Medium-term Management Program "Project AP-G 2019"

1.Position of the Medium-term Management Program

Toray implements three to five year medium-term management programs in order to achieve the goals set in the long-term corporate vision AP-Growth TORAY 2020.
Under the current medium-term management program Project AP-G 2019, Toray will further acclelerate growth and enhance corporate value through the three basic strategies and five key initiatives.

Long-term Corporate Vision and Medium-term Management Program

2. Basic Strategies

Basic Strategy 1. Business Expansion in Growth Business Fields

Expansion of Green Innovation Businesses

Expansion in business fields that contribute to resolving environmental, resource, and energy issues.

FY 2016 result 628 Billion Yen→FY 2019 Target 900 Billion Yen

Examples of Green Innovation Businesses

Reduction of GHG Emmissions

- Carbon fiber for aircraft, automobiles, wind turbine blades, pressure vessels, etc.
- Lithium-ion battery separator

Reduction of GHG Emmissions

Low Environmental Load

- Non-halogen flame-retardant material
- Toray Waterless Plate™

Low Environmental Load

Water Treatment

- RO・MBR・MF/UF
membrane
- Home water purifier

Water Treatment

Recycling

Regeneration-type recycling, circulation-
type recycling / Material, chemical recycling

Air Purification

- Dust collecting filter/Air filter

Expansion of Life Innovation Businesses

Improve quality of healthcare, ease burden on medical professionals, and contribute to health and longevity with Toray Group's management resources

Expansion of Life Innovation Businesses

Examples of Life Innovation Businesses

Advanced Materials in LI Business

Advanced Materials in LI Business

Pharmaceuticals / Medical Devices

Pharmaceuticals / Medical Devices

Basic Strategy 2. Expansion and Advancement of Global Business

Expand business globally by capturing profit opportunities in growth countries and regions

Basic Strategy 2. Expansion and Advancement of Global Business

AE (Asia, Americas, Europe, and Emerging Regions) Project
  • Prioritize allocation of capital investment and R&D resources to growth countries and regions
  • Establish a supply system for cost competitive products
  • Radically reform business and organizational structures for advancement of business
  • In the businesses which have global platform, differentiated products, and core technologies, will implement brand initiatives based on integrated business strategies and establish supply chain

Basic Strategy 3. Strengthening Competitiveness

Pursue total cost reduction, and strengthen corporate structure and sales and marketing

Total Cost Reduction

Target to reduce 220 billion Yen in 3 years from FY 2017

  • 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 through P-ratio(*) accounting method (P-ratio: under 0.96 each fiscal year)
  • For innovation of production process, identify themes by category in terms of "innovative cost reduction," "large-scale total reduction," and "capacity increase of existing facilities" to achieve reduction effects by more than 50 billion Yen in 3 years * P(Performance)-ratio: fixed growth rate/marginal profit growth rate target: less than 1.0 or monitored by division under budget
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 reducting 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 production, technology, R&D departments, and external partners
  • Maximize revenue and profit of existing businesses through improvement in price policies, distribution systems, and brand initiatives

2. Key Initiatives

Key Initiative 1. New Business Creation

In order to make sources of earnings for the next growth stage, identify several large scale items which leads to the creation of new business domain in the 2020s

Accelerate product development and business formation by allocating the resources selectively

Create New Business with
Revenue of 1 trillion Yen in the 2020s

Key Initiative 2. R&D and Intellectual Property

Investment of 220 billion Yen of R&D expenses in 3 years from FY 2017

Key Initiative 2. R&D and Intellectual Property
1/2 of R&D expenses will be allocated to
Green Innovation, and 1/4 to Life Innovation
Key Initiative 3. Capital Investment

500 billion Yen of capital investment planned in 3 years from FY 2017

Allocate 60% of Total Capital Expenditures to Growth and Expansion FieldsAllocate 60% of Total Capital Expenditures to Overseas
Key Initiative 4. M&A and Business Alliances

To increase and complement growth of existing businesses, proactively utilize M&A and business alliances as means to adjust to the changing business environment and to attain sustainable growth

Key Initiative 5. Human Resources

Develop leaders at management level for the next generation, secure and develop core human resources who will exhibit "strong operational competency" at the frontlines

3. Medium-term Business Strategies by Segment

Fibers & Textiles

Fibers & Textiles

Basic Policy
As a core growth driving business of Toray, Fibers and Textiles segment's challenges are to achieve significant growth by strengthening its earnings structure, expand business in growth business fields and regions, and further enhance its global operations
Growth Products and Applications
- Functional materials for apparels and garment
- Fiber and textile for airbags
- PP spunbond for hygiene products
- Suede-texture artificial leather
Net Sales Operating Income
Performance Chemicals

Performance Chemicals

Basic Policy
Expand business by expansion of high value-added products in growth business fields and maximum utilization of global bases, strengthen earnings base by business structure reform
Growth Products and Applications
- Resin compound for automotive use
- PPS Resin, Transparent ABS resin
- Lithium-ion battery separator film
- Films for electronic components
- OLED related materials
Net Sales Operating Income
Carbon Fiber Composite Materials

Carbon Fiber Composite Materials

Basic Policy
Further expand the business as the world's number-one manufacturer of carbon fibers
Growth Products and Applications
- Regular tow (high-functional, high-quality TORAYCA™)
- Large tow (ZOLTEK™)
- Composites for automobile parts
Net Sales Operating Income
Environment & Engineering

Environment & Engineering

Basic Policy
Expand business in the environment and energy field with focus on water treatment membranes and facility desgn capabilities
Growth Products and Applications
- Reverse-Osmosis membrane, Ultrafiltration membrane
- Water-treatment and plant systems
- Plant systems for pharmaceuticals and new energy
Net Sales Operating Income
Life Science

Life Science

Basic Policy
Expand sales of strategic products globally, enhance effective product development
Growth Products and Applications
- Oral pruritus treatment drug Remitch™*
- Blood purification device for treating septicemia Toraymyxin™
- Dialyzers(hemodiafiltration-related products)

*REMITCH™ is a registered trademark of Torii Pharmaceutical Co., Ltd.

Net Sales Operating Income