Teijin Limited

Sources: S&P Global Market Intelligence via StockAnalysis (income statement, balance sheet, cash flow); Teijin FY2024 results deck (company KPIs, EBITDA, ROE, ROIC, R&D, capex, interest-bearing debt); Teijin FY2025 results call. FY2021–FY2023 are J-GAAP (including IT); FY2024–FY2025 IFRS (IT as discontinued). S&P's "operating income" differs from Teijin's IFRS operating income in FY2024 (S&P -¥80.1 bn vs company quarterly sum -¥71.8 bn) because of classification differences.

Income statement

FY2023 IFRS-restated figures (company): revenue ¥960.5 bn, AOI ¥22.0 bn, EBITDA ¥98.4 bn, net income -¥11.7 bn, EPS -¥60.9. FY2025 company-definition EBITDA was not located in sources reviewed (FY2025 outlook had been ¥100 bn; AOI ¥25.8 bn plus S&P D&A ¥60.3 bn implies ~¥86 bn, shown for orientation only).

Margins (%)

Revenue CAGR FY2021–FY2025: -1.5% per year (¥926.1 bn → ¥873.2 bn). The figure is distorted by disposals (INFOCOM ~¥79 bn revenue; North American composites >US$1 bn) and the accounting-basis change; organically, the retained businesses grew modestly.

Commentary. Three inflections define the period. (1) FY2022: a post-COVID cost shock and composites/aramid weakness pushed operating income down 71% and produced a net loss. (2) FY2024: underlying AOI improved 26% to ¥27.6 bn and the INFOCOM gain (¥106.1 bn discontinued-operations profit) produced a reported ¥28.3 bn net profit and 6.7% ROE — but ¥95.2 bn of impairments (North American composites ¥60.2 bn, diabetes drugs ¥28.0 bn, carbon fibre ¥3.1 bn, J-TEC ¥1.1 bn) drove continuing operations deep into loss. (3) FY2025: revenue fell 13.2% on deconsolidation; AOI held at ¥25.8 bn (AOI margin actually rose to 3.0%), but ¥88.9 bn of impairments (aramid ¥50.4 bn, healthcare ¥25.4 bn, carbon fibre ¥8.1 bn) and deferred-tax-asset reversals (other items -¥14.7 bn) generated a ¥88.0 bn net loss. Gross margin compression from 26.7% to 18.5% is substantially an artefact of impairments booked in cost of sales (e.g., ¥41.7 bn of the H1 FY2025 aramid charge).

Balance sheet

Latest quarter (30 June 2026, S&P): total assets ¥950.2 bn; cash and short-term investments ¥151.5 bn (boosted by aramid-paper proceeds); total debt ¥325.2 bn, of which ¥141.3 bn current portion of long-term debt vs ¥159.1 bn long-term; net debt ¥173.7 bn; equity attributable ¥415.1 bn; BVPS ¥2,152.

Commentary. Interest-bearing debt fell by ~¥193 bn (-36%) from the FY2022 peak to FY2025, financed by the INFOCOM sale and FY2025 working-capital release (inventory -¥23.9 bn). Goodwill and intangibles have been written down by ~70% since FY2021, which reduces future amortisation and impairment exposure. Equity attributable, however, fell 20% between FY2023 and FY2025 because losses exceeded retained earnings generation; this kept the gross D/E ratio around 0.9 despite debt repayment. The June 2026 balance sheet shows a meaningful near-term refinancing wall (current LTD equal to ~43% of total debt).

Cash flow

FY2025 company FCF "approximately ¥60 bn" per CFO (11 May 2026).

Commentary. Cash generation has been more resilient than earnings: FY2025 OCF of ¥98.7 bn was the highest of the period despite the ¥88 bn net loss, because impairments are non-cash and working capital was released. Capex has been held at ~¥53–60 bn, roughly in line with D&A, and is expected to stay disciplined under the new plan. Buybacks have been negligible; all disposal proceeds went to debt reduction.

Ratios

ROE per company definition (FY2025 calculated: -¥88.0 bn ÷ average equity attributable ¥398 bn). ROA calculated as net income ÷ average total assets. Interest coverage uses J-GAAP operating income (FY2021–FY2022) and IFRS AOI (FY2023–FY2025) over interest expense. Cash conversion cycle calculated from S&P receivables, inventories, payables, revenue and cost of revenue (cost of revenue in FY2024–FY2025 is inflated by impairments, flattering DIO/DPO).

Commentary. Returns have been structurally inadequate: AOI-based ROIC of 1.8–2.6% sits well below any plausible WACC (management's FY2028 ambition is for Specialty Materials alone to exceed WACC). Leverage is moderate and improving — net debt/EBITDA has fallen from 4.4x (FY2022) to ~2.7x (FY2025, approximate) and interest coverage on AOI has doubled as interest expense fell from ¥10.8 bn to ¥6.8 bn. Working-capital intensity is high for a materials group (CCC 110–134 days), reflecting long aramid/carbon supply chains and the trading-house model; the FY2026–28 plan explicitly targets cash-conversion-cycle KPIs by business.

Latest quarter — Q1 FY2026: notes and sources

Source: Teijin Q1 FY2026 results (4 Aug 2026) via Quartr/FilingReader. Q1 net income includes a ¥45.5 bn gain on the sale of the aramid-paper JV shares to DuPont. AOI rose 56.8%.

Management guidance (FY2026, as revised 4 Aug 2026)

Guidance excludes the impact of the Middle East situation. Q1 FY2026 AOI of ¥12.3 bn already represents 41% of the full-year target, aided by the absence of the triennial aramid shutdown.

Consensus growth expectations

Detailed consensus estimates are not publicly available in sources reviewed. Simply Wall St (2025) cited flat to ~1.5% annual revenue growth forecasts; MarketScreener's five-analyst consensus is HOLD with a ¥1,582 target, implying the market already discounts FY2026 recovery but not the FY2028 targets.

Bull case

1. Earnings trough is behind: ¥211 bn of impairments over FY2023–FY2025 have reset the asset base (goodwill/intangibles down to ¥58.9 bn), lowering D&A and future write-down risk; Q1 FY2026 AOI +56.8% supports the ¥30 bn FY2026 target.

2. Sum-of-the-parts discount: Apparel & Industries (¥17–19 bn AOI) plus E&E (¥15–19 bn) plus home healthcare could justify a value above today's ~¥497 bn EV even ascribing little to Specialty Materials; the stock trades at ~0.77x book.

3. Activist-driven capital efficiency: Effissimo's ~19% stake, TSE pressure and the planned DOE policy create catalysts for further disposals (legacy pharma, Specialty Materials assets) and higher returns.

Bear case

1. Specialty Materials is structurally broken: Asian overcapacity and euro costs may keep aramid/carbon fibre below cost of capital, risking a fourth year of impairments and making the +¥12 bn FY2026 swing optimistic.

2. FY2028 target credibility: reaching ¥60 bn AOI requires more than doubling profit in three years after missing the previous plan's ¥35 bn target by 26%; Healthcare is guided down in FY2026 and E&E faces spread pressure.

3. Quality of FY2026 earnings: the ¥45 bn net profit depends on a ¥45.5 bn one-off gain; underlying net profit is close to zero, the dividend is uncovered on an underlying basis, and ¥141 bn of debt falls due within a year.

Key catalysts and monitorables (next 12 months)

Analyst verdict

Teijin has done the hard, unglamorous part of a turnaround: it has admitted that a decade of materials-led expansion destroyed value, written off roughly ¥211 bn of assets in three years, sold its most valuable non-core asset (INFOCOM) and its largest loss-maker (North American composites), cut interest-bearing debt by more than a third, and redesigned its disclosure so that investors can finally see where profits are earned and lost. The new segment data are genuinely clarifying: roughly ¥50 bn of AOI comes from Apparel & Industries, Electronics & Energy and Healthcare & Life Solutions, while Specialty Materials subtracts about ¥9 bn and corporate costs absorb the rest.

What Teijin has not yet done is prove that it can earn its cost of capital. ROIC of ~2.6% and a three-year ROE path from -22% to a targeted 8% leave little margin for error, and the FY2028 ¥60 bn AOI goal relies on ¥20 bn of structural savings that are still largely prospective. The FY2026 net profit is flattered by a one-off ¥45.5 bn gain, and the balance sheet, while healthier, carries a sizeable near-term maturity wall.

On balance, the shares look fairly valued for the visible recovery — consistent with the HOLD consensus and a ¥1,582 average target versus ¥1,646.50 — with asymmetric optionality from two sources: delivery of the Specialty Materials swing (each ¥10 bn of AOI is worth roughly ¥200–300 per share at peer multiples, an analyst estimate) and Effissimo's ~19% stake, which raises the probability of more radical portfolio action. We would characterise Teijin as a "show-me" restructuring story: investors should demand two consecutive quarters of positive Specialty Materials AOI and a completed legacy-pharma exit before underwriting the FY2028 plan, while monitoring FX, Asian aramid pricing and refinancing. Risk/reward is balanced near term and improves materially if the November 2026 results confirm the turnaround.