Toray Mid term Management Plan 2010

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Toray Mid term Management Plan 2010

  1. 1. Long-term Corporate Vision “AP-Growth TORAY 2020” andMedium-term Management Program “Project AP-G 2013” February 3, 2011 Akihiro Nikkaku President, COO Toray Industries, Inc. 0
  2. 2. ContentsResults of Medium-term Management Program “Project IT-II” (P2~P4)Long-term Corporate Vision “AP-Growth TORAY 2020” (P5-P10)Medium-term Management Program “Project AP-G 2013 (P11-P36)<Reference> Medium-term Business Strategies by Segment (P37-P44) 1
  3. 3. Results ofMedium-term Management Program “Project IT-II” 2
  4. 4. Results of Major Projects Under “IT-II” 1. Total Cost Reduction (TC Project : Total Cost Reduction Project) TC reduction target <FY Mar/09 budget→FYMar/11> <Billion yen> Target Forecast Laid the base to return to the growth track Reduction of fixed costs 60 60 Reduction of variable costs 40 42 Total 100 102 2. Action Program for Survival (APS Project : Action Program for Survival) Maximize earnings by “ensuring sales through every possible effort” Increase sales volume using optimal pricing strategies (increasing market shares in priority fields, etc.) %Æ Improve product spread through optimal price setting and reduction effects of variable costs, etc. Establish reasonable forecasts for the scale of businesses in the medium term, and optimize the scale and systems for marketing and sales, production, and development functions %Æ Streamline facilities of LCD color filters business, etc. 3. Action Program for Growth (APG Project : Action Program for Growth) Solution proposal to economical-growth constraints with Toray Group products and technologies %ÆEnter into battery separator film business %Æ Establish joint venture with Daimler AG for manufacturing and marketing of carbon-fiber based automobile parts %Æ Establish E&E Center to promote technology development for Green Innovation Businesses, etc. Leveraging growth potential of the enormously growing Asian market (especially in China) %ÆAlliance with local enterprises, enhance and expand production bases Improvement of Cash Flows %ÆReduction of capital expenditures and working capitals (inventories, etc.) 3
  5. 5. Trends in Consolidated Operating Income Billion yen140.0 IT-2010 IT-II NT-II120.0 102.4 103.4100.0 93.0 96.0 NT-21 81.1 80.0 60.0 56.8 51.2 40.1 40.0 33.0 36.0 18.8 20.0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 FY (Forecast) 4
  6. 6. Long-term Corporate Vision “AP-Growth TORAY 2020”- Global Growth through Advanced Materials and Green Innovation - 5
  7. 7. Basic Principle of AP-Growth TORAY 2020 Toray Group Corporate group that continually increases revenues and profits Corporate group that proactively contributes to social development and environmental stewardship Corporate group that provides high values to all stakeholders Realization of Toray Group Corporate Philosophy Contributing to society through the creation of new value with innovative ideas, technologies and products” 6
  8. 8. Business Categories and Strategies Foundation Businesses Fibers & Textiles Plastics & Chemicals%ÆExpand businesses in growth business fields and regions and steadily increase revenues Global Growth through Advanced Materials and profits%ÆImprove products and business models to expand earnings and allocate management resources to growth business fields Steadily drive business expansion and profit growth of the Group and Green Innovation Strategically Expanding Businesses IT-related Products Carbon Fiber Composite Materials%ÆFocus on growth business fields including information- telecommunication, automobiles and aircraft, and energy saving and new energy%Æ Allocate management resources with priority%Æ Implement measures including M&A and business alliance Drive revenue and profit growth over the medium- and long-term and achieve strategic and aggressive business expansion Intensively Developing and Expanding Businesses Environment & Life Science Engineering%ÆAllocate management resources with priority%Æ Develop and expand businesses by measures including M&A and business alliance Develop as the next driver for revenue and profit growth to follow IT-related products and carbon fiber composite materials 7
  9. 9. Prospects of Business Structure Reform To evolve into a corporation that continually increases revenues and profits, Toray Group will implement business structure reforms based on the strategy described below. Expand Business Revenue and Profit %ÆSteadily expand revenues and profits through Foundation Businesses %Æ Bolster the earnings of Strategically Expanding Businesses through focused allocation of management resources Position Foundation Businesses and Strategically Expanding Businesses as the drivers of revenue and profit growth. Nurture Intensively Developing and Expanding Businesses to be the next profit base Expand Global Business %Æ Pursue growth in global markets in every segment to expand the net sales ratio of growth countries and regions from 34% to 50% Leverage global business opportunities in growth countries and regions Expand Green Innovation Businesses %ÆPromote the development of products and technologies that will provide solutions to global environmental issues and energy and resource issues Expand net sales of Green Innovation Businesses to 1 trillion yen around 2020 8
  10. 10. LCM (Life Cycle Management)Environmental Management LCM Environmental Management Toray introduced LCM as a rationale to establish business strategies and management strategies based on an analysis of the balance of environmental load and costs from the standpoint of the entire lifecycle of products, technologies and services in all the industrial and business activities. Balance Environmental load Environmental load and Sustainable Sustainable Reduction Reduction Growth Growth For the development of a viable engagement 9
  11. 11. Image of Financial Indicators (FYR) <Billion yen> FY 2010 Around 2015 Around 2020 (Forecast) (Image) (Image) Net Sales 1,530 2,000 3,000 Foundation Businesses 945 (62%) 1,100 (55%) 1,500 (50%) Strategically Expanding Businesses Intensively Developing and 585 (38%) 900 (45%) 1,500 (50%) Expanding Businesses Growth Countries and Regions 520 (34%) 900 (45%) 1,500 (50%) Green Innovation Businesses 370 (24%) 600 (30%) 1,000 (33%) ( ) net sales ratio Operating Income 96 180 300Operating Income to Net Sales ratio 6.3% 9% 10% ROA about 6% 9% 10% ROE about 9% 12% 13% ROA=Operating Income / Total Assets ROE=Net Income / Shareholders’ Equity 10
  12. 12. Medium-term Management Program “Project AP-G 2013” A New Growth Track through Reform and Proactive Management 11
  13. 13. Roadmap to AP-G2013 Long-term Vision AP-New TORAY 21 AP-Innovation TORAY 21 AP-Growth TORAY 2020Mid-term Business Strategies IT-2010 AP-G 2013 NT-!a IT-II Reform and Management with Proactive NT21 Offensive Innovation Reforms with Management Corporate Management and Creativity No Exception Structure PosturesReinforcement, -Challenge for -A New Growth Defensive Further Growth - -Overcoming Track - -Establish Management Economic Foundation Postures Crisis - for Further Growth - -Breakaway from Crisis - 2002 2004 2006 2009 2011 2014 April April October April April March 12
  14. 14. Key Principle and Basic Strategies Key Principle Expand businesses in growth business fields and regions Establish a robust business footing by cost reductions Basic Strategies Basic Strategies 1. Business expansion in growth 5. R&D investment strategy business fields 2. Business expansion in growth 6. Developing and securing human countries and regions resources 3. Capital investment strategy 7. Bolstering competitiveness 4. M&A and business alliance 8. Ongoing promotion of business strategies structure reform 13
  15. 15. Basic Strategy 1Business Expansion in Growth Business Fields For the four major growth business fields, Toray Group will expand its business by bolstering development of advanced materials and cross-sectional business approach. Regarding businesses related to environmental issues, Toray Group will comprehensively and aggressively expand its Green Innovation Businesses. Environment, Water-related Information, Telecommunications and Energy and Electronics%Æ Aggressively expand carbon fiber composite %Æ Expand business in the electronic device materials to be the mainstay of Green Innovation market including cell phones, flat panel TVs Businesses and smartphones%Æ Expand materials for use in batteries and next- %Æ Accelerate development and sales expansion of generation power sources innovative products through vertically integrated%Æ Global expansion of the water treatment business tie-ups with customers%Æ Expand applications for non-petrochemical-based %Æ Improve competitiveness by integrating fibers, resins and films businesses from resin and film materials to parts Automobiles and Life Science Aircraft%ÆExpand new applications of carbon fiber composite materials and high-performance resins that can provide energy efficiencies through weight reduction and reduce greenhouse gas emissions %ÆExtend the drug discovery business model %Æ Develop and market high value-added%Æ Develop products to leverage expanding markets medical materials for next-generation power trains and automotive %Æ Create innovative bio-tools by combining electronics biotechnology and nanotechnology%Æ Aggressively expand investment in carbon fiber composite materials 14
  16. 16. Basic Strategy 2Business Expansion in Growth Countries and Regions Leverage the Group’s management resources efficiently to expand business smoothly and promptly in Asia and emerging countries.China Republic of Korea Fibers & Textiles, Fibers & Textiles, Plastics & Chemicals Plastics & Chemicals%ÆEstablish vertically integrated businesses extending %ÆUpgrade existing business structures from filament yarn, woven and knitted fabrics to IT-related Products garments Carbon Fiber Composite Materials%Æ Increase production capacity of polypropylene spunbond to enhance the supply system %Æ Expand IT-related materials through%Æ Bolster production base for resin compounds collaboration with customers and start-up chemical businesses (including DMSO, %Æ Embark on full-scale carbon fiber business etc.) ASEAN IT-related Products Fibers & Textiles, Plastics & Chemicals%ÆImprove and expand the supply system of display materials %Æ Upgrade products at each existing local companies and develop new business models Environment & Engineering which leverage Free Trade Agreements and Economic Partnership Agreements%ÆStart-up full-scale production of reverse %Æ Expand businesses in growth business fields such osmosis membranes at TBMC and strengthen as automotive applications the sales structure Emerging Countries %ÆStrategically prioritize investment in India, Mideast, Brazil and others 15
  17. 17. Basic Strategy 3, 4Strategies for Capital Investment, M&A and Business Alliance Capital Investment Strategy 350 billion yen of capital investment planned in 3 years period from FY 2011 Maintenance / Improvement Japan/US/Europe (1/3) (50%) Growth and Asia Expansion (50%) (2/3) 60% out of capital expenditures to Growth 50% out of capital expenditures shall be and Expansion shall be allocated to allocated to Asian businesses green innovation businesses M&A and Business Alliance Strategies %Æ To expedite business expansion, make strategic decisions and actions on priority themes including M&A schemes considered on a business unit basis as well as those promoted from a group-wide perspective %Æ M&A funds will be held separate from capital expenditures and be invested based on strategic decisions 16
  18. 18. Basic Strategy 5 R&D Investment Strategy Increase R&D investment focusing on Green Innovation 160 billion yen in 3 years period Major Issues from FY 2011 1. Strengthen R&D in green innovation-related themes <Major Themes> ①High-efficiency in energy use CFRP for lightening of vehicles and aircraft, etc. ②New energy Materials, parts for three major batteries (solar cells, fuel cells, lithium ion battery), etc. 50% ③Bio-based polymers Conversion to bio-based polymers such as polylactic acid, PET, etc. ④Water treatment High-performance RO, UF / MF membranes, etc. 2. Promote open innovation 3. Intensify global research and development 50% out of R&D expenses shall be 4. Strengthen basic and fundamental research allocated to research and development related to green innovation 17
  19. 19. Promote Open Innovation Promote integrated co-development with customers : comprehensive ability and speed 0 Development Base for Automobiles and Aircraft0 Main 0Main Development Base for Environment and Energy0 A&A Center E&E Center Global Environment Business Global Environment Business Strategic Planning Dept. Strategic Planning Dept.Automotive MaterialAutomotive MaterialStrategic Planning Dept. Strategic Planning Dept. Environment and Energy Environment and Energy Automotive Center Automotive Center Development Center Development Center Collaborative Advanced Composite Advanced Composite Collaborate with environmental Collaborative Strategy, Project Center Center energy-related institutions and Strategy, Project Japanese and overseas Plastics Application Plastics Application subsidiaries and affiliated Technology Development Technology Development companies Center Center Technical Marketing Collaboration with (Reflect theme proposal, product design of the market) each laboratories Japanese and overseas Planning, Project Management subsidiaries and affiliated Parts, product Verified companies development evaluation Public Institutions Public Institutions Leading Leading Market (Customers) Market (Customers) Academia Academia (National Projects) (National Projects) Companies Companies 18
  20. 20. Intensify Global Research and Development Global implementation of Business Expansion in Growth Business Fields and Regions Global implementation of Business Expansion in Growth Business Fields and Regions (Number of R&D staff on a global basis :: about 3,300) (Number of R&D staff on a global basis about 3,300) Develop collaborative research and technological development with operational bases in each country Global development of Intellectual Property Strategy Advanced compositeEuropeEurope materials, films, Republic Republic IT-related films, fibers & textiles, etc. of Korea of Korea electronics materials, etc. R&D base Japan Japan R&D base Lyon Troy Seattle Milan Abidos Seoul, Gumi R&D base San Francisco Rhode Island in Japan Decatur Nantong, Films, advanced Singapore Water treatment Shanghai Singapore US US composite materials, resins, etc. Fibers & Textiles, resins & R&D base China China chemicals, films, R&D base electronics materials, water treatment, etc. Singapore R&D base 19
  21. 21. Developing and Securing Human Resources Developing and Securing Human Resources <Strategic Direction> 1. Develop and secure personnel with high aspirations and global mind-set 2. Secure world-leading R&D and technological capabilities 3. Realize strong operational competency to beat international competition %Æ Develop and secure competent employees who will lead the creation and implementation of key strategies 0ûRedesign Toray Management School for capable managers to develop into future executives %Æ Employ and foster employees internationally that can excel globally regardless of national boundaries 0ûDevelop and promote local personnel and appoint competent personnel to executives and senior managers 0ûStrategically increase global recruitment 0ûEnrich internationalization training (studying-abroad program for Japanese employees and upgrading of training in Japan for local staffs, etc.) 20
  22. 22. Basic Strategy 7, 8Bolstering Competitiveness,Ongoing Promotion of Business Structure Reform Bolstering Competitiveness Undertake efforts to bolster corporate competitiveness to establish a robust business footing %ÆMaintain fixed costs at an appropriate level and radically reduce variable costs (over 70 billion yen) %Æ Strengthen operational strength at manufacturing sites and production technology to enable production of world-class quality and competitiveness %Æ Comprehensively optimize and drive efficiencies in administrative and indirect functions %Æ While maintaining capital investment for business expansion, increase the efficiency of working capital via thorough inventory management, in order to improve cash flows %Æ Improve capital efficiency (ROA, ROE, etc.) %Æ The guideline figure for D/E ratio is 1 Ongoing Promotion of Business Structure Reform %ÆContinue to implement structural reform of loss-generating and low-profit businesses in Japan and overseas %Æ For Foundation Businesses in Japan, maintain and bolster foundations for production and marketing and sales by shifting offerings to advanced products, strengthening collaboration with existing customers, improving market share and continuing to strengthen corporate structure %Æ Steadily increase profits in Strategically Expanding Businesses by identifying issues such as developing new products and applications and strengthening cost competitiveness %Æ Implement structural reforms including integration and reorganization of group companies in Japan to strategically expand businesses and enhance business synergies 21
  23. 23. Trends in Cash Flows and Inventories Billion yen Trends in Consolidated Cash Flows s sh flow 200.0 free ca l p ositive ota Ensure three years t 150.0 in 100.0 50.0 0 -50.0 -100.0 -150.0 -200.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 FY Cash flows from operating activities Cash flows from investment activities Free cash flows Inventory Amount Inventory Days <Bar chart, Billion yen> Trends in Consolidated Inventories <Line chart, days> 350.0 120 Keep th 100 300.0 invento e inventory am ry days to the a ount and dequate level 80 250.0 60 40 200.0 20 150.0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 FY 22
  24. 24. Group-wide Projects Green Innovation Business Expansion (GR) Project Toray Group will use its strength in chemistry to develop “Green Innovation Businesses” on a global scale to provide solutions to the environmental issues and energy and resource issues, towards the independence from petroleum resources and the realization of a low-carbon society. Asia and Emerging Country Business Expansion (AE) Project Toray Group will seek to aggressively develop and expand businesses in Asia and emerging countries in other regions that are expected to realize major economic growth. Total Cost Reduction (TC-II) Project Toray Group will continue cost reduction initiatives to reinforce the robust business footing required to achieve its objective of becoming a corporate group that continually increases revenues and profits. 23
  25. 25. Green Innovation Businesses Expansion (GR) Project Toray Group will use its strengths in chemistry to develop Green Innovation Businesses on a global scale %Æ Expansion of Green Innovation Businesses Trends in Net Sales of Green Innovation Businesses Toray Group will aim to contribute to global issues including the global environment and energy and Billion yen resource 3,000.0 3,000 %Æ Development of Green Innovation Businesses 2,500 Toray Group will develop technologies and 2,000.0 businesses related to new materials and 2,000 1,800.0 1,649.7 components that will contribute to solutions to 1,530.0 global environmental issues (solar battery cell 1,500 encapsulant materials, electrolyte membranes for fuel cells, lithium ion battery electrode materials, 1,000 etc.) 500 1,000.0 %Æ Reduction of Greenhouse Gas (GHG) 214.0 370.0 500.0 600.0 - Toray Group will promote development of technologies 0 FY20 FY2010 FY2013 Around 2015 Around 2020 and products, and increase sales with aim to reduce (Actual) (Forecast) (Target) (Image) (Image) GHG emissions achieved through the use of its products to 200 million tons per year around 2020 - Toray Group will aim to reduce 25% of GHG emissions Net sales ratio of Green Innovation Businesses in manufacturing processes by FY2020 over FY1990 in its operations in Japan FY2007 FY2010 FY2013 Around 2015 Around 2020 (Actual) (Forecast) (Target) (Image) (Image) 13% 24% 28% 30% 33% Toray Group aims to expand its Green Innovation Businesses to 1 trillion yen around 2020 24
  26. 26. Strategic Fields of Green Innovation Businesses (1)<Carbon Fiber Composite Materials> Expansion of Environment, Energy-related Applications Clean Energy Light-weight, Energy-saving CNG tank Wind power blade Aircraft Automobile Toray Group Production Capacity Recommencement of the expansion of high-performance Recommencement of the expansion of high-performance (carbon fiber) carbon fibers carbon fibers (thousand tons / year) 21.1 Start of full-scale commercialization of carbon Start of full-scale commercialization of carbon 17.9 Republic of Korea fibers in Republic of Korea fibers in Republic of Korea 13.9 Europe Establishment of a joint venture with Daimler AG for the Establishment of a joint venture with Daimler AG for the US manufacturing and sales of automobile parts manufacturing and sales of automobile parts Japan End of 2007 End of 2010 End of 2013 The carbon fiber composite materials will be a core business for the “Green Innovation Businesses” and Toray Group will aim to rapidly expand its application in a wide range of areas 25
  27. 27. Strategic Fields of Green Innovation Businesses (2) <Water Treatment Membranes> 1. Strengthen and expand Global Marketing Structure 1. Strengthen and expand Global Marketing Structure Global Global 2. Strengthen profit structure through improvement of Marketing Marketing 2. Strengthen profit structure through improvement of Structure Structure production system and increase of production system and increase of production capacity production capacity Manufacturing R&D Manufacturing 3. Create new technologies and new products 3. Create new technologies and new products R&D Technology Capabilities Technology fully utilizing comprehensive R&D and fully utilizing comprehensive R&D and Capabilities Capabilities Capabilities manufacturing technology capabilities manufacturing technology capabilities TMEu (Europe, Mideast, Africa) TMUS TBMC (US) (China) TMBJ・TCH (China) TORAY Major sales base TAS Sales office (Oceania) Agency Production baseMaintain the strong position as the world leader in membrane business by strengthening globalization 26
  28. 28. Strategic Fields of Green Innovation Businesses (3)<Battery (solar cell , fuel cell, lithium-ion battery, etc.) Materials> Solar Cell Materials Fuel Cell Materials Lithium-ion Battery MaterialsBack Sheet PET Film Electrolyte Membrane High-performance Battery Separator Heat-resistantFront Sheet Fluorine Film Film Microporous Film, OPP Microporous FilmJunction Box Engineering Plastics Negative-electrode Material Si MaterialPotting Compound, Adhesive Gas Diffusion Layer Carbon Fiber Binder Polyimide-amide Resin Silicone Resin Fuel Tank Carbon Fiber Battery Manufacturing EquipmentSubstrate Film Polyimide FilmSemiconductor Layer Toray Engineering Co., Ltd. Organic Semiconductor Analysis Technology Toray Research Center Inc.【System Market Size】 【System Market Size】 【Battery Market Size】(Trillion yen)15 4 Over 12.0 Trillion yen Over 2.0 Trillion yen Over 3.5 Trillion yen10 4 fold expansion 3.5 fold increase 200 fold increase 2 5 1.0 Trillion yen 3.0 Trillion yen 10 Billion yen 0 0 2008 2020 2008 2020 2008 2020 Aim to become a comprehensive manufacturer of battery materials with unified effort of Toray Group 27
  29. 29. Strategic Fields of Green Innovation Businesses (4) <Biomass Materials> Biomass-origin Materials Biomass-origin Materials Biotechnology + Nanotechnology e.g. :forest loss lactic acid Polylactic Acid (PLA) Polylactic Acid (PLA) 1,3-propanediol (+TPA) 3GT * 3GT * Plant-derived melt spinning fiber materials Cellulose Fiber Cellulose Fiber Polylactic Acid Products cellulose non-edible Fibers & Textiles nano-alloy Resins plant oil New Biomass Polymer New Biomass Polymer Films waterphotosynthesis carbon dioxide carbon neutral *3GT: polytrimethylene terephthalate Fibers & Textiles Films Resins Blister pack, food containers, PC, TV (casing), office automationApparel, carpets, automotive interiors, etc. packaging material, etc. equipment, etc. Promote development and commercialization of new products utilizing biomass-origin materials 28
  30. 30. Asia and Emerging Country Business Expansion (AE) Project Toray Group will seek to aggressively develop and expand businesses in Asia and emerging countries in other regions that are expected to realize major economic growth%Æ Develop and provide products and materials that Trends in Net Sales in Growth Countries and Regions meet the needs in Asia and emerging countries. Growth countries and regions Billion yen Others (Japan, US, Europe) Strengthen marketing and sales capabilities to (Asia, others) ensure that products penetrate local markets 3,000.0 3,000%Æ Strengthen infrastructure of existing production 2,500 bases and also establish new facilities in areas 2,000.0 where facilities do not currently exist. 2,000 1,800.0 Bolster local technical support functions to 1,530.0 customers 1,500 1,075.4 1,000%Æ Achieve rapid expansion of businesses by 1,500.0 leveraging existing production and sales bases as 500 900.0 well as group-wide management resources to the 520.0 720.0 251.5 greatest extent possible, and through alliances 0 FY2000 FY2010 FY2013 Around 2015 Around 2020 with local leading companies as necessary (Forecast) (Target) (Image) (Image)%Æ Aggressively expand business mainly with Net sales ratio of Growth Countries and Regions advanced materials to respond to the rapid increase in demand resulting from the growing FY2000 FY2010 FY2013 Around 2015 Around 2020 (Actual) (Forecast) (Target) (Image) (Image) numbers of both upper- and middle-income 23% 34% 40% 45% 50% group 29
  31. 31. Operational Base in Asia (1) Strong presence in Asia is an advantage to expand business Strong presence in Asia is an advantage to expand business Year1960 1970 1980 1990 2000 2010 PAB (Malaysia) TJQ (China) PFR (Malaysia) ITS (Indonesia) TPN (China)Fibers &Textiles CENTEX (Indonesia) TSD (China) ETX (Indonesia) TTTM (Thailand) TFNL (China) ACTEM (Indonesia) TFRC (China) TTS (Thailand) LTX (Thailand) ISTEM (Indonesia) TAK(Korea) TPM0 PFR (Malaysia) TBPR (Malaysia)Plastics & PNR (Indonesia) TPRC (Thailand)Chemicals TTS (Thailand) RKZ (China) TPSU (China) TPSZ(China) YTP(China) TFCC (China) TAK (Korea) TFZ (China)IT-related Products STEMCO (Korea) STECO (Korea)Environment & Engineering TBMC (China) TITP (Taiwan) TRI (Indonesia)Trading THK (Hong Kong) TISP (Singapore) TCH/TSL (China) China / Hong Kong Region Southeast Asia Region Republic of Korea 30
  32. 32. Operational Base in Asia (2) China Republic of Korea Southeast AsiaNet Sales *1 approx. approx. approx.(FY Mar/11 Forecast) 170 billion yen 100 billion yen 160 billion yenConsolidated Subsidiaries 33 3 20(End of Sept. 2010 Actual)Number of Employees on a approx. approx. approx.Consolidated basis *2 7,600 1,700 9,000(End of Sept. 2010 Actual)Accumulated Capital Investment*3 approx. approx. approx.(End of Sept. 2010) 80 billion yen 90 billion yen 280 billion yen*1 Sum total of net sales of consolidated subsidiaries at each region*2 Number of employees of consolidated subsidiaries at each region*3 Accumulated capital investment of major consolidated subsidiaries at each region 31
  33. 33. Operational Base in Asia (3) Production Capacity of Major Products (End of 2010)Fibers (filament yarn/staple fiber) Resins (neat resin) PET Film Japan Japan 31% 25%Japan 42% Asia 52% Asia 58% Asia Europe 69% US 23% Tangible and intangible management assets in Asia Promote further business expansion in Asia utilizing all out of existing operational bases 32
  34. 34. Total Cost Reduction (TC-II) Project To reinforce the robust business footing, Toray Group will implement the group-wide project outlined below: Variable Cost Reduction Implement “VCIÿ 10ÿ Variable Cost Innovation 10%ÿ ”Project %ÆImprovements in unit consumptions will be achieved by applying methods developed at Reduce variable costs certain Japanese plants to group companies in Japan and overseas by over 3% each year and over 10% %ÆPurchasing VA (Value Analysis) will be undertaken for cost reductions in accordance with business strategies (over 70 billion yen) over three years %Æ The Purchasing & Logistics Division will provide support to individual purchasing VA activities and build a global procurement system Fixed Cost Reduction %Æ Toray Group will continue to improve its operational effectiveness to keep fixed costs at proper levels in line with profit growth 33
  35. 35. Financial Targets <Billion yen> FY 2010 FY 2013 (Forecast) (Target) Net Sales 1,530 1,800 Foundation Businesses 945 (62%) 1,000 (56%) Strategically Expanding Businesses Intensively Developing and 585 (38%) 800 (44%) Expanding Businesses Growth Countries and Regions 520 (34%) 720 (40%) Green Innovation Businesses 370 (24%) 500 (28%) ( ) net sales ratio Operating Income 96 150 Operating Income to Net Sales Ratio 6.3ÿ 8.3ÿ ROA about 6% 8ÿ ROE about 9% 11ÿ Remarks : Estimated exchange rate 80 yen / US$ ROA=Operating Income / Total Assets Estimated oil price 95 USÿ / B(DUBAI FOB) ROE=Net Income / Shareholders’ Equity<Basic policy of Dividends> Aim for sustainable increase of dividends linked to the business performance 34
  36. 36. Trends in Net Sales / Operating Income by SegmentBillion yen Net Sales Billion yen Operating Income2,000 180 150.0 1,800.0 150 1,530.0 15.01,500 52.0 1,359.6 120 175.0 96.0 46.7 14.1 6.0 1.0 68.0 4.0 3.0 159.8 50.7 90 275.0 42.01,000 230.4 40.1 60 0.9 3.9 2.7 380.0 332.7 25.0 25.0 30 500 11.6 32.0 16.3 565.0 0 525.2 %² 5.3 %² 17.0 %² 14.9 %² 30 0 FY2009 FY2010 FY2013 FY2009 FY2010 FY2013 (Forecast) (Target) (Forecast) (Target) Fibers & Textiles Plastics & Chemicals IT-related Products Carbon Fiber Environment & Life Science Composite Materials Engineering Others Adjustment 35
  37. 37. Trends in Operating IncomeBillion yen 350 AP-Growth TORAY 2020 Actual 300.0 300 Mar/11 Forecast “Project AP-G 2013” Target Reform and Proactive Management Image “Project IT-II” 250 “Project IT-2010” 「Reforms with 「Challenge for Further Growth」 Exception」 no 200 “Project NT-II” 180.0 「Establish Foundation for Further Growth」 150.0 150 “Project NT21” 「Breakaway from Crisis」 102.4 103.4 96.0 100 93.0 81.1 51.2 56.8 50 33.0 36.0 40.1 18.8 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2013 Around 2015 Around 2020 (Forecast) (Target) (Image) (Image) 36
  38. 38. <Reference> Medium-term Business Strategies by Segment 37
  39. 39. Business Categories and Segments Business Toray Divisional Segment Basic Materials Advanced MaterialsCategories Organization Fibers & Fibers & Synthetic Fibers High-functionFoundation Textiles Textiles Resins Fibers & TextilesBusinesses Films Resins & Chemical Functional Particles Chemicals Plastics & High-function Resins Chemicals Materials, others High-function Films Films Display Materials Electronics & Semiconductor- Information related MaterialsStrategically Electronics & Related High-density DisplayDeveloping Information Products Materials Businesses Materials Advanced Carbon Fiber Carbon Fibers Composite Composite Advanced Materials Materials Composite Materials Pharmaceuticals Pharmaceuticals and & Medical Life Science Medical Devices,Intensively Products othersDeveloping Environmentally-friendlyBusinesses Water Environment & Engineering, Materials Treatment, Engineering others High-function Separation Membranes Environment 38
  40. 40. Fibers & Textiles Segment<Basic Policy>Maintain and strengthen a stable earnings structure as a Foundation Business andpromote business expansion in growth business fields and regions<Business Strategies> Net Sales (left axis) Operating Income (right axis) Billion yen Billion yen <Business Strategies>1. In Japan, maintain domestic production of all materials 1. In Japan, maintain domestic production of all materials 800.0 60 by improving facilities and products as well as continuing by improving facilities and products as well as continuing with “ensuring sales through every possible effort” with “ensuring sales through every possible effort”2. Outside Japan, promote expansion of facilities and 2. Outside Japan, promote expansion of facilities and 50 businesses in appropriate locations to respond to global businesses in appropriate locations to respond to global 565.0 growth of the fiber and textile industry 600.0 growth of the fiber and textile industry 525.23. Bolster and expand garment business to build a 3. Bolster and expand garment business to build a 40 foundation for revenue and profit through extensive foundation for revenue and profit through extensive optimization of supply chains and as an outlet for fibers 32.0 optimization of supply chains and as an outlet for fibers and textiles manufactured in and outside Japan and textiles manufactured in and outside Japan 400.0 304. Expand sales in growth regions (China, ASEAN, India, 4. Expand sales in growth regions (China, ASEAN, India, etc.) and develop new business models which leverage etc.) and develop new business models which leverage Free Trade Agreements and Economic Partnership 16.3 20 Free Trade Agreements and Economic Partnership Agreements Agreements 200.05. Expand business related to growth business fields 5. Expand business related to growth business fields (automotive sector, green innovation product sector, 10 (automotive sector, green innovation product sector, etc.) etc.)6. Expand advanced materials business through high- 6. Expand advanced materials business through high- performance fibers (PPS, fluorofiber, LCP, etc.) and bio- 0 0 performance fibers (PPS, fluorofiber, LCP, etc.) and bio- FY 2009 FY 2010 FY 2013 Around based polymer fibers (PLA, 3GT, etc.). based polymer fibers (PLA, 3GT, etc.). (Forecast) (Target) 2015 (Image) 39
  41. 41. Plastics & Chemicals Segment<Basic Policy>Leverage Group’s global operation to achieve improvements in earnings andexpand business in growth business fields and regions<Business Strategies> <Business Strategies> Net Sales (left axis) Operating Income (right axis) Billion yen Billion yen- -Resins & Chemicals Business Resins & Chemicals Business1. Pursue global business expansion in the face of 1. Pursue global business expansion in the face of 500.0 50.0 market changes based on fundamental technologies market changes based on fundamental technologies of chemistry of chemistry2. Aggressively promote global alliances and further 380.0 2. Aggressively promote global alliances and further 400.0 40.0 strengthen ties with customers strengthen ties with customers 332.73. Launch and expand sales of new products by 3. Launch and expand sales of new products by integrating capabilities regarding resins and integrating capabilities regarding resins and 30.0 300.0 chemicals chemicals 25.0- -Films Business - - Films Business 200.0 20.01. Expand businesses in the growing markets mainly in 1. Expand businesses in the growing markets mainly in Asia Asia 11.62. Extend the environment and energy businesses as a 2. Extend the environment and energy businesses as a 100.0 10.0 revenue and profit platform through the revenue and profit platform through the development of proprietary technology and development of proprietary technology and proactive pursuit of global alliances proactive pursuit of global alliances 0 03. Accelerate globalization of the high value-added film 3. Accelerate globalization of the high value-added film FY 2009 FY 2010 FY 2013 Around processing business processing business (Forecast) (Target) 2015 (Image) 40
  42. 42. IT-related Products Segment <Basic Policy> Bolster production capacity and develop and launch new products to meet increasing demand. Also continue strengthening cost competitiveness in response to expected declines in market prices Net Sales (left axis) Operating Income (right axis) Billion yen Billion yen<Basic Strategies> <Basic Strategies> 500.0 100.0- -Films Business - - Films Business1. Aggressively expand display films business leveraging 1. Aggressively expand display films business leveraging growing demand in the Asian markets by bolstering growing demand in the Asian markets by bolstering 400.0 80.0 production capacity, reducing costs and developing and production capacity, reducing costs and developing and launching new products launching new products2. Expand products associated with global operation by 2. Expand products associated with global operation by enhancing manufacturing technologies and quality 300.0 275.0 60.0 enhancing manufacturing technologies and quality levels at overseas bases levels at overseas bases3. Accelerate globalization of the high value-added film 230.4 3. Accelerate globalization of the high value-added film 42.0 processing business processing business 200.0 40.0- -Electronics & Information Materials Business - - Electronics & Information Materials Business 25.01. Focus on high-performance electronic materials including 1. Focus on high-performance electronic materials including varnish and paste materials, with proprietary material varnish and paste materials, with proprietary material 100.0 20.0 technology as a key pillar, centering on functional technology as a key pillar, centering on functional polymers polymers2. Utilizing the aforementioned high-functional materials, 2. Utilizing the aforementioned high-functional materials, 0 0 expand business in display, semiconductor and mobile expand business in display, semiconductor and mobile FY 2009 FY 2010 FY 2013 Around phones and other applications phones and other applications (Forecast) (Target) 2015 (Image) 41
  43. 43. Carbon Fiber Composite Materials Segment<Basic Policy>In order to maintain and strengthen position as the world s leading manufacturer in carbon fibers,reinforce strategic approach to important applications and customers, further expand market share,and aim to realize price recovery to establish a highly-profitable business structure Net Sales (left axis) Operating Income (right axis) Billion yen Billion yen 150.0 30.0 <Basic Strategies> <Basic Strategies> 1. Maintain and strengthen position as the world’s 1. Maintain and strengthen position as the world’s leading manufacturer in the high-performance and leading manufacturer in the high-performance and high-quality carbon fiber market by ensuring the high-quality carbon fiber market by ensuring the 100.0 20.0 integrity of the aircraft programs integrity of the aircraft programs 68.0 2. Implement a transition to a highly advanced supply 2. Implement a transition to a highly advanced supply chain by extending cooperation with important end- chain by extending cooperation with important end- 50.7 user customers as well as aggressively expand the 50.0 10.0 user customers as well as aggressively expand the intermediate materials business intermediate materials business 3. Meet growing demand for carbon fiber for industrial 4.0 3. Meet growing demand for carbon fiber for industrial applications with a large proportion realized in China applications with a large proportion realized in China by increasing capacity at existing facilities and 0 0 by increasing capacity at existing facilities and establishing a production base in Asia that isisthe most establishing a production base in Asia that the most cost competitive in the world cost competitive in the world 4. Expand composite business by leveraging Toray’s %² 5.3 4. Expand composite business by leveraging Toray’s %² 10.0 strength in molding technology and newly strength in molding technology and newly FY 2009 FY 2010 FY 2013 Around developed intermediate materials developed intermediate materials (Forecast) (Target) 2015 (Image) 42
  44. 44. Environment & Engineering Segment<Basic Policy>Expand business and provide solutions to environmental fields with the mainstay of separationmembranes and filtration technologies. Also promote business expansion in environmental andenergy fields utilizing Toray’s original engineering technologies Net Sales (left axis) Operating Income (right axis) Billion yen Billion yen <Basic Strategies> <Basic Strategies> 25.0 - -Water Treatment & Environment Business - - 250.0 Water Treatment & Environment Business 1. Develop the water treatment membrane business of 1. Develop the water treatment membrane business of RO, UF/MF and MBR membranes into the next RO, UF/MF and MBR membranes into the next generation growth engine by expanding 200.0 20.0 generation growth engine by expanding 175.0 market share and bolstering profitability market share and bolstering profitability 2. In the membrane system and plant business, build 159.8 2. In the membrane system and plant business, build group internal synergies and expand current group internal synergies and expand current 150.0 15.0 businesses and create new businesses in Japan and businesses and create new businesses in Japan and overseas overseas 100.0 10.0 - -Engineering Business - - Engineering Business 1. Positioning environment and energy-related fields as 1. Positioning environment and energy-related fields as the future core business and expand its business the future core business and expand its business 50.0 3.9 5.0 utilizing proprietary technologies utilizing proprietary technologies 3.0 2. Develop new businesses by establishing new business 2. Develop new businesses by establishing new business models and applying core technologies in new models and applying core technologies in new business fields 0 0 business fields FY 2009 FY 2010 FY 2013 Around 3. Aggressively expand business in growth countries 3. Aggressively expand business in growth countries (Forecast) (Target) 2015 and regions by leveraging overseas group companies and regions by leveraging overseas group companies (Image) 43
  45. 45. Life Science Segment<Basic Policy>As the market grows led by demand increase in emerging countries, aim for significantbusiness expansion in the long term (by 2020) by developing businesses with Toray’sunique characteristics Net Sales (left axis) Operating Income (right axis)<Basic Strategies> <Basic Strategies> Billion yen Billion yen- -Pharmaceuticals Business - - Pharmaceuticals Business 80.0 15.01. Increase new indication of existing drugs 1. Increase new indication of existing drugs2. Develop and adapt new drugs in nervous system and 2. Develop and adapt new drugs in nervous system and autoimmune system fields autoimmune system fields 60.0- -Medical Products Business - - 52.0 Medical Products Business 10.01. Expand business in the areas of blood purification 1. Expand business in the areas of blood purification 46.7 (including dialysis), intervention and materials offerings (including dialysis), intervention and materials offerings2. Dialysis business 2. Dialysis business 40.0 ①Increase market share in Japan of the new dialyzer ①Increase market share in Japan of the new dialyzer 6.0 product released in the second half of 2010 product released in the second half of 2010 ②Review options for launching business in emerging ②Review options for launching business in emerging 5.0 countries countries 20.0 2.7Bolster capabilities in sales and marketing and Bolster capabilities in sales and marketing anddevelopment of the aforementioned businesses to development of the aforementioned businesses topromote business growth in and outside Japan 0 0 promote business growth in and outside Japan FY 2009 FY 2010 FY 2013 Around (Forecast) (Target) 2015 (Image) 44
  46. 46. Descriptions of predicted businessresults, projections and business planscontained in this material are based onassumptions and forecasts regardingthe future business environment, madeat the present time.The material in this presentation is not aguarantee of the Company’s futurebusiness performance. 45

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