Toray Industries, Inc.

For the first quarter ended June 30, 2023, consolidated revenue decreased 4.6% year over year to ¥578.1 billion. Operating income decreased 19.2% to ¥21.9 billion, and profit decreased 65.1% to ¥13.9 billion. Special items worsened by ¥24.9 billion to negative ¥1.1 billion. At quarter-end, total assets were ¥3,347.4 billion, total liabilities ¥1,599.8 billion, total equity ¥1,747.6 billion, owners’ equity ¥1,643.3 billion, interest-bearing liabilities ¥974.7 billion, and the D/E ratio was 0.59; free cash flow was positive at ¥12.5 billion. By segment, fibers and textiles revenue decreased 0.9% to ¥223.8 billion and core operating income increased 25.8% to ¥10.9 billion. Performance chemicals revenue decreased 12.3% to ¥214.8 billion and core operating income decreased 56.1% to ¥7.4 billion. Carbon fiber composite materials revenue increased 0.2% to ¥68.7 billion and core operating profit increased 13.8% to ¥2.7 billion. Environment engineering revenue increased 10.3% to ¥56.0 billion and core operating income increased 76.4% to ¥6.2 billion. Life science revenue decreased 8.4% to ¥11.3 billion and core operating income was negative ¥0.5 billion. For fiscal year ending March 2024, Toray kept its full-year consolidated forecast unchanged at revenue of ¥2,560 billion, core operating income of ¥120 billion, and profit of ¥76 billion. The company said the July-onward forecast assumes an exchange rate of ¥135 to the U.S. dollar.

Masahiko Okamoto framed the quarter as one shaped by a still-challenging global environment, with slow recovery in the U.S. and Europe, moderation in China, and continued risks from inflation and high interest rates. His emphasis was on explaining the segment-level mix rather than changing the company’s overall outlook. He also signaled confidence by holding the full-year forecast steady despite the weaker first quarter.

The financial update highlighted lower revenue and profit, but also a positive cash generation profile. Free cash flow was ¥12.5 billion, total assets rose to ¥3,347.4 billion, and the D/E ratio was 0.59, with borrowings up and equity also higher. Capital expenditures were ¥23.5 billion, depreciation and amortization were ¥31.9 billion, and R&D spending was ¥15.5 billion.

There was no real analyst Q&A in the transcript; the call ended after management’s prepared remarks. The main management explanation for the soft quarter was weaker demand in performance chemicals, soft apparel and hygiene conditions in fibers/textiles, and inventory adjustments in several businesses. Management’s key answer to the quarter was not a new target cut, but to leave full-year guidance unchanged while assuming an exchange rate of ¥135 per U.S. dollar.