Business Overview

Business Overview Suminoe at a Glance

Business Overview 2018

president yoshikawa

Consolidated financial result

During the consolidated fiscal year ended May 31, 2018 under review, the Japanese economy continued recovering, supported by strong corporate earnings and a gradual improvement in employment and income. Meanwhile, the global economy recovered, but there remained uncertainty over the future due to the unpredictable policies of the Trump administration and rising geopolitical risks.
In accordance with the basic policy of its 5th three-year medium-term management plan, “2020,” the Suminoe Textile Group implemented various measures to achieve its target for the initial year. Net sales increased from the previous year, since the Automotive Textiles and Traffic Facilities Segment performed solidly against the backdrop of steady automobile sales in Japan, China, and Thailand. Meanwhile, profits grew from the previous year despite the negative impact of soaring raw material prices and distribution costs.
Consequently, our consolidated net sales for the fiscal year under review were ¥97,873 million (U.S.$897,917 thousand, up 1.9% year-on-year), with operating income of ¥2,248 million (U.S.$20,624 thousand, up 73.2%), ordinary income of ¥2,359 million (U.S.$21,639 thousand, up 72.9%), and profit attributable to owners of the parent of ¥1,084 million (U.S.$9,945 thousand, profit attributable to owners of the parent of ¥26 million in the previous year).

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Dividend policy

The Company has positioned shareholder return as a key management issue and distributes profits appropriately by taking into account stable dividend payments and business results. Based on this basic dividend policy, for this fiscal year, we have paid an interim dividend of ¥3.5 (U.S.$0.03) per share and year-end dividend of ¥35.0 (U.S.$0.32) per share. The fiscal year-end dividend is ¥35.0 given the 1-for-10 reverse split of common shares, which took effect on December 1, 2017.
In addition, it plans to pay an annual dividend of ¥70.0 per share (an interim dividend of ¥35.0 and year-end dividend of ¥35.0) for the fiscal year ending May 2019.

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Note : The figures shown were calculated based on standards after the reverse stock split.

Outlook for the next term

The fiscal year ending May 31, 2019 is the second year of “2020,” our 5th three-year medium-term management plan. Although the Japanese economy is expected to continue recovering gradually, there is growing uncertainty over the global economy due to the escalation of a trade dispute caused by the Trump administration’s commercial policies and the risk of changes in emerging-market currencies.
We forecast net sales to decrease from FY2018 due to the impact of restructuring in the Interior Fittings Segment and foreign currency translation adjustments. However, we expect operating income to grow from FY2018 because of continued steady demand for automotive textiles.
Considering these circumstances, we plan to post net sales of ¥97,500 million, operating income of ¥3,100 million, ordinary income of ¥3,350 million, and net income attributable to owners of the parent of ¥1,900 million for the fiscal year ending May 31, 2019.

Suminoe at a Glance

Suminoe at a Glance

Interior Fittings

Interior Fittings

At the Vanguard of Lifestyle Creation

Ever since 1891, when its carpets were supplied to the Imperial Diet Building on the occasion of its opening, the Suminoe Textile Group has created comfortable and safe living spaces as a pioneer in the Japanese interiors industry. Currently, our curtains and carpets are primarily marketed by SUMINOE Co., Ltd. and our wallpaper and paper for sliding doors by RUNON CO., LTD. The Suminoe Textile Group is committed to providing environmentally friendly products that feature both excellent design and functionality, and serving diverse customers by offering a wide variety of interior products for public facilities, hotels, schools, hospitals, and office buildings, as well as for general households.
In recent years, we have worked on the production of eco-friendly products, under the theme of KKR+A, or Kenko (Health), Kankyo (Environment), Recycle and Amenity.

Environmentally Friendly Product at World's Highest Level

ECOS® is a series of recycled carpet tiles produced using horizontal recycling technology. ECOS® has achieved a post-consumption recycled material usage rate of 84%. Through our proprietary recycling system, recycled materials are created from old carpet tiles.

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Business overview for the fiscal year ended May 31, 2018

Sales of commercial-use carpets declined from the previous year despite steady growth in the export of ECOS®, eco-friendly carpet tiles under the horizontal recycling system. The decrease was due to the dearth of large-scale projects in Japan, although we launched sales of BERRY ALLOC® PURE LVT, a quality, high functional hard floor material, and concentrated our efforts on obtaining orders for carpets related to new construction and remodeling of office buildings, commercial facilities, and hotels. Sales of curtains fell over the previous year because sales of Face, curtains for medical, welfare, and educational institutions, were sluggish due to fewer projects, although sales of mode S® Vol. 8 remained almost at the level of the previous year. Sales of carpets, rugs and mats for general households fell from the previous year, since consumer sentiment continued to be weak. Sales of wall coverings and materials increased from the previous year due to solid sales of Runon Fresh Premium.
Furthermore, we recorded a valuation loss on inventory as expenses for structural reform. Consequently, the Interior Fittings Segment posted operating income of ¥33 million (U.S.$303 thousand, down 95.4% year-on-year) on net sales of ¥34,330 million (U.S.$314,953 thousand, down 3.1%).

Automotive Textiles and Traffic Facilities

Automotive Textiles and Traffic

Our Expertise in Proposing Optimal Solutions as a Total Supplier

In 1931, Suminoe Textile supplied carpets and seat covering materials for automobiles assembled and manufactured in Japan for Ford Motor Company and General Motors. After World War Ⅱ, the production of domestic automobiles increased, with our products adopted in these Japanese-made cars one after another. At present, Suminoe Textile supplies its products to all Japanese automobile manufacturers.
The greatest feature of our Company is that we can supply a total line of automotive textiles, from floors to ceilings, including headliners, seat covering materials, car mats, and floor carpets.
Outside Japan, the Suminoe Textile Group has now expanded its overseas presence by setting up 11 manufacturing and sales sites in six countries (the United States, Mexico, China, Thailand, Indonesia, and India), aiming at the creation of a globally optimized supply system.

Automotive Textiles and Traffic

Confidence Based on Our Experience as a Pioneer

In 1896, we succeeded in producing hand-woven moquette as a seat covering for the first time in Japan. This domestic moquette was adopted by Japan National Railways (now Japan Railways (JR)) for its seat coverings in 1899. Since then, we have supplied our products to JR, private railways and publicly operated transportation services, maintaining the top market share for more than a century. Currently, Suminoe Textile offers total proposals for seat coverings, curtains, wall materials, flooring materials and other interior materials for public transportation systems, such as Shinkansen bullet trains and other trains, buses, ships, and aircraft. We also deliver environmentally friendly products, including SUMICUBE® seat cushion material, which excels in terms of both safety and environmental performance.

Business overview for the fiscal year ended May 31, 2018

In the area of automotive textiles, domestic sales increased from the previous year in the carpet, mat, and seat fabric businesses. In the seat fabric business, new fabric mixtures sold well due to the expansion of production supported by export demand. The carpet business experienced a growth in orders for exterior components as well as interior materials. In the mat business, sales were steady since high-grade mats were newly adopted by customers. Overseas, Suminoe Textile of America Corporation, a subsidiary in the U.S., continued to focus its efforts on improving its balance sheet. Meanwhile, our overseas sales rose from the previous year due to a rise in orders for new fabric mixtures in the seat fabric business in Asia, most notably China and Thailand, where production of Japanese cars was strong. In automotive textiles as a whole, both sales and operating income grew from the previous year.
In the area of traffic facilities, railway vehicle-related sales grew from the previous year since sales of non-textile products were steady, despite the lack of large orders from the Japan Railways (JR) Group and private railway companies. Bus-related sales decreased from the previous year, since the production of new buses declined due to a fall in the use of large buses. This was because there was a change in the preferences of inbound tourists, who have been driving the travel industry in recent years. Specifically, the travel pattern of inbound tourists changed from traveling in large groups to small-group travel. Furthermore, orders for the remodeling of buses also declined. Meanwhile, airplane-related sales decreased from the previous year, since sales of seat covering materials and new materials that we had started supplying reached saturation point. In traffic facilities as a whole, sales and operating income fell from the previous year.
Consequently, the Automotive Textiles and Traffic Facilities Segment posted operating income of ¥3,331 million (U.S.$30,559 thousand, up 9.8% year-on-year) on net sales of ¥59,758 million (U.S.$548,239 thousand, up 6.0%).

Functional Materials

In Pursuit of Endless Business Possibilities

Transcending the boundaries of our traditional business segments, such as interior fittings and automotive textiles and traffic facilities, we have embarked on business targeting other fields and industries. Suminoe Textile has offered products that incorporate the unique technologies we have accumulated, such as TRIPLE FRESH® deodorizing filters and olefin bathroom flooring. In addition, the Company offers new value in the field of functional materials (SUMINOE BIOTECH®) based on biotechnology, in keeping with the theme of KKR+A, or Kenko (Health), Kankyo (Environment), Recycle and Amenity.

Tispa Deodorization Related Brand

The Tispa Series, Real Odor Deodorization without Disguising with a Scent, is stationary deodorizers for home use, making use of a deodorant filter.

Functional Materials

Air-filter Products

TRIPLE FRESH® Bio is a concept of deodorizing filter where a biomimetic enzyme is invested in to a corrugate carrier. It continuously decomposes and deodorizes unpleasant odor components by oxidation-reduction reaction. This technology is incorporated into deodorizing filters used in air purifiers and other household appliances.

Functional Materials

SUMITRON®

Continuous fiber made from recycled PET bottles.

Functional Materials

Electric Carpet

The main unit is produced by Suzhou Suminoe Textiles Co., Ltd.

Functional Materials

Floor Material for Bathrooms

We have developed bath flooring made of eco-friendly olefin materials.

Functional Materials

SUMINOE BIOTECH®

Functional materials based on biotechnology, and foods, processed foods, cosmetics, etc., making effective use of these materials.

Functional Materials

Business overview for the fiscal year ended May 31, 2018

In the electric carpets business, sales and operating income decreased from the previous year due to a change in the product mix, although sales volume grew. In the deodorization and filter-related business, sales and operating income increased from the previous year, since deodorizing filters for air purifiers and heating equipment and the Tispa series, Real odor deodorization without disguising with a scent (a stationary deodorizer for home use) in a redesigned package, sold well. Although floor materials for bathrooms sold steadily, the business saw sales and operating income decrease from the previous year. Sales of Sumitron®, polyester filament for dust mats, and carpets for airplanes were strong. Thus, both businesses saw sales and operating income grow from the previous year.
Consequently, the Functional Materials Segment posted operating income of ¥177 million (U.S.$1,624 thousand, up 40.2% year-on-year) on net sales of ¥3,647 million (U.S.$33,459 thousand, down 10.8%). The exclusion of Suminoe Nakacho Device Technology Corporation from the scope of consolidation at the end of December 2016 also influenced the segment’s results.