign currency swaps:
Receiving U.S. dollar, paying Thai baht
Millions of yen
2017
Fair
value
Contract
amount
Unrealized
gain (loss)
¥ 9,964
¥ 36
¥ 36
1,141
319
4,397
9,098
446
67
107
2,053
5,075
(10)
37
(211)
(9)
(5)
(0)
1
(27)
53
(10)
37
(211)
(9)
(5)
(0)
1
(27)
53
¥
—
¥ (135)
¥ (135)
83
Toray Industries, Inc.
Hedge accounting is applied
Millions of yen
2018
Hedge accounting method
Type of derivative and principal hedged items
Contract amount Fair value *1, 2
Estimation method for fair value
Deferral hedge
method
Forward foreign exchange contracts:
For trade receivables and trade payables
Buying U.S. dollar
Buying Japanese yen
Selling U.S. dollar
Selling euro
Selling Chinese yuan
Foreign currency swaps:
For long-term bank loans
¥
426
2,512
854
1,202
839
¥ 2 Forward foreign exchange quotes
29
(1)
1
4
Receiving U.S. dollar, paying Korean won
Receiving Japanese yen, paying Korean won
5,994
10,196
(240) The price provided by correspon-
dent financial institutions
(321)
Interest rate swaps:
For long-term bank loans
Floating-rate receipt, fixed-rate payment
54,985
153
Interest rate swaps:
For bonds and long-term bank loans
Floating-rate receipt, fixed-rate payment
Floating-rate receipt, floating-rate payment
Fixed-rate receipt, floating rate payment
364
26,900
40,000
The price provided by correspon-
dent financial institutions
—
Forward foreign exchange contracts:
For forecast transactions denominated
in foreign currencies
Buying U.S. dollar
Buying euro
Buying Chinese yuan
Buying Thai baht
Buying Korean won
Selling U.S. dollar
Selling euro
Selling British pound
Selling Thai baht
Selling Japanese yen
Forward foreign exchange contracts:
For trade receivables and trade payables
Buying U.S. dollar
Buying euro
Buying Chinese yuan
Buying Korean won
Buying Japanese yen
Selling U.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
Foreign currency swaps:
For long-term bank loans
21,996
123,153
367
483
177
9,583
1,422
10
3
30
12,568
91
8
31
7
25,303
3,854
28
73
(183) Forward foreign exchange quotes
(1,343)
(1)
105
(2)
280
38
0
0
0
—
—
Receiving U.S. dollar, paying Japanese yen
131,046
¥
— ¥ (1,479)
Special accounting
method for interest
rate swaps
Allocation method
for forward foreign
exchange contracts
84
Annual Report 2018
Hedge accounting method
Type of derivative and principal hedged items
Contract amount Fair value *1, 2
Estimation method for fair value
Deferral hedge
method
Forward foreign exchange contracts:
For trade receivables and trade payables
Millions of yen
2017
Buying Japanese yen
Selling euro
Selling Chinese yuan
Foreign currency swaps:
For long-term bank loans
¥ 1,397
2,074
652
¥ 15 Forward foreign exchange quotes
(25)
2
Receiving U.S. dollar, paying Korean won
Receiving Japanese yen, paying Korean won
7,028
16,000
0 The price provided by correspon-
(667)
dent financial institutions
Interest rate swaps:
For long-term bank loans
Floating-rate receipt, fixed-rate payment
86,468
221
Interest rate swaps:
For bonds and long-term bank loans
Floating-rate receipt, fixed-rate payment
Floating-rate receipt, floating-rate payment
Fixed-rate receipt, floating rate payment
2,000
26,900
40,000
The price provided by correspon-
dent financial institutions
—
Special accounting
method for interest
rate swaps
Allocation method
for forward foreign
exchange contracts
302 Forward foreign exchange quotes
5
(2)
118
5
1
119
8
0
(1)
0
0
Forward foreign exchange contracts:
For trade receivables and trade payables
(forecast transactions)
Buying U.S. dollar
Buying euro
Buying Chinese yuan
Buying Thai baht
Buying Korean won
Buying Indian rupee
Selling U.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
Selling Thai baht
Selling Japanese yen
Forward foreign exchange contracts:
For trade receivables and trade payables
Buying U.S. dollar
Buying euro
Buying Chinese yuan
Buying Japanese yen
Selling U.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
Selling Thai baht
Foreign currency swaps:
For long-term bank loans
16,655
655
377
900
333
259
18,140
1,176
17
79
61
12
13,044
232
1,518
4
25,972
3,310
24
502
3
Receiving U.S. dollar, paying Japanese yen
Receiving Australian dollar, paying Japanese yen
160,981
3,129
¥
— ¥ 101
—
—
85
Toray Industries, Inc.
Hedge accounting method
Type of derivative and principal hedged items
Contract amount
Fair value *1, 2
Estimation method for fair value
Deferral hedge
method
Forward foreign exchange contracts:
For trade receivables and trade payables
Thousands of U.S. dollars
2018
Special accounting
method for interest
rate swaps
Allocation method
for forward foreign
exchange contracts
Buying U.S. dollar
Buying Japanese yen
Selling U.S. dollar
Selling euro
Selling Chinese yuan
Foreign currency swaps:
For long-term bank loans
$ 4,011
23,653
8,041
11,318
7,900
$ 19 Forward foreign exchange quotes
273
(9)
9
38
Receiving U.S. dollar, paying Korean won
Receiving Japanese yen, paying Korean won
56,441
96,008
(2,260) The price provided by correspon-
dent financial institutions
(3,023)
Interest rate swaps:
For long-term bank loans
Floating-rate receipt, fixed-rate payment
517,750
1,441
Interest rate swaps:
For bonds and long-term bank loans
Floating-rate receipt, fixed-rate payment
Floating-rate receipt, floating-rate payment
Fixed-rate receipt, floating rate payment
3,427
253,296
376,648
The price provided by correspon-
dent financial institutions
—
Forward foreign exchange contracts:
For forecast transactions denominated
in foreign currencies
Buying U.S. dollar
Buying euro
Buying Chinese yuan
Buying Thai baht
Buying Korean won
Selling U.S. dollar
Selling euro
Selling British pound
Selling Thai baht
207,119
1,159,633
3,456
4,548
1,667
90,235
13,390
94
28
(1,723) Forward foreign exchange quotes
(12,646)
(9)
989
(19)
2,637
358
0
0
Selling Japanese yen
282
0
Forward foreign exchange contracts:
For trade receivables and trade payables
Buying U.S. dollar
Buying euro
Buying Chinese yuan
Buying Korean won
Buying Japanese yen
Selling U.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
Foreign currency swaps:
For long-term bank loans
118,343
857
75
292
66
238,258
36,290
264
687
—
—
Receiving U.S. dollar, paying Japanese yen
1,233,955
$ — $ (13,927)
*1 The fair value of interest rate swaps to which a special accounting method is applied is included in the fair value of bonds and long-term bank loans in Note 5.
FINANCIAL INSTRUMENTS of the Notes to the Consolidated Financial Statements because such interest rate swaps are accounted for together with the corre-
sponding bonds and long-term bank loans.
*2 The fair value of forward foreign exchange contracts to which the allocation method is applied, except for forecast transactions, is included in the fair value of trade
receivables, trade payables and long-term bank loans in Note 5. FINANCIAL INSTRUMENTS of the Notes to the Consolidated Financial Statements since such for-
ward foreign exchange contracts are accounted for together with the corresponding trade receivables, trade payables and long-term bank loans.
86
Annual Report 2018 8. RETIREMENT BENEFIT PLAN
The changes in the retirement benefit obligation during the years ended March 31, 2018 and 2017 were as follows:
Retirement benefit obligation at beginning of the year
¥ 196,911
¥ 203,426
$ 1,854,153
Millions of yen
Thousands of
U.S. dollars
2018
2017
2018
Service cost
Interest cost
Actuarial gains and losses
Retirement benefit paid
Other
7,552
1,596
(1,573)
(14,178)
(46)
7,281
1,500
(682)
(14,856)
242
71,111
15,028
(14,812)
(133,503)
(433)
Retirement benefit obligation at end of the year
¥ 190,262
¥ 196,911
$ 1,791,544
The changes in the plan assets at fair value during the years ended March 31, 2018 and 2017 were as follows:
Plan assets at beginning of the year
Expected return on plan assets
Actuarial gains and losses
Contributions
Retirement benefit paid
Return of assets from retirement benefits trust
Other
Plan assets at end of the year
Millions of yen
Thousands of
U.S. dollars
2018
2017
2018
¥ 121,774
¥ 131,360
$ 1,146,648
2,560
5,738
6,602
(9,258)
(9,931)
(197)
2,490
12,871
6,552
(10,077)
(21,632)
210
24,105
54,030
62,166
(87,175)
(93,512)
(1,855)
¥ 117,288
¥ 121,774
$ 1,104,407
The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets as of March
31, 2018 and 2017 for the Company’s and its consolidated subsidiaries’ defined benefit plans:
Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Net liability for retirement benefits in the balance sheets
Millions of yen
Thousands of
U.S. dollars
2018
2017
2018
¥ 96,258
¥ 102,223
$ 906,384
(117,288)
(121,774)
(1,104,407)
(21,030)
(19,551)
(198,023)
94,004
72,974
94,688
75,137
885,160
687,137
Net defined benefit liability
Net defined benefit asset (included in other non-current assets)
101,786
103,459
(28,812)
(28,322)
958,437
(271,299)
Net liability for retirement benefits in the balance sheets
¥ 72,974
¥ 75,137
$ 687,137
87
Toray Industries, Inc.
The components of retirement benefit expense for the years ended March 31, 2018 and 2017 were as follows:
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gains and losses
Amortization of past service cost
Gain on return of assets from retirement benefits trust
Millions of yen
2018
2017
¥ 7,552
¥ 7,281
1,596
(2,560)
622
(4,248)
—
1,500
(2,490)
648
(4,221)
(810)
Thousands of
U.S. dollars
2018
$ 71,111
15,028
(24,105)
5,857
(40,000)
—
Retirement benefit expense
¥ 2,962
¥ 1,908
$ 27,891
In addition to the above, special severance payments of ¥1,442 million ($13,578 thousand) and ¥967 million were recognized for the years
ended March 31, 2018 and 2017, respectively. Contributions to the defined contribution pension plan of ¥6,996 million ($65,876 thou-
sand) and ¥6,297 million were recognized for the years ended March 31, 2018 and 2017, respectively.
The components of remeasurements of defined benefit plans included in other comprehensive income (before tax effect) for the years
ended March 31, 2018 and 2017 were as follows:
Past service cost
Actuarial gains and losses
Total
Millions of yen
Thousands of
U.S. dollars
2018
2017
2018
¥ (4,248)
¥ (4,221)
$ (40,000)
7,960
¥ 3,712
13,320
¥ 9,099
74,953
$ 34,953
The components of remeasurements of defined benefit plans included in accumulated other comprehensive income (before tax effect)
as of March 31, 2018 and 2017 were as follows:
Unrecognized past service cost
Unrecognized actuarial gains and losses
Total
Millions of yen
Thousands of
U.S. dollars
2018
2017
2018
¥
46
¥ (4,202)
$
433
(6,010)
1,950
(56,591)
¥ (5,964)
¥ (2,252)
$ (56,158)
The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2018 and 2017 was as follows:
Bonds
Stocks
Life insurance
Cash and time deposits
Other
Total
2018
2017
11%
50%
26%
10%
3%
12%
52%
26%
8%
2%
100%
100%
The expected return on plan assets has been estimated based on the anticipated allocation to each asset class and the expected long-
term returns on assets held in each category.
The assumptions used in accounting for the above plans were as follows:
Discount rate
Expected rate of return on plan assets
Expected rate of salary increase
88
2018
2017
primarily 0.6% primarily 0.6%
primarily 2.0% primarily 2.0%
primarily 7.5% primarily 7.5%
Annual Report 2018
9. STOCK OPTION PLANS
1. Stock option expense included in selling, general and administrative expenses amounted to ¥338 million ($3,183 thousand) and ¥346
million for the years ended March 31, 2018 and 2017, respectively.
2. Information on stock options issued
The following table summarizes the stock options outstanding as of March 31, 2018.
Company name
Toray Industries, Inc.
Position and number
of grantees
Type and number of shares
to be issued upon exercise
Grant date
Vesting conditions
Vesting period
Exercise period
Company name
Position and number
of grantees
Type and number of shares
to be issued upon exercise
Grant date
Vesting conditions
Vesting period
Exercise period
Company name
Position and number
of grantees
Type and number of shares
to be issued upon exercise
Grant date
Vesting conditions
Vesting period
Exercise period
Company name
No.1 Stock Option Plan No.2 Stock Option Plan No.3 Stock Option Plan
Members of the Board
of the Company
Directors of the Company
28
32
26
32
26
26
Common stock
747,000 shares
844,000 shares
583,000 shares
August 20, 2011
Based on the number of
months that have elapsed
during the vesting period
June 24, 2011-
June 22, 2012
August 21, 2011-
August 20, 2041
August 4, 2012
Based on the number of
months that have elapsed
during the vesting period
June 22, 2012-
June 26, 2013
August 5, 2012-
August 4, 2042
August 10, 2013
Based on the number of
months that have elapsed
during the vesting period
June 26, 2013-
June 25, 2014
August 11, 2013-
August 10, 2043
Toray Industries, Inc.
No.4 Stock Option Plan No.5 Stock Option Plan No. 6 Stock Option Plan
Members of the Board
of the Company
Directors of the Company
25
27
23
31
23
30
Common stock
569,000 shares
358,000 shares
381,000 shares
August 9, 2014
Based on the number of
months that have elapsed
during the vesting period
June 25, 2014-
June 24, 2015
August 10, 2014-
August 9, 2044
August 22, 2015
Based on the number of
months that have elapsed
during the vesting period
June 24, 2015-
June 28, 2016
August 23, 2015-
August 22, 2045
August 20, 2016
Based on the number of
months that have elapsed
during the vesting period
June 28, 2016-
June 27, 2017
August 21, 2016-
August 20, 2046
Toray Industries, Inc.
No.7 Stock Option Plan
Members of the Board
of the Company
Directors of the Company
23
31
Common stock
374,000 shares
August 19, 2017
Based on the number of
months that have elapsed
during the vesting period
June 27, 2017-
June 26, 2018
August 20, 2017-
August 19, 2047
Toray Chemical Korea Inc.
No.2 Stock Option Plan
1
Position and number
Executives of the
of grantees
Company
Type and number of shares
to be issued upon exercise
Grant date
Vesting conditions
Vesting period
Exercise period
Common stock
18,815 shares
July 22, 2008
Holders must be in
continuous employment
from the grant date to the
vesting date of July 21, 2011
July 22, 2008-July 21, 2011
July 22, 2011-July 21, 2018
89
Toray Industries, Inc. The following table summarizes movements of stock options during the year and price information on stock options as of March 31,
2018. The number of stock options are translated into the number of shares.
(1) Number of stock options
Company name
Toray Industries, Inc.
No.1 Stock
Option Plan
No.2 Stock
Option Plan
No.3 Stock
Option Plan
Stock acquisition rights not yet vested
As of March 31, 2017
Granted
Forfeited
Vested
As of March 31, 2018
Stock acquisition rights already vested
As of March 31, 2017
Vested
Exercised
Forfeited
As of March 31, 2018
—
—
—
—
—
242,000
—
24,000
—
218,000
—
—
—
—
—
355,000
—
65,000
—
290,000
—
—
—
—
—
306,000
—
54,000
—
252,000
Company name
Toray Industries, Inc.
No.4 Stock
Option Plan
No.5 Stock
Option Plan
No.6 Stock
Option Plan
Stock acquisition rights not yet vested
As of March 31, 2017
Granted
Forfeited
Vested
As of March 31, 2018
Stock acquisition rights already vested
As of March 31, 2017
Vested
Exercised
Forfeited
As of March 31, 2018
—
—
—
—
—
365,000
—
63,000
—
302,000
—
—
—
—
—
286,000
—
45,000
—
241,000
110,000
—
—
110,000
—
271,000
110,000
51,000
—
330,000
Company name
Toray Industries, Inc.
Toray Chemical Korea Inc.
No.7 Stock
Option Plan
No.2 Stock
Option Plan
Stock acquisition rights not yet vested
As of March 31, 2017
Granted
Forfeited
Vested
As of March 31, 2018
Stock acquisition rights already vested
As of March 31, 2017
Vested
Exercised
Forfeited
As of March 31, 2018
—
374,000
—
265,000
109,000
—
265,000
—
—
265,000
—
—
—
—
—
18,815
—
18,815
—
—
90
Annual Report 2018 (2) Price information
Company name
Exercise price
Weighted average price at exercise
Fair value per share at the grant date
Company name
Exercise price
Weighted average price at exercise
Fair value per share at the grant date
Yen
Toray Industries, Inc.
No.1 Stock
Option Plan
No.2 Stock
Option Plan
No.3 Stock
Option Plan
¥ 1
948.8
513
¥ 1
948.8
394
¥ 1
948.8
546
Yen
Toray Industries, Inc.
No.4 Stock
Option Plan
No.5 Stock
Option Plan
No.6 Stock
Option Plan
¥ 1
948.8
605
¥ 1
948.8
987
Yen
Won
¥ 1
948.8
902
Company name
Toray Industries, Inc.
Toray Chemical Korea Inc.
Exercise price
Weighted average price at exercise
Fair value per share at the grant date
Company name
Exercise price
Weighted average price at exercise
Fair value per share at the grant date
Company name
Exercise price
Weighted average price at exercise
Fair value per share at the grant date
No.7 Stock
Option Plan
No.2 Stock
Option Plan
¥ 1
—
899
W 8,480
19,000
7,067
U.S. dollars
Toray Industries, Inc.
No.1 Stock
Option Plan
No.2 Stock
Option Plan
No.3 Stock
Option Plan
$ 0.01
8.93
4.83
$ 0.01
8.93
3.71
$ 0.01
8.93
5.14
U.S. dollars
Toray Industries, Inc.
No.4 Stock
Option Plan
No.5 Stock
Option Plan
No.6 Stock
Option Plan
$ 0.01
8.93
5.70
U.S. dollars
$ 0.01
8.93
9.29
$ 0.01
8.93
8.49
Company name
Toray Industries, Inc.
Toray Chemical Korea Inc.
Exercise price
Weighted average price at exercise
Fair value per share at the grant date
No.7 Stock
Option Plan
No.2 Stock
Option Plan
$ 0.01
—
8.47
$ 7.97
17.87
6.65
91
Toray Industries, Inc. 3. Estimation method and assumptions used for the per share fair value of stock options
(1) Estimation method
Black-Scholes model
(2) Assumptions used for the per share fair value of stock options
Company name
Expected volatility*1
Expected holding period*2
Expected dividend*3
Risk-free rate*4
Toray Industries, Inc.
No.7 Stock Option Plan
26.630%
7 years
¥14 per share ($0.13)
(0.056)%
*1 The expected volatility is based on actual share prices during 7 years from August 20, 2010 to August 18, 2017.
*2 The expected holding period is calculated based on the service period of past members of the Board.
*3 This is based on the dividend for the year ended March 31, 2017.
*4 The risk-free interest rate is the yield on Japanese government bonds for the period that corresponds to the remaining life of the option.
Because it is difficult to reasonably estimate the number of options that will expire in the future, only the number of options that have
actually forfeited is applied.
10. INCOME TAXES
The statutory tax rate in Japan for the years ended March 31, 2018 and 2017 was 30.9%.
At March 31, 2018 and 2017, significant components of deferred tax assets and liabilities were as follows:
Deferred tax assets:
Accrued bonuses
Depreciation and impairment loss
Net defined benefit liability
Tax loss carryforwards
Unrealized intercompany profits
Investments in subsidiaries and affiliated companies
Other
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserve for advanced depreciation
Depreciation
Undistributed earnings of subsidiaries and affiliated companies
Unrealized gains on securities
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)
Millions of yen
Thousands of
U.S. dollars
2018
2017
2018
¥ 6,134
10,876
32,101
13,473
15,401
21,764
33,481
133,230
(44,992)
88,238
4,571
18,419
19,870
31,776
23,450
98,086
(9,848)
¥
¥ 5,978
10,680
33,396
17,136
16,512
19,593
33,005
136,300
(41,168)
95,132
4,854
22,070
17,749
28,768
25,064
98,505
(3,373)
¥
$
57,759
102,411
302,269
126,864
145,019
204,934
315,264
1,254,520
(423,653)
830,866
43,041
173,437
187,100
299,209
220,810
923,597
(92,731)
$
92
Annual Report 2018
At March 31, 2018 and 2017, deferred tax assets and liabilities were classified as follows:
Deferred tax assets - current
Deferred tax assets - non-current
Deferred tax liabilities - current (included in other current liabilities)
Deferred tax liabilities - non-current
Millions of yen
2018
¥ 25,641
12,902
30
48,361
2017
¥ 26,438
13,513
4
43,320
Thousands of
U.S. dollars
2018
$ 241,441
121,488
282
455,377
The reconciliation of the statutory tax rate and the effective income tax rate for the years ended March 31, 2018 and 2017 was as follows:
Statutory tax rate
Increase (decrease) in taxes resulting from:
Permanent differences
Recognition of certain deferred tax assets by reversal of valuation allowance
Equity in earnings of unconsolidated subsidiaries and affiliated companies
Income taxes for prior periods
Differences of tax rates for overseas consolidated subsidiaries
Undistributed earnings of subsidiaries and affiliated companies
Impact of the Tax Cuts and Jobs Act in the United States
Amortization of goodwill
Other
Effective income tax rate
2018
30.9%
0.7
(0.2)
(2.1)
(0.2)
(3.9)
1.6
(3.2)
2.0
(1.1)
24.5%
2017
30.9%
0.4
(2.4)
(1.7)
(1.7)
(2.9)
1.4
—
1.9
(2.1)
23.8%
On December 22, 2017, the Tax Cuts and Jobs Act was enacted
in the United States, effectively lowering the federal corporate
income tax rate effective for the periods beginning on or after
January 1, 2018. Consequently, the federal corporate income tax
rate applicable to the Company’s consolidated subsidiaries in the
U.S. was reduced from 35% to 21%.
As a result, as of and for the year ended March 31, 2018, net
deferred tax liabilities have decreased by ¥4,822 million ($45,405
thousand), deferred income taxes have decreased by ¥4,838 mil-
lion ($45,556 thousand) and remeasurements of defined benefit
plans have decreased by ¥16 million ($151 thousand).
11. NET ASSETS
The Corporation Law of Japan provides that an amount equal to
10% of the amount to be disbursed as distributions of capital sur-
plus (other than the capital reserve) and retained earnings (other
than the earned reserve) be transferred to the capital reserve
and the earned reserve, respectively, until the sum of the capital
reserve and the earned reserve equals 25% of the capital stock
account. Such distributions can be made at any time by resolution
of the stockholders, or by the Board of Directors if certain condi-
tions are met.
At the June 2018 annual stockholders’ meeting, stockhold-
ers approved the payment of cash dividends of ¥8.00 per share,
aggregating to ¥12,802 million ($120,546 thousand) which has
not been reflected in the accompanying consolidated financial
statements for the year ended March 31, 2018.
93
Toray Industries, Inc.
12. COMMITMENTS AND CONTINGENT LIABILITIES
At March 31, 2018, commitment line of credit to unconsolidated subsidiaries and affiliated companies was as follows:
Total commitment line of credit
Loans receivable outstanding
Balance
Millions of yen
¥ 380
212
¥ 168
Thousands of
U.S. dollars
$ 3,578
1,996
$ 1,582
This commitment does not necessarily imply that the unused amount may be fully utilized.
At March 31, 2018 and 2017, contingent liabilities were as follows:
As guarantors of loans to:
Unconsolidated subsidiaries and affiliated companies
Other
Notes discounted
Export bills discounted
Notes endorsed
Contingent liabilities associated with securitization of receivables
Millions of yen
Thousands of
U.S. dollars
2018
2017
2018
¥ 5,959
3,494
¥ 9,453
¥ 1,922
2,820
1,538
¥ 1,216
¥ 5,774
2,849
¥ 8,623
307
¥
785
1,162
¥ 3,255
$ 56,111
32,900
$ 89,011
$ 18,098
26,554
14,482
$ 11,450
13. LEASES
Finance leases
The Group holds certain buildings, machinery and equipment and intangible assets by leases.
Operating leases
Future minimum lease payments under noncancellable operating leases subsequent to March 31, 2018 and 2017 were as follows:
Due within one year
Due after one year
Total
Millions of yen
2018
¥ 358
952
¥ 1,310
2017
¥ 343
1,193
¥ 1,536
Thousands of
U.S. dollars
2018
$ 3,371
8,964
$ 12,335
94
Annual Report 2018
14. RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses included in cost of sales and selling, general and administrative expenses for the years ended
March 31, 2018 and 2017 were ¥66,229 million ($623,625 thousand) and ¥59,230 million, respectively.
15. LOSS ON IMPAIRMENT OF FIXED ASSETS
The Company and its consolidated subsidiaries grouped assets used for business based on the classification under the management
accounting. For assets to be disposed and idle assets, each asset is considered to constitute a group.
For the year ended March 31, 2018, the carrying value of certain business-use assets for which profitability declined were written
down to the recoverable amount.
As a result, the Company and its consolidated subsidiaries recognized loss on impairment of fixed assets in the amount of ¥3,944 mil-
lion ($37,137 thousand).
The major assets for which a loss on impairment was recognized were as follows:
Location
Use
Classification
Loss on impairment
Millions of yen
Thousands of
U.S. dollars
Esslingen, Germany, etc. Manufacturing facilities for carbon fiber composites Buildings
Machinery and equipment
Construction in progress
Other
¥ 156
893
1,781
94
$ 1,469
8,409
16,770
885
The recoverable amount of the above assets was measured at the net selling value. The net selling value was calculated based on the
appraisal value.
For the year ended March 31, 2017, the carrying value of certain business-use assets for which profitability declined were written down
to the recoverable amount.
As a result, the Company and its consolidated subsidiaries recognized loss on impairment of fixed assets in the amount of ¥2,925 million.
95
Toray Industries, Inc.
16. OTHER COMPREHENSIVE INCOME
The following table presents reclassification adjustments and tax effects allocated to each component of other comprehensive income
for the years ended March 31, 2018 and 2017.
Net unrealized gains (losses) on securities:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Before tax effect
Tax effect
Net unrealized gains (losses) on securities
Net deferred gains (losses) on hedges:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Before tax effect
Tax effect
Net deferred gains (losses) on hedges
Foreign currency translation adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Before tax effect
Tax effect
Foreign currency translation adjustments
Remeasurements of defined benefit plans:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Before tax effect
Tax effect
Remeasurements of defined benefit plans
Share of other comprehensive income of unconsolidated subsidiaries
and affiliated companies accounted for by the equity method:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Share of other comprehensive income of unconsolidated subsidiaries
and affiliated companies accounted for by the equity method
Millions of yen
Thousands of
U.S. dollars
2018
2017
2018
¥ 15,089
¥ 11,004
$ 142,081
(3,400)
11,689
(3,589)
8,100
(1,302)
(104)
(1,406)
409
(997)
(4,471)
(1,375)
(5,846)
26
(3,454)
7,550
(2,419)
5,131
918
15
933
(290)
643
(14,953)
838
(14,115)
1
(5,820)
(14,114)
7,338
13,482
(3,626)
3,712
(1,077)
2,635
(4,383)
9,099
(2,794)
6,305
(32,015)
110,066
(33,795)
76,271
(12,260)
(979)
(13,239)
3,851
(9,388)
(42,100)
(12,947)
(55,047)
245
(54,802)
69,096
(34,143)
34,953
(10,141)
24,812
(1,697)
(73)
(1,938)
(12)
(15,979)
(687)
(1,770)
(1,950)
(16,667)
Total other comprehensive income
¥ 2,148
¥
(3,985)
$ 20,226
96
Annual Report 2018
17. SEGMENT INFORMATION
(Segment information)
1. Outline of reportable segments
The reportable segments of the Group are components for which discrete financial information is available and whose operating results are regu-
larly reviewed by the Board of Directors to make decisions about resource allocation to the segments and assess performance.
The Company identifies the following five segments according to the nature of the products and market for their products.
Reportable segment
Main products
Fibers & Textiles
Performance Chemicals
Filament yarns, staple fibers, spun yarns, woven and knitted fabrics of nylon, polyester, acrylic,
etc.; non-woven fabrics; ultra-microfiber non-woven fabric with suede texture; apparel products
Nylon, ABS, PBT, PPS and other resins and molded products; polyolefin foam; polyester, polyethyl-
ene, polypropylene and other films and processed film products; raw materials for synthetic fibers
and other plastics; fine chemicals; electronic and information materials and graphic materials
Carbon Fiber Composite Materials
Carbon fibers, carbon fiber composite materials and their molded products
Environment & Engineering
Comprehensive engineering; condominiums; industrial equipment and machinery; IT-related
equipment; water treatment membranes and related equipment; materials for housing, building
and civil engineering applications
Life Science
Pharmaceuticals and medical devices
Changes in Reportable Segments
The Company changed the reportable segments from six reportable segments of Fibers & Textiles, Plastics & Chemicals, IT-related
Products, Carbon Fiber Composite Materials, Environment & Engineering and Life Science to five reportable segments by integrating the
Plastics & Chemicals and IT-related Products segments into the Performance Chemicals segment, effective from the year ended March
31, 2018. IT-related equipment business and service-related business such as information processing, previously classified in IT-related
Products, were reclassified to Environment & Engineering and Others, respectively.
Accordingly, the actual figures for the year ended March 31, 2017 are restated to reflect the changes in reportable segments.
2. Measurement of sales, income, assets and other material items of reportable segments
The accounting policies for the reportable segments are the same as those described in Note 1. SIGNIFICANT ACCOUNTING POLICIES.
The figures of segment income are based on operating income. Intersegment sales are determined based on consideration of the mar-
ket price and related information.
Changes in Accounting Estimates
As noted in Note 1. SIGNIFICANT ACCOUNTING POLICIES, in accounting for retirement benefits, the actuarial gains and losses and past
service costs, which were previously amortized primarily over 13 years, are now amortized primarily over 12 years effective from the year
ended March 31, 2018 because of a decrease in the employees’ average remaining years of service.
This change increased segment income in the year ended March 31, 2018 by ¥679 million ($6,394 thousand) in Fibers & Textiles, ¥1,022
million ($9,623 thousand) in Performance Chemicals, ¥349 million ($3,286 thousand) in Carbon Fiber Composite Materials, ¥274 million
($2,580 thousand) in Environment & Engineering and ¥216 million ($2,034 thousand) in Life Science segments.
97
Toray Industries, Inc.
3. Information on sales, income, assets and other material items of reportable segments
Millions of yen
Year ended
March 31, 2018:
Fibers
&
Textiles
Performance
Chemicals
Carbon Fiber
Composite
Materials
Environment
&
Engineering
Life Science
Others
Total
Adjustments
Consolidated
Total
Sales to outside customers
¥ 913,610
¥ 803,310
¥ 177,949
¥ 238,256
¥ 53,803
¥ 17,930 ¥ 2,204,858 ¥
— ¥ 2,204,858
Intersegment sales
1,248
17,902
591
69,453
—
24,456
113,650
(113,650)
—
Total sales
¥ 914,858
¥ 821,212
¥ 178,540
¥ 307,709
¥ 53,803
¥ 42,386 ¥ 2,318,508 ¥ (113,650) ¥ 2,204,858
Segment income
¥ 72,418
¥ 71,363
¥ 20,764
¥ 13,287
¥ 1,942
¥ 2,897 ¥ 182,671 ¥ (26,207) ¥ 156,464
Segment assets
¥ 783,869
¥ 981,288
¥ 466,119
¥ 274,219
¥ 79,015
¥ 65,044 ¥ 2,649,554 ¥ (56,640) ¥ 2,592,914
Depreciation and
amortization
Investment in unconsolidated
subsidiaries and affiliated
companies accounted for
by the equity method
28,186
37,451
21,575
4,719
2,572
1,418
95,921
(106)
95,815
84,079
48,318
8,073
10,930
2,780
7,867
162,047
(240)
161,807
Capital expenditures
48,761
61,362
32,604
5,978
2,768
1,564
153,037
287
153,324
Millions of yen
Year ended
March 31, 2017:
Fibers
&
Textiles
Performance
Chemicals
Carbon Fiber
Composite
Materials
Environment
&
Engineering
Life Science
Others
Total
Adjustments
Consolidated
Total
Sales to outside customers
¥ 856,124
¥ 724,648
¥ 161,608
¥ 212,548
¥ 54,150
¥ 17,392 ¥ 2,026,470 ¥
— ¥ 2,026,470
Intersegment sales
1,001
16,684
519
68,588
2
23,666
110,460
(110,460)
—
Total sales
¥ 857,125
¥ 741,332
¥ 162,127
¥ 281,136
¥ 54,152
¥ 41,058 ¥ 2,136,930 ¥ (110,460) ¥ 2,026,470
Segment income
¥ 66,768
¥ 61,807
¥ 23,963
¥ 11,710
¥ 2,148
¥ 2,625 ¥ 169,021 ¥
(22,128) ¥ 146,893
Segment assets
¥ 722,078
¥ 890,870
¥ 460,968
¥ 233,890
¥ 79,732
¥ 63,650 ¥ 2,451,188 ¥
(54,403) ¥ 2,396,785
Depreciation and
amortization
Investment in unconsolidated
subsidiaries and affiliated
companies accounted for
by the equity method
27,460
33,077
19,967
4,737
2,581
1,365
89,187
(114)
89,073
26,827
44,398
8,563
10,058
2,763
7,727
100,336
(414)
99,922
Capital expenditures
41,143
56,824
46,459
5,053
3,445
1,394
154,318
(2,279)
152,039
98
Annual Report 2018 Thousands of U.S. dollars
Year ended
March 31, 2018:
Fibers
&
Textiles
Performance
Chemicals
Carbon Fiber
Composite
Materials
Environment
&
Engineering
Life Science
Others
Total
Adjustments
Consolidated
Total
Sales to outside customers
$ 8,602,731
$ 7,564,124
$ 1,675,603
$ 2,243,465
$ 506,620
$ 168,832 $ 20,761,375 $
— $ 20,761,375
Intersegment sales
11,751
168,569
5,565
653,983
—
230,282
1,070,151
(1,070,151)
—
Total sales
$ 8,614,482
$ 7,732,693
$ 1,681,168
$ 2,897,448
$ 506,620
$ 399,115 $ 21,831,525 $ (1,070,151) $ 20,761,375
Segment income
$ 681,902
$ 671,968
$ 195,518
$ 125,113
$ 18,286
$ 27,279 $ 1,720,066 $
(246,770) $ 1,473,296
Segment assets
$ 7,381,064
$ 9,240,000
$ 4,389,068
$ 2,582,100
$ 744,021
$ 612,467 $ 24,948,719 $
(533,333) $ 24,415,386
Depreciation and
amortization
Investment in unconsolidated
subsidiaries and affiliated
companies accounted for
by the equity method
265,405
352,646
203,154
44,435
24,218
13,352
903,211
(998)
902,213
791,704
454,972
76,017
102,919
26,177
74,077
1,525,866
(2,260)
1,523,606
Capital expenditures
459,143
577,797
307,006
56,290
26,064
14,727
1,441,026
2,702
1,443,729
Notes:
1) “Others” represents service-related businesses such as analysis, physical evaluation and research.
2) a) “Adjustments” of segment income for the year ended March 31, 2018 of ¥(26,207) million ($(246,770) thousand) includes inter-
segment eliminations of ¥(1,600) million ($(15,066) thousand) and corporate expenses of ¥(24,607) million ($(231,704) thousand).
“Adjustments” of segment income for the year ended March 31, 2017 of ¥(22,128) million includes intersegment eliminations
of ¥(630) million and corporate expenses of ¥(21,498) million. The corporate expenses consist of the headquarters’ research
expenses, etc. that are not allocated to each reportable segment.
b) “Adjustments” of segment assets for the year ended March 31, 2018 of ¥(56,640) million ($(533,333) thousand) includes inter-
segment eliminations of ¥(77,624) million ($(730,923) thousand) and corporate assets of ¥20,984 million ($197,589 thousand).
“Adjustments” of segment assets for the year ended March 31, 2017 of ¥(54,403) million includes intersegment eliminations
of ¥(71,372) million and corporate assets of ¥16,969 million. The corporate assets consist of the headquarters’ research assets,
etc. that are not allocated to each reportable segment.
3) “Segment income” is reconciled to operating income.
(Related information)
Geographic information
Sales to outside customers
Millions of yen
Asia
Year ended March 31, 2018:
Japan
China
Others
North America,
Europe
and other areas
Total
Sales to outside customers
¥ 1,005,260
¥ 386,520
¥ 421,456
¥ 391,622
¥ 2,204,858
Year ended March 31, 2017:
Sales to outside customers
Year ended March 31, 2018:
Sales to outside customers
Millions of yen
Asia
Japan
China
Others
North America,
Europe
and other areas
Total
¥ 976,839
¥ 335,469
¥ 376,134
¥ 338,028
¥ 2,026,470
Thousands of U.S. dollars
Asia
Japan
China
Others
North America,
Europe
and other areas
Total
$ 9,465,725
$ 3,639,548
$ 3,968,512
$ 3,687,589
$ 20,761,375
Sales amounts are allocated to countries or regions according to the customers’ location.
99
Toray Industries, Inc.
Property, plant and equipment, net
Millions of yen
Asia
North America, Europe
and other areas
March 31, 2018:
Japan
Republic of Korea
Others
U.S.A.
Others
Total
Property, plant and equipment, net
¥ 326,679
¥ 199,721
¥ 153,741
¥ 123,042
¥ 123,846
¥ 927,029
March 31, 2017:
Japan
Republic of Korea
Others
U.S.A.
Others
Total
Property, plant and equipment, net
¥ 316,310
¥ 186,259
¥ 155,441
¥ 122,890
¥ 100,534
¥ 881,434
Millions of yen
Asia
North America, Europe
and other areas
March 31, 2018:
Japan
Republic of Korea
Others
U.S.A.
Others
Total
Property, plant and equipment, net
$ 3,076,073
$ 1,880,612
$ 1,447,655
$ 1,158,588
$ 1,166,158
$ 8,729,087
Thousands of U.S. dollars
Asia
North America, Europe
and other areas
(Information about loss on impairment of fixed assets by reportable segments)
Year ended
March 31, 2018:
Loss on impairment
Year ended
March 31, 2017:
Loss on impairment
Year ended
March 31, 2018:
Loss on impairment
Millions of yen
Fibers
&
Textiles
¥ 24
Performance
Chemicals
Carbon Fiber
Composite
Materials
Environment
&
Engineering
Life Science
Others
Elimination
&
Corporate
Total
¥ 899
¥ 2,924
¥ 36
¥ 61
¥ —
¥ —
¥ 3,944
Millions of yen
Fibers
&
Textiles
Performance
Chemicals
Carbon Fiber
Composite
Materials
Environment
&
Engineering
Life Science
Others
Elimination
&
Corporate
Total
¥ 1,095
¥ 877
¥ —
¥ 15
¥ 938
¥ —
¥ —
¥ 2,925
Thousands of U.S. dollars
Fibers
&
Textiles
$ 226
Performance
Chemicals
Carbon Fiber
Composite
Materials
Environment
&
Engineering
Life Science
Others
Elimination
&
Corporate
Total
$ 8,465
$ 27,533
$ 339
$ 574
$ —
$ —
$ 37,137
(Information about amortization and balance of goodwill by reportable segments)
Millions of yen
Year ended
March 31, 2018:
Amortization of goodwill
Balance of goodwill
Fibers
&
Textiles
Performance
Chemicals
Carbon Fiber
Composite
Materials
Environment
&
Engineering
Life Science
Others
Elimination
&
Corporate
Total
¥ 1,289
7,440
¥ 4,186
15,094
¥ 2,613
13,474
¥ 777
4,138
¥ —
—
¥ —
—
¥ —
—
¥ 8,865
40,146
Millions of yen
Year ended
March 31, 2017:
Amortization of goodwill
Balance of goodwill
Fibers
&
Textiles
Performance
Chemicals
Carbon Fiber
Composite
Materials
Environment
&
Engineering
Life Science
Others
Elimination
&
Corporate
Total
¥ 1,208
8,657
¥ 4,181
17,966
¥ 2,768
16,842
¥ 323
2,314
¥ —
—
¥ —
—
¥ —
—
¥ 8,480
45,779
Year ended
March 31, 2018:
Amortization of goodwill
Balance of goodwill
Fibers
&
Textiles
Performance
Chemicals
Carbon Fiber
Composite
Materials
Environment
&
Engineering
Life Science
Others
Elimination
&
Corporate
Total
$ 12,137
70,056
$ 39,416
142,128
$ 24,605
126,874
$ 7,316
38,964
$ —
—
$ —
—
$ —
—
$ 83,475
378,023
Thousands of U.S. dollars
100
Annual Report 2018
18. AMOUNTS PER SHARE
Basic net income per share is computed based on the net income
attributable to owners of parent available for distribution to stock-
holders of common stock and the weighted-average number of
shares of common stock outstanding during the year.
Diluted net income per share is computed based on the net
income attributable to owners of parent available for distribution
to the stockholders and the weighted-average number of shares
of common stock outstanding during the year after giving effect
to the dilutive potential of shares of common stock to be issued
Net income attributable to owners of parent:
Basic
Diluted
Cash dividends applicable to the year
Net assets
19. RELATED PARTY TRANSACTIONS
Corporate pension for employees
Year ended March 31, 2018
No items to be reported.
upon the exercise of warrants and stock acquisition rights.
Amounts per share of net assets are computed based on the
net assets available for distribution to the stockholders and the
number of shares of common stock outstanding at year end.
Cash dividends per share represent the cash dividends pro-
posed by the Board of Directors applicable to the respective
years together with any interim cash dividends paid.
Yen
2018
2017
U.S. dollars
2018
¥ 59.97
59.90
15.00
681.92
¥ 62.17
62.10
14.00
638.64
$ 0.56
0.56
0.14
6.42
Year ended March 31, 2017
Name
Category
Relationship
Description of the transaction
Amount of the transaction
Retirement benefit trust
Corporate pension
Plan assets under retirement benefit accounting
Return of part of assets
¥21,632 million
20. ADDITIONAL INFORMATION
Planned Share Purchase of TenCate Advanced Composites
Holding B.V.
(2) Name of the seller
Koninklijke Ten Cate B.V.
On March 14, 2018, the Company reached an agreement with
Koninklijke Ten Cate B.V. to purchase the entire share of its sub-
sidiary TenCate Advanced Composites Holding B.V. (TCAC).
(3) Outline of the acquired company
Name: TenCate Advanced Composites Holding B.V.
Business: Manufacture and distribution of carbon fiber compos-
(1) Objective of share purchase
TCAC is a prepreg manufacturer with its main manufacturing
bases in Europe and the U.S. and has a track record of widely
supplying thermoplastic prepreg and high heat resistance ther-
moset resin materials. Especially, TCAC is a global leading com-
pany of carbon fiber intermediate materials using thermoplastic
resins. The acquisition is expected to generate significant syner-
gies by combining the product lineup in which TCAC specializes
with the broad range of carbon fiber as well as polymer technol-
ogies, which are the Company’s strengths. Combining the two
companies’ distribution channels, the Company can offer a wider
product lineup to the customers. The Company will respond
swiftly to the expansion of the market for small-sized aircraft and
expand the business further for industrial use applications includ-
ing automobiles in the medium- to long-term.
ite materials
Size of business (year ended December 31, 2017)
Revenues: EUR 197 million
Total assets: EUR 148 million
(4) Number of shares to be purchased, purchase price and
percentage ownership after purchase
Shares to be purchased: 100 shares
Aggregate purchase price: EUR 930 million
Percentage ownership after purchase: 100%
Note: The purchase price includes net debt in addition to the
share purchase price. The purchase price will be adjusted
in accordance with any adjustments stipulated in the share
purchase agreement.
(5) Methods for fundraising
Own funds, borrowings, bonds, etc.
101
Toray Industries, Inc.
102
Annual Report 2018 Investor Information
(As of March 31, 2018)
Common Stock:
Issued:
1,600,271,569 shares
(excluding treasury stock)
Number of Stockholders: 155,653
Annual General Meeting:
The annual general meeting of stockholders is
normally held in June in Tokyo.
Listings:
Common stock is listed on the Tokyo Stock
Exchange.
Independent Auditors:
Ernst & Young ShinNihon LLC
Transfer Agent:
Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi Chiyoda-ku, Tokyo
100-0005, Japan
Cash Dividends Per Share
Years ended March 31
Total for the year
Interim
Principal Stockholders
FY 2018
FY 2017
¥15.00
¥14.00
7.00
7.00
Thousands of
shares
Percentage of
shares held
The Master Trust Bank of Japan, Ltd. (Trust Account) 117,902,200
Japan Trustee Services Bank, Ltd. (Trust Account)
91,157,200
Nippon Life Insurance Co.
Mitsui Life Insurance Co., Ltd.
State Street Bank West Client – Treaty 505234
71,212,250
35,961,000
31,680,351
Japan Trustee Services Bank, Ltd. (Trust 5 Account)
29,035,900
Sumitomo Mitsui Banking Corporation
28,522,000
Japan Trustee Services Bank, Ltd. (Trust 4 Account)
25,510,000
Japan Trustee Services Bank, Ltd. (Trust 7 Account)
21,638,700
Japan Trustee Services Bank, Ltd. (Trust 1 Account)
21,546,300
7.37
5.70
4.45
2.25
1.98
1.81
1.78
1.59
1.35
1.35
* Percentage of shares held is calculated excluding 31,209,834 shares of treasury stock.
Stock Price Range
Composition of Stockholders (Thousands of shares)
(Yen)
1,500
1,200
900
600
300
0
2013
April
2014
April
2015
April
2016
April
2017
April
2018
March
Treasury Stock
31,210
1.91%
Individuals
and Others
306,751
18.80%
Companies and
Individuals in
Foreign Countries
520,655
31.91%
Financial
Institutions
624,763
38.29%
Securities
Companies
12,754
0.78%
Other
Japanese
Companies
135,348
8.30%
Corporate Data
(As of March 31, 2016)
Toray Industries, Inc.
Head Office
Nihonbashi Mitsui Tower, 1-1,
Nihonbashi-Muromachi 2-chome,
Chuo-ku, Tokyo 103-8666, Japan
Telephone: 81 (3) 3245-5111
Facsimile: 81 (3) 3245-5054
www.toray.com
URL:
Established:
January 1926
Paid-in Capital:
¥147,873,030,771
Number of Employees:
45,762
Parent company:
7,625
Japanese subsidiaries: 10,590
Overseas subsidiaries: 27,547
103
Toray Industries, Inc.
Printed in Japan