toray ir day medium-term management program “project ap-g …

0Copyright © 2020 Toray Industries, Inc.

Toray IR Day Medium-term Management Program “Project AP-G 2022”

June 4, 2020

Films Business

Osamu InoueSenior Vice President, General Manager, Films DivisionToray Industries, Inc.

1Copyright © 2020 Toray Industries, Inc.Copyright © 2020 Toray Industries, Inc.

Contents

I. Overview of Films Business

II. Review of “AP-G 2019”

III. Basic Policies and Major Issues of “Project AP-G 2022”


I. Overview of Films Business


Net Sales by Segment

Toray Group total2.2 trillion yen

1. Consolidated Net Sales of Films Business (FY 2019)

770.8

883.1

236.9

252.3

Performance Chemicals

Fibers & Textiles

Carbon Fiber Composite Materials

Environment & Engineering

Life Science Others

billion yen

(34.8%)

Net Sales

Films 316.1

Resins, Chemicals 319.3Electronic &Information Materials 67.7

Trading 449.1

Adjustments ▲ 381.4

Total 770.8

About 14% ofConsolidated

Net sales

Billion yen


TTS (Thailand)

Film processing

Base film

TAF (Takatsuki)

2. Production Bases of the Films Business

TFE (France)

PET･OPP

YTP (China)

PET

TAK(Republic of Korea)

PET

TBSK(Republic of Korea)

BSF

PFR (Malaysia)

PET

TFZ (China)

TAFK (Taiwan)PE

TFN (China) TPA (USA)

PET･OPP

GifuPET, PPS

TAF (Nakatsugawa)

TAF (Fukushima)

MishimaPET,

Aramid

TsuchiuraOPP

NasuBSF

TKP (Kakogawa)

THU (Hungary)

BSF

TBCK(Republic of Korea)

BSF


■TPA (USA)■ YTP

(China)

■ TFE (France)

■ PFR (Malaysia)

Japan

3086

147

■TAK (Republicof Korea)46

45

43

(unit: 1,000 tons/yr)

3. Toray Group Production Capacity of PET Filmand OPP Film

4619

14

OPPFilm

PETFilm


Brand Product Major Applications

LUMIRRORTM Polyester (PET) filmrelease film in production lines, optical materials,magnetic recordings materials,packaging material

TORAYFANTM Polypropylene (OPP) film capacitor, packaging materials

TORELINATM Polyphenylene sulfide (PPS) film release film in production lines, capacitor, electrical insulator

MICTRONTM Aramid film magnetic recordings materials

SETELATM Battery separator film (BSF) separator for secondary lithium-ion batteries

TORETECTM Non-oriented polyethylene film self-adhesive protection film (optical, functional resin plate)

BARRIALOXTM Clear metallized film packaging material

4. Toray Group Main Films


5. Fundamental Film Technologies and Product Line-up

Polymer technology

Film technology

Synthesis, molecular design

Solution casting

Melt extrusion, casting

Structural design, control

Surface design, control

Fundamental technologies Pursuit of ultimate performance Product line-up

microporous PE filmSETELATM

aramid filmMICTRONTM

PPS filmTORELINATM

OPP filmTORAYFANTM

super smooth and transparentLUMIRRORTM U series

metallic lusterPICASUSTM

for capacitorsTORAYFANTM

Automobiles

Display

release filmLUMIRRORTM R series

Lithium-ion battery

microporous PE filmSETELATM

high rigidity

heat resistance

electrical characteristics

microporous

transparency

reflective properties

dimension stability

surface smoothness

Data storage

aramid filmMICTRONTM

Nano-layered filmPICASUSTM

super smooth and transparent, good adhesion, high-functional release film

LUMIRRORTM

for electric insulationTORELINATM


II. Review of “AP-G 2019”


Review of “AP-G 2019”

PET film ：Completed the restructuring of theproduction system

BSF ：Expanded production capacityLow-profitability companies：Promoted business

structure reform

Progress in “AP-G 2019”Progress in “AP-G 2019”

PET film：Slowdown in sales for main applications (MLCC, etc.)

BSF：Downward swing in major customers’ demandPrice decline due to intensifying competition

Market slumped in FY 2019 on the back of US-China trade friction, and business expansion fell short of the plans

Market slumped in FY 2019 on the back of US-China trade friction, and business expansion fell short of the plans

【Trends in net sales of Films Business】

(note) include transactions within the Group

(battery separator film)

293.2

330.8

352.7 316.1

0

100

200

300

400

2016 2017 2018 2019

(Billion yen) "AP-G2019"Target


III. Basic Policies and Major Issues of “Project AP-G 2022”


1. Basic Policies of Project “AP-G 2022”Business environment, External structural changes

Expansion of xEV, Automation⇒ Demand increase in BSF, MLCC for automotive applications and

film capacitorsProgress in 5G, IoT⇒ New business opportunities in next-generation display

applications, etc.Tighter global environmental regulations⇒ Requests for reduction of plastic wastes, and recycling

Basic Policies for Films Business

Expanding high value-added products in the growth business fields

Accelerate development and creation of new products and applications


①PET film: Strengthening global supply of highly functional release applicationsexpanding nano-layered film PICASUSTM

②BSF: Strengthening production facilities in Europe, driving differentiation strategy in high functional products

③OPP film: Strengthening production facilities and expanding sales in automotive capacitors

④Processed film products: Strengthening supply capacity and promoting high value-added products

(1) Expanding high value-added products in the growth business fields

2. Basic Policies and Major Issues

(2) Developing new products and new applications

①Strengthening development of new products and materials by anticipatingmarket demand

② Driving development of environmentally-friendly technologies in order toenhance sustainability


3. Key Initiatives (1) – 1: Expanding PET Film Business6 operational bases worldwide, production capacity at about 400,000 tons/yr,No. 1 global market shareWide range of applications including information and telecommunications, general industry, and packaging materials

Global operation of PET films

Expanding highly functional release applications (MLCC, DFR, etc)⇒ Strengthen the overwhelming top market

position through increased supply capacity andadvanced technologies

Expanding functional nano-layered film PICASUSTM

Advancement in information interfaces such as 5G and IoT

Expansion of xEV and progress in automation

Strengthening cost competitiveness through

use of ICT

Strengthening cost competitiveness through innovation of production process and the use of ICT

Expanding High Value-added Products in the Growth Business Fields

■TPA (U.S.A.)

■YTP (China)

■TFE (France)

■PFR (Malaysia)

Japan■TAK (Republic of Korea)- Expanding market share in Europe

- Mother plants- Developing and expanding highvalue-added products

- Responding to theexpanding Chinese market

- Manufacturing high value-added products to the ASEANcountries

- Serving major Korean customers- Operational base for the

US market


Business OpportunitiesMLCC: Increased functions of smartphones and installation of base stations with the spread of 5G,

expanding demand due to the increased use of electronics in automobilesDFR: Downsizing of circuit substrates, higher definition of wiring circuits

Strategies

quality-control expertise

StrategiesIn addition to the surface-forming technologies developed in the 90s with magnetic tapes, promote business expansion in areas where market growth is expected such as MLCCs and DFRs, using high quality-control expertise

Expanding High Value-added Products in the Growth Business Fields3. Key Initiatives (1) – 2: Expanding Highly Functional Release PET Films

201020001990

Release films for ceramic capacitors (MLCC)

2020

Films for DFR expansion

Films for video tapes convergence

Smartphone circuit boards


Business Opportunities: Advancement in smartphones (with 5G etc.), progress in automotive CASE→ Downsizing of MLCC, increased number of ceramic layers for higher capacity, and increase in the

number of units installed

Expanding High Value-added Products in the Growth Business Fields3. Key Initiatives (1) – 3: Expanding MLCC Release PET Films

- Reduction of surface roughness

- Reduction of foreignsubstance

Optimization of front and

back roughness

Surface designPursuit of ultimate

performance

Thickness uniformity

Multifunction of mobile phones,

smartphones

Mobile device(wearable, etc.)

small-size MLCC, multi-layer, thin-layer

Automotive application

High reliability and long-term warranty

Devices

Requirements in film

properties

2000 2005 2010 2015 2018

PC, TVMobile phones

(dawn)

5G, AI, robotAutomatic driving,

drone

Homogeneous smoothnessZero-defect

Changes in devices and requirements in film properties

Toray’s strength- Advanced surface design technology and

know-how of zero-defect- Production at 4 locations worldwide

(Mishima, Gifu, Republic of Korea, Malaysia)

Quality requirements for films continues to increase

Film

surfa

ce

High-reliability

Mobile electronics

Mobility5G

equip-ment

Industrial Home

appliance

High-precision

- Covering commodity and advancedapplications with reliability


Expanding High Value-added Products in the Growth Business Fields3. Key Initiatives (1) – 4: Expanding PET Films for DFRWhat is DFR (Dry Film photo Resist) ?

Photoresist formed by a photosensitive resin in a film form (*)

Used to form circuit boards for electronic components

Circuit formation method

substrate

photosensitive resinPET

copper foil

photomask

resin cured by ultraviolet light

etching the exposed areas

photosensitive resinPET

DFR

* photoresist: photosensitive materials whose properties (solubility) changes with light

Curing resist by UV light through PET→ foreign substance inside the PET is the cause of

exposure blockage (defects)UV exposure

Downsizing of circuit boards, increase in fine-pitch of circuit board wiring (L/S)

Will proceed with differentiation and maintain a high market share by anticipating the increasing sophistication of quality requirements, such as high transparency, reduced surface micro-scratches, and control of foreign substances inside the film


3. Key Initiatives (2) – 1: Expanding BSF Business Production at 2 locations (Japan, Republic of Korea) worldwideHigh safety through COEX (co-extrusion) technology, high-performance coating

- Expanding demand for automotive applications mainly in the European market on the back of growing global demand for xEVs

- In addition to IoT devices, the range of consumer applications is expanding to include stationary fuel cells and power tools

Expanding production facilities at locations with increasing demand (Hungary)(scheduled to start operation in 2021)

Proceed with differentiation to build competitive advantage by anticipating customer demands for high-safety, high-quality and high-functionality


0.0

2.0

4.0

6.0

8.0

2018 2019 2022

Demand for Battery separator films(billion ㎡/yr)

Automotive

applications

Consumer

applications

0.0

0.5

1.0

1.5

End of

2018

End of

2019

End of

2022

Toray Group production capacity of

Battery separator films

(billion ㎡/yr)

Hungary

increaseabout 30%

increaseabout 20%

annual growth rateover 20%


Thin-layer,High-strength

Thin-layer,High-strength

COEX(co-extrusion)

COEX(co-extrusion)

Heat-resistant Layer (180℃)

base layer(150℃)

Fine pore structure control

Film thickness (4μm～)Increased energy density

Improved reliability due to uniform ion transmission

Increased safety throughimproved heat resistance

⇒ Contributing to outstanding safety andimprovement of LIB performance

Polymer design Process control Film structure control

Base Film technology

cross-section (image)

ion path

surface (AFM image) separator thickness (μm)

ener

gy d

ensit

y

９４1μm

Expanding High Value-added Products in the Growth Business Fields3. Key Initiatives (2) – 2: Expanding BSF Business


< Heat-resistant ceramic coating>

uncoatedceramic coating

Heat resistant film breakage ： hot nail test (450℃)

450℃solderingiron

separator

<Adhesive Coating>

Heat-resistant coating technology

cross-section

heat-resistant coating layer

substrate

Assembly deformationwithout adhesion

with adhesion 50

60

70

80

90

100

110

0 100 200 300 400

容量維持率（％）

充放電回数

with adhesion

without adhesion

Heat resistanceHeat resistanceCeramic particle

homogenous distribution technology

AdhesiveHigh-functional binder design

technology

AdhesiveHigh-functional binder design

technology

Improved heat resistance ⇒ High safetyAdhesion to the electrode⇒High reliability, longer battery life

Battery cross-sectional view(X-ray CT image)

Prevention of short circuit inside the battery Improved battery life and reliability

3. Key Initiatives (3) – 2: Expanding BSF BusinessExpanding High Value-added Products in the Growth Business Fields

Number of charge/discharge cycles

Capa

city

Mai

nten

ance

Rat

io (%

)


3. Key Initiatives (3) – 1: Expanding OPP Film Business

Production at 3 locations (Japan, US, France) worldwide

Focus on capacitors for xEVs (Japan), high-functional packaging materials (US, France)

Expanding demand for automotive capacitors for use in HEVs, etc.

Increase production facilities for ultra-thin, high voltage resistant OPP films ⇒ build a system to increase production at Tsuchiuraplant (plan to start operations in 2022)

Increasingly diverse and sophisticated customer needs in the food packaging market

Introduced the latest 5-layer laminated, high-speed film production facility at TPA (USA) (plan to start operations in 2020)

Capacitor applications High-functional packaging materials



250

300

350

400

450

500

2000 2005 2010 2015 2020 2025耐電

圧高

温(1

25℃

)BD

V

（V

/μ

m）

年

フィルム厚み3.0μm

2.5μm2.3μm

3.2μm

2.0～2.3μm

3. Key Initiatives (3) – 2: Expanding Ultra-thin OPP Film for Automotive CapacitorsExpansion of xEV market (millions units )

Capacitors for HEV

• Automotive capacitors : used in the inverter circuit of the PCU* that drives the motor of the car

• There is a strong need for smaller and lighter PCU and film capacitors to improve driving performance, fuel efficiency, interior space, and design flexibility

Captured the top share of the market by combining the contradictory characteristics of thinness and high voltage resistance through our proprietary technologies

Expanded the production facilities at the Tsuchiuraplant to increase the production capacity of films for automotive capacitors to 1.6 times the current scale


* PCU=Power Control Unit

TORAYFANTM leads the market in achieving high voltage resistance with thinner films

film thickness

BＤV

(125℃

)（Ｖ

／μｍ

）

3 4 5 7 11 15 20 27 321 2 2 2 4 5 7

9 11

01020304050

2017 18 19 20 21 22 23 24 25

EVHEV+PHEV


3. Key Initiatives (4) : Accelerate development by integrating core technologies

low oligomerlow oligomer weather resistant polymerweather resistant polymer

recycling technologyrecycling technology hydrothermal resistant polymer

hydrothermal resistant polymer

nanoalloy, co-polymerizationnanoalloy, co-polymerization

filler, inner grain controlfiller, inner grain control

physical property control

physical property control

high-functional surface treatmenthigh-functional

surface treatment

fine laminationfine lamination optical property designoptical property design

surface structure design, controlsurface structure design, control

extrusion, retention controlextrusion, retention control

castcast

zero-defect coatingzero-defect coating

cleaningcleaning static Controlstatic Control thickness controlthickness control

fine windingfine winding

micro-defect evaluationmicro-defect evaluation

dimensional stabilizationdimensional stabilization

equipment designequipment designzero-defect stretching, delivery

zero-defect stretching, delivery

ultra-thin, ultra-thick film production

ultra-thin, ultra-thick film production

● Polymer design, polymerization technology ● Film design, control technology

● High-quality, high-grade film manufacturing process technology

Developed high-functional products and realized low costs utilizing proprietary core technologies

Developing New Products and New Applications


3. Key Initiatives (5) : Quality Improvement through Evolution of Process Fundamental Technologies

- polymer nano dispersion - fine filtration

・高機能口金・高精度制御

High-functional polymer technology

- high-functional socket- fine control

- high-speed slitting of thin, smoothproducts

- electrostatic control, zero foreignsubstance

- simultaneous, sequentialbiaxial drawing

- vertically, horizontally low heat-absorption

- zero-defect coating

- thin-layer laminate- multi-layer laminate

- stretching temperature control- scratchless roll formationFine multi-layer technology

Zero-defect longitudinal extension technology

High-functional coating technology

Fine winding technologyDimensional stabilization technology

Nano-thickness control technology

Possessing the world's highest level of process fundamental technologies



3. Key Initiatives (6) – 1 : Expanding Nano-multilayer Film PICASUSTM

【 Nano-multilayer film PICASUSTM】Toray’s unique nano-layering technology⇒ about 1,000 layers with thickness of nanometersCharacteristics: non-metal, electromagnetic wave permeable, good formability+ selectively reflects light of various wavelengths (ultraviolet, visible light, infrared rays)

Expand each of metallic films, blue-light block, and UV protection applicationsTargeting energy conservation and augmented reality (AR), etc., currently developing high thermal-insulation types, front transmittance and oblique reflection types

Basic structure of PICASUSTM


Blue Light blockingFilm

Transmission of Visible Light

Reflection of Blue Light

Cold Mirror

Reflection of

Visible LightTransmission

of Near-IR Light

Can control the light with PICASUSTM


3. Key Initiatives (6) – 2 : Expanding Nano-multilayer Film PICASUSTM


Applications

Reduces blue light, the cause of eyestrain

Sensor covers for in-vehicle emblems, etc.Visible light reflection (metallic),

millimeter-wave transparency

Blue-light reduction

Metallic : Design quality

Heat reflection: Energy conservation

Window filmReflect near-infrared light, transmit visible and

electromagnetic waves

Viewing-angle control

Head-up display

PICASUSTM

applied part

CorneaRetina

Crystalline Lens

Blue Light

Visible Light


3. Key Initiatives (7): Establishing a Recovery System for Release Films

Current situation Plan 1 Plan 2&Selling wastes,

Thermal recyclingRecycling to other

productsFilm to Film

Recycling concept

Release PET films are currently used mainly for waste treatment and thermalrecycling as it is difficult to remove coating materials and resins, etc. at each process in the supply chain

Plan 1: Establish a recovery system and utilize them in our other materials such as fibersPlan 2: Establish a circulation-type cycling system by reusing films

Developing New Products and New Applications (enhance sustainability)


3. Key Initiatives (8): Developing High Value-added Processed Film ProductsThe aluminum evaporated layer blocks oxygen and water vapor

Providing optimal products to meet diverse needs

Providing products optimized for various

film processing technologies

Providing products optimized for various applications, from packaging for snacks to emergency food and space food, by combining film products and film processing technologies

Contributing to the reduction of food waste by extending the life of food products

• Diversified needs in the food packaging market due to changes in eating habits and diversification of packaging methods

• Increasing efforts to reduce food loss

• Increasing quality requirements in packaging applications

Developing new applications with new film processing technologies・Introduce new technologies for high adhesion and high barrier properties (for oxygen and water vapor)・Develop vacuum insulation materials and materials for automotive thermal barrier applications (high value-added applications) utilizing new technologies

Developing New Products and New Applications (enhance sustainability)


4. Net Sales, Revenue Targets for Growth in the Films Business

0

100

200

300

400

2016 2017 2018 2019 2019 2022

(Billion yen)

Target

380

J-GAAP IFRS(IFRS estimation)

317

Actual

+20 ％


Descriptions of predicted business results, projections, and business plans contained in this material are based on predictive forecasts of the future business environment made at the present time.

The material in this presentation is not a guarantee of the Company’s future business performance.

toray ir day medium-term management program “project ap-g …

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