Could you show your business results
for the fiscal year ended May 31, 2012?
Please illustrate the present status of your overseas
operations for automotive textiles.
A : Suminoe Teijin Techno Krishna India Pvt. Ltd., our newly established subsidiary in India, introduced manufacturing equipment for seat covering and commenced full-scale production in June 2012. T.C.H.Suminoe Co., Ltd. in Thailand, which had suspended operation due to floods that occurred in October 2011, completed restoration of submerged manufacturing equipment and resumed full-scale operations in June 2012. Our U.S. subsidiary Suminoe Textile of America Corporation recorded a surplus for two consecutive years, demonstrating its capacity to create stable profits. STA is expected to continuously lead our automotive textiles business overseas, and contribute to the entire Suminoe Textile Group’s sales and profits for the next fiscal year. In addition to these three companies, we now have three subsidiaries in China and one in Indonesia, totaling seven. We will continue to actively promote expansion of our automotive textiles business overseas.
Please describe your policy for dividends.
A : The Company positions shareholder return as a key management issue, and follows a policy of making stable dividend payments at an appropriate level, taking business results into account. Based on this policy, we paid ¥2.5 (US$0.03) per share as the year-end and interim dividend, respectively. Consequently, our annual dividend for the term under review totaled ¥5.0 (US$0.06) per share. We will maintain this policy, and will again pay ¥5.0 per share as the annual dividend for the current term ending May 31 2013.
Although the Japanese economy is on a gradual recovering trend, there are concerns about continuous appreciation of the yen and the hollowing-out of domestic manufacturing industry. Overseas, the debt problems are continuing in Europe while economic growth in China, India and other emerging countries is slowing down. Under these circumstances, in anticipation of the business recovery of our overseas subsidiaries including Suminoe Textile of America Corporation (U.S.) and T.C.H. Suminoe Co., Ltd. (Thailand), the Suminoe Textile Group set targets for the fiscal year ending May 31, 2013 of ¥81,000 million in net sales, ¥2,000 million in operating income, ¥2,350 million in ordinary income and ¥1,500 million in net income.
Sales of recycled carpet tiles “ECOS,” launched in July 2011, showed a steady increase. ECOS attracted customers for its excellent environmental performance, containing at maximum 77% post-consumer recycled materials, the highest level in Japan, and its reasonable prices, about the same as those of conventional products. Sales of commercial-use carpets for office buildings, commercial facilities and hotels were about the same as the sales of the previous year despite the impact of delays in progress for some large orders, thanks to an increase in demand after the Great East Japan Earthquake. Sales of carpets and rugs for general households exceeded those of the previous year, along with gradual recovery of personal consumption. Sales of curtains increased because of the steady growth of our mainstay items “mode S Vol.5” and “U-Life Vol.6”, as well as the “Disney series” and “Design Life”, in addition to a continued increase in orders for “Face Vol. 17” partition curtains from medical, nursing care and educational institutions. Sales of wall coverings exceeded those of the previous year due to steady demand for “Runon Home1000”. Heat-shield window film also showed growth because of the energy-saving trend. Profit margins on sales decreased due to intensifying price competition and soaring raw material prices, resulting in a decline in operating income.
As a result of the above, total sales of the Interior Fittings segment recorded a year-on-year increase of 3.5% to ¥33,747 million (US$427,177 thousand), while operating income fell 48.5% to ¥297 million (US$3,760 thousand).
In the area of Automotive Textiles, Suminoe Textile’s automotive carpet business and the seat covering business by Suminoe Teijin Techno Co., Ltd. recorded an increase in both net sales and operating income from those in the previous year despite the impact of the Great East Japan Earthquake and the floods in Thailand in the first half of the year. This was because of the accelerated recovery in the later half of the year and an increase in orders for car models that were subject to the Eco-Car Subsidy.
Overseas, despite the recovery trend from the impact of the earthquake and floods, our U.S. subsidiary Suminoe Textile of America Corporation showed a decrease from the previous year in both net sales and operating income, while our Chinese subsidiary SPM Automotive Textile Co., Ltd. saw an increase in sales but a decrease in operating income from the previous year.
In the area of Traffic Facilities, the business environment was extremely severe, as the work related to the large orders for new railway cars we had received in the previous year was almost complete. Also, customers held down their spending due to the Great East Japan Earthquake, resulting in a decrease in reseating demand, as well as in orders for replacement of carpets and “Sumi Cube®” cushions. Although we tried to solicit orders associated with the rush demand before implementation of the new regulations for buses and to expand sales of environmentally friendly products including “OH film”, a polyolefin warning floor film, both of net sales and operating income decreased from the previous year.
As a result of the above, total sales in the Automotive Textiles and Traffic Facilities segment recorded a year-on-year increase of 7.2% to ¥37,558 million (US$475,418 thousand), while operating income rose 3.0% to ¥1,802 million (US$22,810 thousand).
In the electric carpet business, because customers reconsidered the merits of electric carpets as energy-saving products, orders increased substantially. In our carpet tile OEM business, sales in Japan remained solid, while exports showed only a slight increase in terms of both sales and quantity. In the deodorizing filter business, our sales rose because we obtained new orders for air purifier filters for home appliances; sales of existing filters grew; shipments of stationary deodorizing units for general households, marketed under the brand name of “Real odor deodorization without disguising with a scent,” also steadily increased. Sales of construction materials including heat-shield roofing sheets and special-treated water-shield sheets for civil engineering uses also contributed to the overall sales increase.
As a result of the above, total sales in the Functional Materials Segment recorded a year-on-year increase of 26.8% to ¥3,911 million (US$49,506 thousand), while operating income was ¥76 million (US$962 thousand) (operating loss in the previous year : ¥43 million).