Japan’s economy grew steadily during fiscal 2006, ended March 31, 2007, supported by increases in corporate capital investment on the back of stronger earnings.
The Fibers and Textiles Business saw decreases in both sales and earnings. Sales declined ¥1,182 million, or 1.1%, to ¥107,925 million, and operating income dropped ¥1,466 million, or 15.5%, to ¥7,985 million.
Sales of KURALON as an alternative to asbestos for use in reinforcing cement remained favorable. However, the impact of high raw materials and fuel prices led to a situation whereby overall sales in the KURALON business increased while earnings declined.
Sales of the man-made leather CLARINO for use in accessories were strong. However, the combination of stagnant sales for shoe applications and high raw materials and fuel prices led to flat overall sales and a decrease in earnings.
In nonwoven fabrics and hook and loop fasteners, Kuraray recorded strong sales volume for automobile applications. This was offset, however, by slumping sales of hygienic materials and higher raw materials prices. Overall sales and earnings were down.
Due to Kuraray’s efforts to develop new applications, sales and earnings were up for the high-strength fiber, VECTRAN. In the polyester business, Kuraray made progress in its efforts to shift to differentiating products, but felt the impact of high raw materials and fuel prices.
In fiscal 2007, ending March 31, 2008, we expect to seesteady growth in the world economy. However, we believe that high prices for raw materials and fuel will continue, along with a number of other uncertainties, including lingering concerns over the direction of the economies in the United States and China.
In addition, we expect international corporate competition to intensify, making the operating environment more severe. Under these circumstances, Kuraray will pursue the following business initiatives.
In the Fibers and Textiles Business, Kuraray will take active steps to expand the number of specialized applications for KURALON, such as in reinforcing cement. We will work to expand the market for the man-made leather, TIRRENINA, an eco-friendly variety of CLARINO.
In non-woven fabrics, we will focus on developing markets for new FLEXSTAR, which incorporates steam-jet technologies, and on expanding uses for hook and loop fasteners in automobiles. In the polyester business, we will expand sales of uniforms and other sportswear products.
