<IT-2010 IR Seminar – No. 4 (Automobiles / Aircraft)> October 7, 2008 BusinessBusiness StrategiesStrategies throughthrough TheThe EstablishmentEstablishment ofof thethe AA && AA CenterCenter inin NagoyaNagoya PlantPlant Chiaki Tanaka Executive Vice President and Representative Director Toray Industries, Inc. Contents ･ Midterm Business Strategies “IT-2010” and the Creation of Advanced Materials ・ The Era of Protecting the Global Environment and Toray’s EcoChallenge ・ The Automobile Industry Entering a Great Revolutionary Era ・ Concept for A & A Center and Restructuring of Nagoya Plant ・ Expansion Plan for Automotive Business Copyright 2008 Toray Industries, Inc. All Rights Reserved. 2 Midterm Business Strategies, IT-2010 April 2002 April 2006 Long-term vision AP-New TORAY 21 AP-Innovation TORAY 21 Goals in and around 2010 Mid-term Business Strategies Net sales IT-2010 ¥1,800 billion NT- II Operating NT21 income 「Offensive 「Management based on 「Corporate Innovation and Creation」 ¥150 billion Structure management postures Reinforcement・ 」 -Challenges for Operating defensive further growth - income to net management sales ratio postures」 -Establish 8.3% foundation for -Breakaway from ROA : 8% Crisis - further growth - Toward a Global Top Company of Advanced Materials ROE : 11% 2002 2004 2006 Around April April October 2010 Copyright 2008 Toray Industries, Inc. All Rights Reserved. 3 Basic Strategies （Transformation to a highly profitable business group） Transform to a highly profitable business group while 1. Transforming continuing business expansion to a highly ① 5% annual growth in net sales “5-10 Growth Plan” profitable ② 10% annual growth in operating income business group Improving capital efficiency ① ROA : over 8% ROE : over 11% around 2010 2. Expanding Increase profit by expanding Strategically Expanding Businesses Strategically Expanding Businesses (IT-related products and Carbon Fiber Composite Materials) (profit growth driver) while securing stable profit by Foundation Businesses 3. Expanding Develop strategically next generation profit growth driver Strategically businesses after 2010 (Life Science, Water Treatment, Developing Businesses Environmental friendly businesses) (next profit growth driver) Advance business structure reform by expanding Strategically 4. Advancing Expanding Businesses and Strategically Developing Businesses Double net sales in Strategically Expanding Businesses and business ① Strategically Developing Businesses around 2010 structure reform ② Expand their ratio of net sales from the current 25% to 40% around 2010 Expand advanced materials sales in every segment and 5. Expanding increase their ratio of net sales advanced ① Double net sales in advanced materials around 2010 materials ② Expand their ratio of net sales from the current 30% to 50% around 2010 Copyright 2008 Toray Industries, Inc. All Rights Reserved. 4 Basic Strategies (Expansion of advanced materials in 4 major growing business fields) Aim for business expansion mainly in advanced materials by providing cross- organizational solutions to the 4 major growing business fields. ・・ BusinessBusiness expansionexpansion inin thethe growinggrowing marketmarket ofof digitaldigital network-relatednetwork-related productsproducts Information / includingincluding flatflat panelpanel displaydisplay televisions,televisions, cellularcellular phones,phones, and and personalpersonal computerscomputers Telecommunications ・・ DevelopmentDevelopment andand salessales expansionexpansion ofof innovativeinnovative productsproducts throughthrough verticalvertical businessbusiness / Electronics integrationintegration withwith keykey customerscustomers ・・ StrengthenStrengthen competitivenesscompetitiveness throughthrough integratedintegrated operationsoperations fromfrom plastic/filmsplastic/films materialsmaterials toto componentscomponents ・・ DevelopmentDevelopment ofof productsproducts toto meetmeet expandingexpanding marketsmarkets inin hybridhybrid carscars and and carcar electronicselectronics ・・ Expansion of application parts by widening advanced functional availability Automobiles / Expansion of application parts by widening advanced functional availability ofof carboncarbon fiberfiber compositecomposite materialsmaterials andand engineeringengineering plasticsplastics Aircraft ・・ AggressiveAggressive capacitycapacity expansionexpansion toto meetmeet thethe growinggrowing demanddemand forfor carboncarbon fiberfiber compositecomposite materialsmaterials ・・ ConclusiveConclusive launchlaunch ofof newnew drugsdrugs whichwhich isis underunder developmentdevelopment andand furtherfurther expansionexpansion ofof newnew drugdrug pipelinespipelines Life Science ・・ DevelopmentDevelopment andand commercializationcommercialization ofof highhigh value-addedvalue-added medicalmedical devicesdevices ・・ CreationCreation ofof innovativeinnovative bio-toolsbio-tools throughthrough bio/nano-technologicalbio/nano-technological integrationintegration ・・ DevelopmentDevelopment ofof newnew applicationsapplications forfor fibersfibers && textiles,textiles, plasticsplastics andand filmsfilms usingusing suchsuch non-petrochemicalnon-petrochemical rawraw materialsmaterials asas polylacticpolylactic acids acids Environment / ・ Global expansion of water treatment businesses with a core of high-performance Water-related / ・ Global expansion of water treatment businesses with a core of high-performance separationseparation membranesmembranes Energy ・・ DevelopmentDevelopment ofof newnew materialsmaterials forfor nextnext generationgeneration energyenergy systemssystems includingincluding solarsolar cells,cells, fuelfuel cells,cells, andand windwind powerpower generationgeneration Copyright 2008 Toray Industries, Inc. All Rights Reserved. 5 Toward a Global Top Company of Advanced Materials *products in blue :examples of nano-tech products “ “CreateCreate advancedadvanced materialsmaterials thatthat Innovation of changechange thethe futurefuture”” key materials ThatThat isisToray Toray’’ss Nano-technologyNano-technology FibersFibers && TextilesTextiles FilmsFilms Toray Core Technologies Nano-fiber Nano-laminated film New Properties ResinsResins ChemicalsChemicals Organic synthetic chemistry Emerge High-toughness (Zeolite) nano-alloy* Polymer chemistry New Value Biotechnology “Nano-effect” Nano-technology Dramatic improvement in properties Expansion of four growing business fields InformationInformation // CNT TelecommunicationsTelecommunications // ElectricsElectrics Nano-material Nano-particles (nano-dispersion) Film for data storage, LCF, PDP Nano-structure Nano-alloy* AutomobilesAutomobiles // AircraftAircraft design control Nano-composite Carbon fiber, impact-absorbing nano-alloy* Chemical modification Nano-surface-treatment Nano-coating LifeLife ScienceScience Nano-process Nano-imprint Artificial kidney, DNA chip (nano-processing) Nano-laminates EnvironmentEnvironment // Water-relatedWater-related // EnergyEnergy Nano-shape observation PLA products, water-treatment membrane, Nano-analysis Nano-structure analysis/ fuel cell composition analysis * nano-alloy* is one of Toray’s trademark Copyright 2008 Toray Industries, Inc. All Rights Reserved. 6 Business Culture of Toray Technology Development A business culture that pursues the ultimate, challenge in “Innovation of technologies,” and create innovative technologies Area Ultimate Themes Objectives Contents Fibers & Nano-fiber Fineness of fiber diameter Textiles 20 μ m Hair Ultrafine-fiber Resins Polymer-alloy Polymer dispersion size 10 5nm PET Co-polymerized PET Films Multi-layer film Thinness of film layers S Carbon fiber t r e n Carbon Fiber g 5 t h Composite Carbon fiber Strength and rigidity Aramid fiber Materials IC bonding area GPa Glass Steel wire Electronic & Nylon fiber High-density Processing accuracy of Information 0 0 200 400 600 800 Rigidity (modulus) GPa Materials mounting board wiring pitch Structure design control of Health care DNA chip nano-columnar 20 μ m High boron- Water Pore size control of RO 100 μ m rejection Polymer model Treatment membrane membranes Holes Engineering Realization of innovative technologies through Development creation of new processing and establishment Columnar structure Center of process for mass-production Copyright 2008 Toray Industries, Inc. All Rights Reserved. 7 Contents ･ Midterm Business Strategies “IT-2010” and the Creation of Advanced Materials ・ The Era of Protecting the Global Environment and Toray’s EcoChallenge ・ The Automobile Industry Entering a Great Revolutionary Era ・ Concept for A & A Center and Restructuring of Nagoya Plant ・ Expansion Plan for Automotive Business Copyright 2008 Toray Industries, Inc. All Rights Reserved. 8 Various Global Environmental Issues Urgent response to various global environment issues is required Global warming / Extreme weather Acid rain Air pollution Sea pollution Desertification Oil exhaustion Ozone layer depletionBiodiversity loss Forest loss Copyright 2008 Toray Industries, Inc. All Rights Reserved. 9 Global Environmental Issue Initiatives by the Industrial World Responses to GHG reduction…. ** (GHG: Green House Gas) COCO22 reductionreduction from from aa Carbon-BalanceCarbon-Balance perspectiveperspective * quantification value of CO2 balance over total product-life cycle Global warming GHG increase ・use of fossil fuels Mining of natural ・deforestation, etc. resources / Production Extreme weather refinement Disposal Use EnsuringEnsuring food, food, water, water, energy energy Contribute to GHG reduction during mining / refinement