TOKYO — A pair of major Japanese synthetic-fiber manufacturers, Toray and Teijin, last week reported dramatically improved first-half profits, after having taken heavy one-time charges in the prior-year period.
This story first appeared in the November 11, 2003 issue of WWD. Subscribe Today.
Toray Industries Group said its net income for the first half ended Sept. 30 was $100.4 million, up from $11.8 million a year earlier. This year the company recorded one-time losses of $24.7 million, compared with one-time costs of $74.7 million related to the sale of fixed assets and restructuring a year ago.
In local currency, the company reported net income of 10.95 billion yen in the first half, up from 1.28 billion yen a year earlier. Dollar figures have been converted from the yen at the current exchange rate.
Net revenue rose 7.2 percent to $4.9 billion, or 534.35 billion yen.
Sales of fibers and textiles rose 2.1 percent to $1.96 billion dollars from a year ago. In local currency, sales were 213.38 billion yen.
“Total overseas sales rose, with particular sales growth of polyester filament for apparel and nonwoven fabrics in Korea and polyester filament textiles in China,” the fiber producer said in a statement.
“While the U.S. economy enjoyed a recovery, in part of Europe and Asia the economy slowed down,” said the group of 106 subsidiaries in a statement on the first half. “In Japan, although the capital investment recovered and stock prices rebounded, the overall economy is still in a severe condition due to the sluggish consumer spending.”
The company attributed earnings improvements to a recently implemented restructuring program called “Project New Toray 21.” That program calls for Toray to move much of its manufacturing operations into low-cost nations such as China, and to set aside its Japanese plants for high-end, high-margin products that cannot be produced more cheaply elsewhere.
For the full year ending March 31, 2004, Toray projects net income of $174.3 million dollars, or 19 billion yen, and total revenue of $9.91 billion, or 1.08 trillion yen.
“We expect inconsistent growth in the Asian economy, while the U.S. economy should continue to expand,” the group added.
The Teijin Group turned into the black, reporting net income of $54.1 million for the six months ended Sept. 30, compared with a net loss of $9.9 million a year earlier, a result that included $105.6 million in one-time charges primarily related to restructuring.
In the recently completed period the company posted one-time charges of $67.1 million, or 7.3 billion yen, and extraordinary earnings of $88.1 million, or 9.6 billion yen, on the sale of securities.
In local currency, earnings of 5.9 billion yen compared with a loss of 1.08 billion yen.
Operating income was up 1.5 percent to $141.6 million, or 15.43 billion yen. Sales rose 1.8 percent to $4.07 billion, or 443.5 billion yen.
Sales of synthetic fibers were $1.34 billion, or 146.51 billion yen.
“In the global market for polyester fibers, the business environment was considerably impaired by weak demand in China and several other Asian countries because of the outbreak of SARS, significantly higher raw material prices owing to the war in Iraq and a worldwide supply-demand imbalance in polyester,” the company said in a statement.
Teijin said for the year ending March 31, it expects to record net income of $100.9 million, or 11 billion yen, on sales of $8.17 billion, or 890 billion yen.