Fiscal 2018 Performance Fiscal 2018 Performance Fiscal 2018 Performance Fiscal 2018 Performance Production Sites Production Sites Production Sites Production Sites Sales of aramid fibers expanded mainly for automotive and infrastructure-related applications Sales of para-aramid fiber Twaron for tires and other automotive applications and optical fiber applications were firm. In the meta- aramid fiber Teijinconex, sales related to automobiles such as turbo- charger hoses, protective clothing and industrial materials remained strong. Aramid fibers possess outstanding features such as high strength and heat resistance. They can be divided into two broad categories: para-aramid fibers and meta-aramid fibers. Para-aramid fibers are particularly outstanding in terms of strength and heat resistance. Accordingly, they are mainly used as reinforcement for tires and friction material for automobile brake pads, as well as reinforcement for optic fiber cables. The market for para-aramid fibers is expected to grow at an annual rate of 3%. Meta-aramid fibers have outstanding long-term heat resis- tance and flame retardant properties, enabling them to be used in heat-resistant filters and special environment uniforms such as those worn by firefighters, as well as other industrial materials where heat resistance is required. With ten times the strength and only one-quarter of the weight of steel, carbon fiber is attract- ing interest as an environmentally friendly material that will contribute to CO2 emissions cuts and provide other benefits. This growing interest has driven expansion in demand particularly for aerospace applications and industrial applications. The Teijin Group’s TENAX carbon fibers boast a high global market share, mainly in aircraft applications. Moreover, against the backdrop of tighter environmental regulations in recent years, carbon fiber is expected to see rapid growth in applications as automotive components. With an impact resistance 200 times greater than glass, and only half the weight, polycarbonate (PC) resins offer outstanding heat resistance, transparency and weatherability. These resins are now widely used in the markets of the electronics and automotive fields, with market growth projected at an annual rate of about 3–4%. Teijin has a strong presence in Asia, mainly in the electronics field. The reason is that we have materials technologies that comprise compounds and are developing specialty polymers, and we also have large-scale molding and coating technologies. Polycarbonate films and sheets are also used in products that leverage their functionality due to factors including sophisticated optical control technologies. Polyester films feature balanced physical properties in terms of such characteristics as strength, heat resistance, and optical properties, together with outstanding cost performance. For these reasons, polyester films are used in a wide array of applications. Our proprietary development polyethylene naphthalate (PEN) is a highly functional film used in high-density data backup tapes, electronic materials, and the automotive field. Sales for use in aircraft grew steadily The sales volume of carbon fiber TENAX has increased for pressure vessel applications along with steady sales for aircraft use appli- cations. However, the rise in raw material and fuel prices pushed down profits in addition to slight stagnation seen through the market impact in compound applications. Sales mix improved for polycarbonate resin In main polycarbonate resin, despite a shift in sales to high-value- added products, profits were pushed down by the slowdown in demand for polycarbonate resin and the decline in market prices, which have progressed rapidly since the second quarter. Sales expanded for use in smartphones and automotive electronics Sales of Purex, a mold release film for processes such as MLCC (Multilayer Ceramic Capacitors), a related material for smartphones and electronic parts for automobiles, continued to expand. Sales of PEN films for automobiles and electronic components remained strong. Para-aramid fibers ▶ The Netherlands, Japan Meta-aramid fibers ▶ Japan, Thailand Polycarbonate resins ▶ Japan, China Polycarbonate films and sheets ▶ Japan Polyester films ▶ Japan, Indonesia Carbon fibers ▶ Japan, Germany Global share of para-aramid fibers Twaron and Technora Among the Approx. 50% (1st) Global share of carbon fibers Among the top class Polycarbonate resins Among the top class in Asia Meta-aramid fiber Teijinconex for firefighting uniforms in Japan Top share Providing high added value through Teijin’s proprietary technologies MATERI ALS Expanded Teijin’s proprietary PEN film products to automotive applications Strengths in processing technologies Multi-layer film formation technologies and surface processing * Plans to transfer the film business company to Toyobo Co., Ltd. effective October 1, 2019 Contributing to energy conservation and CO2 emissions cuts through weight reduction SECTION 3 BUSINESS STRATEGY S W O T Materials Business Field We are promoting the provision of materials and the development of composite materi- als that combine the characteristics of these materials in order to respond appropriately to the needs of the renewal of infrastructure, which is the social foundation. We are also responding to requests for lower fuel consumption and increased awareness of disaster prevention accompanying advanced environmental laws and regulations. Yasumichi Takesue Senior Executive Officer, Member of the Board President, Materials Business of Teijin Group Aramid Fibers Carbon Fibers Resin and Plastics Processing Films* EBITDA (Billions of yen) ROIC (based on operating income) (%) SWOT Analysis (Right scale) ⎯ ROIC (based on operating income) (Left scale) ■ EBITDA (FY) ’19 (Outlook) ’18 ’17 0 20 40 60 80 0 5 10 15 20 Net Sales (Billions of yen) 0 200 400 600 800 (FY) ’19 (Outlook) ’18 ’17 Operating Income (Billions of yen) 0 10 20 30 40 (FY) ’19 (Outlook) ’18 ’17 Early profit contribution of new business Fundamental technologies to create new materials and products, composite technologies of various materials and a customer-oriented business platform starting from CSP* Increasing needs of material for mobility, weight reduction, high durability and disaster prevention against the background of environmental issues Changes in material needs due to industrial structural changes and intensifying competition across industries Business Opportunities Business Opportunities Business Opportunities Business Opportunities * Continental Structural Plastics Holdings Corporation TEIJIN LIMITED INTEGRATED REPORT 2019 68 TEIJIN LIMITED INTEGRATED REPORT 2019 69