Fiber and Advanced Materials Makers Q1 FY2027: Toray rebounds

Average sales for the two companies were ¥450.45 billion, up an average 2.7% year on year, though results varied widely. Average operating profit was ¥53.65 billion and the average operating margin was 17%. Teijin's one-off gain lifted the averages.

• AI and semiconductor investment supported demand for materials. Toray's advanced performance chemicals business grew, offsetting economic uncertainty.
• Higher energy and raw-material costs weighed on both companies. Costs rose amid tensions in the Middle East, and Toray pushed through price increases.
• Differences in demand and foreign-exchange effects contributed to the divergence. Toray grew sales, while Teijin's revenue fell because of currency effects and weaker demand in some businesses.
• Portfolio selection and restructuring continued. Toray benefited from structural reforms, while Teijin gained from selling a joint-venture business.

On earnings quality, Toray was the winner. Sales rose 14% to ¥679 billion, compared with Teijin's ¥221.9 billion, down 8.7%. Toray's operating profit also climbed 72.1% to ¥47.3 billion, reflecting a recovery across its core businesses.

Teijin ranked first in reported operating profit, at ¥60 billion, ahead of Toray's ¥47.3 billion. The figure was up 2,512.6% year on year, with a ¥45.5 billion gain from a joint-venture sale making a major contribution. Business profit also rose 56.8%, indicating an underlying improvement, but not on the scale implied by the headline growth.

Teijin's operating margin was 27%, against Toray's 7%. But Teijin's margin includes the sale gain and may not reflect its normal earning power. The defining contrast this quarter was Toray's core recovery versus Teijin's one-off gain.

Toray recovered across all segments, led by carbon-fiber composite materials and advanced performance chemicals. It responded to higher raw-material costs with price increases, while structural reforms also supported earnings. The company raised its forecast for the first-half cumulative period. Its full-year forecasts are sales of ¥2.83 trillion and operating profit of ¥160 billion.

Teijin booked a ¥45.5 billion gain from selling shares in joint ventures, including its venture with DuPont. As it reshapes its portfolio, Electronics and Energy has become its main earnings driver, while losses in Specialty Materials remain a challenge. Teijin raised its full-year forecast to sales of ¥900 billion and operating profit of ¥70 billion.

Toray is building on a recovery in products and cost measures. For Teijin, the focus is on asset sales and rebuilding its business mix. Investors will also want to track Teijin's profit growth excluding the one-off gain.

• Rising raw-material and energy prices could squeeze margins if companies are slow to pass costs on to customers.
• Geopolitical risks: Changes in the Middle East could disrupt procurement costs and logistics.
• Uncertainty in China: China-related risks could weigh on Toray's earnings.
• Uneven demand: AI and semiconductor investment is providing support, but reliance on specific markets also risks a pullback.
• The aftereffect of one-off gains: Teijin benefited substantially from the sale gain, leaving its underlying recovery in focus in the coming periods.

In materials, success depends not only on developing products but also on proposing applications, negotiating prices and reviewing business portfolios. Toray's price increases and structural reforms show how both technical expertise and business execution shape earnings.

Teijin's restructuring highlights the ongoing need to deploy talent in growth areas and turn around existing businesses. Alongside research and development, data skills, joint development with customers and knowledge of overseas procurement could strengthen a career in the sector.