Annual Review 2020

Suminoe Textile

Annual Review 2020
YEAR ENDED MAY 31, 2020

Head Office
11-20, Minami-Semba 3-Chome, Chuo-ku, Osaka 542-8504, Japan
Phone: +81-6-6251-6801 Fax: +81-6-6251-0862
URL: https://suminoe.co.jp/

Company Purpose
We contribute to the improvement of society through production,
sales of good products and prosperity of business.

Company Motto
Suminoe Textile supplied carpet to various major architectural structures during the Meiji era.
We have thus advanced together with Japan from its start as a modern nation.

We pride ourselves as a pioneer in the interior design and furnishing industry
and persist in the spirit of cooperation, sincerity and resolution.

Contents
1883

Meiji Era

1891

1896

1913

1930

Taisho Era

Showa Era

1949

1958

1980

1994

1998

2003

2005

2010

2011

2012

2013

2015

2018

Heisei Era

2019
Reiwa Era

2020

Financial
Highlights
P3

1913

1883

Suminoe Textile Joint-Stock Company isestablished.

At the age of 35 founderDenshichi Murata purchased 3looms in 1883 and began
manufacturing carpets.

1980

Nara Factory began production of Japan's
first carpet tiles.

1891

In 1891, Suminoe Textile supplied carpet for
the establishment of Japan's Imperial Diet
Building in Hibiya. We have been serving as its
supplier for 120 years since then.

1930

Suminoe Textile Co., Ltd. is established.

1949

Shares listed on the Tokyo, Osaka, and Kyoto
stock exchanges.

1896

1958

Successful production of hand-woven
moquette in 1896, adopted by Japan National
Railways for seat covering in 1899.

Starting with our supply of nylon seat covering
to TOYOTA MOTOR CORPORATION in 1958,
our products have been used by various
Japanese automobile manufacturers one after
another.

2003

Suminoe Textile of America Corporation is established in
the U.S.
Current subsidiary, Suzhou Suminoe Textiles Co., Ltd. isestablished in China.
Current subsidiary, Suzhou Suminoe Koide Automotive
Accessories Co., Ltd. is jointly established in China.
Current subsidiary, PT. Sinar Suminoe Indonesia is jointly
established in Indonesia.

2013

Consolidate Suminoe Koka Co., Ltd. andSuminoe Nara Co., Ltd., Suminoe Techno Co.,
Ltd. is established.
Suminoe Textile de Mexico, S.A. de C.V. isestablished in Mexico.
PT. Suminoe Surya Techno is established inIndonesia.

1994

Current subsidiary, T.C.H. Suminoe Co.,
Ltd. is jointly established in Thailand.

1998
TRIPLE FRESH®
deodorant
treatment
technology
developed.

2010

Subsidiary, Suminoe Teijin Techno Krishna India Pvt. Ltd. is
jointly established in India.
Suminoe Textile Shanghai Co., Ltd. is established in China.

2011

ECOS® Recycled Carpet Tiles New Release.

100th Anniversary

2012

We celebrated the130th anniversary of
our founding and the100th anniversary of
our incorporation.

2015

Acquired Bondtex, Inc.
and made it a consolidated subsidiary.

2018

Suminoe Koide (Thailand) Co., Ltd. starts up
operations.

2019

ECOS® became the first product to obtain Eco Markcertification under the new certification criteria.

P4Topics2005

Subsidiary, SPM Automotive Textile Co., Ltd. is jointly
established in China.

Business
Results

Suminoe Textile Vietnam Co., Ltd. isestablished in Vietnam.

P6

Suminoe ata Glance
P11

Financial
Section
P18

Corporate
Data
P33

We are aiming for the creation of a globally optimized supply system.

1

Suminoe Textile Co., Ltd. Annual Review 2020

Suminoe Textile Co., Ltd. Annual Review 20202

Financial Highlights

Millions of Yen

For the Year:Net Sales
Operating Income
Net Income Attributable to Owners of the Parent
At Year-End:Total Assets
Total Equity
Per Share (Yen and U.S. dollars):

Net Income Attributable to Owners of the Parent
Shareholder's Equity
Cash dividends applicable to the year

Financial Ratios (%):

2020

2019

2018

2017

2016

2020

¥91,512
1,557
142¥98,6173,118
467¥97,873
2,248
1,084

¥96,038
1,298
26¥97,5302,554
245$847,335
14,425
1,324¥86,272
32,582¥87,976
35,271¥92,183
38,542¥90,255
37,399¥86,878
37,178$798,823
301,692¥21.884,438.11
50.00¥65.36
4,469.04
70.00¥143.66
4,515.26
70.00

¥3.50
4,412.34
70.00¥32.52
4,416.08
70.00

$0.20
41.09
0.46

Equity Ratio
ROE (Net Income Attributable to Owners of the Parent Base)ROA (Ordinary Income Base)

32.5%
0.5
1.5

34.8%
1.4
3.4

36.9%
0.1
1.5

36.9%
3.2
2.6

97,53097,87396,03898,617

pandemic of COVID-19. In the interior industry, newhousing starts were significantly less than the previous

year, and the floor area of nonresidential construction starts
also decreased. In the automotive industry, automobile

and sales have also stagnated in overseas markets,making the outlook of recovery uncertain.

In the final year of its 5th three-year medium-term

management plan, “2020,” which started in the fiscal

year ended May 2018, the Suminoe Textile Group has

0

2016

2017

2018

2019

(Millions of Yen)

1,200

4,000

2,000

800

2,248
1,557

1,298

1,000
2016

2017

2018

2019

2020

Total Assets (Millions of Yen)
86,87890,255400
0245

Total Equity (Millions of Yen)

92,183

87,97686,27240,000

142

26
2017

37,17837,399

2018

2019

2020

38,54235,271

32,582

2016

2017

Suminoe Textile Co., Ltd. Annual Review 2020

2018

2019

2020

0

1. Expansion of product lineups
2. Strengthening of globalization
3. Development and sales of high value-added products

In the Interior Fittings Segment, the Company is actively

capturing businesses with hotels, commercial facilities andwith higher profitability. The Company is also making

efforts to enhance sales of curtains and wall coverings

2017

2018

2019

cushion materials and safety products. In the Functional
Materials Segment, preparations are being made tolaunch a plant in a new subsidiary that was establishedin Vietnam to stabilize the supply chain, in addition to thesole manufacturing base for electric heating products

the Company had in China. For the entire Group, we areworking on reconstructing our core system and raising theaccuracy of consolidated performance management, inorder to upgrade our business management structure. We
will continue working steadily on building a foundation forbusiness growth.

Under these circumstances, our consolidated financial
results for the fiscal year are as follows.

Net sales ended at ¥91,512 million (U.S.$847,335

thousand, down 7.2% year on year) as sales of automotive
textiles in Japan and abroad declined due to the impact of
the global economic slowdown. In addition to the drop in

operating income due to the decrease in sales, an increasein depreciation, etc. related to the reconstructing of its

core system resulted in operating income of ¥1,557 million(U.S.$14,425 thousand, down 50.0%), ordinary incomeof ¥1,323 million (U.S.$12,256 thousand, down 55.2%),

and profit attributable to owners of parent of ¥142 million(U.S.$1,324 thousand, down 69.4%).

Consolidated Financial Results

2020

Net Salesand materials. In the Automotive Textiles and Traffictechnologies and increase orders received for non-textile

Net Income Attributable to Owners of
the Parent

products such as artificial leather and to reduce costs
2016

of not only conventional fabric materials but also seat

Operating Income

Facilities Segment, efforts are being made to develop

10,00020,0002. Restructuring internal control system

automotive textiles business, while in the traffic facilities

the Company is identifying and focusing on products

20,00040,000

1. Review of financial results management system

demand from offices. At the same time, to secure profits

30,00060,000"growth of business."

Growth ofbusiness

467

2016

the themes of "restructuring of corporate governance" andRestructuringof corporate
governance

1,084

3,118

2,554

implemented various measures to achieve our goals under2020

Net Income Attributable to Owners of the Parent

Operating Income (Millions of Yen)

3business, the Company is striving to increase sales

since April due to the impact of the coronavirus. Production

20,0000environment were initially robust, the economy slowed2020 under review, while the employment and income

declining year on year since last October, has plunged

91,51240,00080,000the places of production for globally marketed cars in thethe outlook became rapidly uncertain due to the global

60,000100,000

During the consolidated fiscal year ended May 31,

the consumption tax hike. Amid such circumstances,

80,0000Consolidated financial result

production in the Japanese market, which had been

Net Sales (Millions of Yen)

3,000

Chairman and President
Ichizo Yoshikawa

down due to the prolonged U.S.-China trade friction and

38.3%
0.7
3.3

Note 1: U.S. dollar amounts are converted from Japanese yen amounts at the rate of U.S.$1 to ¥108, the approximate rate on May 31, 2020.
2: Net income attributable to owners of the parent per share of common stock is computed based on the weighted average number of shares outstanding.
3: Suminoe Textile implemented a 1-for-10 reverse split of common shares, which took effect on December 1, 2017. We are calculating our net income
attributable to owners of the parent per share, shareholder’s equity per share and cash dividends applicable to the year per share based on the numberof shares outstanding after the reverse stock split.

100,000

Business Results

Thousands of
U.S.Dollars

through the optimization of material procurement andExchange Rate (Yen)¥ : Millions of Yen

2020(Result)

2019(Result)¥ 91,512¥ 98,617$847,335$904,743¥   1,557¥   3,118$ 14,425$ 28,606¥    142¥    467$   1,324$   4,284

U.S.$1=¥108

U.S.$1=¥109$ : Thousands of U.S. Dollars

Suminoe Textile Co., Ltd. Annual Review 20204

Business Results

Topic 1Dividend policy

Results of the 5th Three-Year Medium-Term Management Plan “2020”

The Company has positioned shareholder return as a key management issue and distributes profits appropriately by taking

In the final year of its 5th three-year medium-term management plan, “2020,” which started in the fiscal year ended May

into account stable dividend payments and business results. Based on this basic dividend policy, the annual dividend for the

2018, the Suminoe Textile Group has implemented various measures to achieve our goals under the themes of "restructuring

fiscal year ended May 31, 2020 was ¥50 (U.S.$0.46) per share, with an interim dividend of ¥35 (U.S.$0.32) per share andof corporate governance" and "growth of business." The plan generally made steady progress until its second year. However,a year-end dividend of ¥15 (U.S.$0.14) perin the final year, the initial plan collapsed due to the prolonged trade friction between the United States and China, theshare due to the spread of COVID-19, which
had a significant impact on our business.

consumption tax hike, and the spread of the COVID-19 pandemic.

Annual Cash Dividends Per Share

The dividend forecast for the fiscal year¥70

ending May 2021 is undetermined. We will

¥70

¥70

¥70

disclose it as soon as it becomes possible

Changes in Consolidated Financial Results
5th Three - Year Medium - Term Management Plan “2020”¥50

to calculate consolidated earnings forecast

FY2018END ¥15

figures.

96,038MID ¥35

FY201997,87297,500

FY2020100,000

98,617102,000

3,100

3,118

3,450

91,512Net Sales

Operating Income

FY2016FY2017FY2018FY2019FY20202,800

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

FY2017

We expect the fiscal year ending May 31, 2021 toadded value fabric mixtures, including antibacterial andbe faced with difficult conditions in our business

antiviral function processing, which is expected to see

environment amid the inability to foresee whena rise in demand under the COVID-19 crisis. In terms

the COVID-19 pandemic will abate. Under suchof governance, the Group will strengthen its businesscircumstances, the Suminoe Textile Group will continue

infrastructure by reconstructing its core system with theto place emphasis on the growth of business andaim of improving efficiency.

restructuring corporate governance, the two themes

The Group has decided to postpone the announcementof the 5th three-year medium-term management plan,of the plan for the fiscal year ending May 31, 2021

“2020,” and work steadily on them while focusing

and the new medium-term management plan startingon preventing the spread of COVID-19. In terms offrom the fiscal year as it cannot foresee the end ofgrowing the business, the Group will seek to expand

the COVID-19 pandemic. The Group will keep an eye

its lineup of fabric mixtures in each business segment

on future development and will announce its plans aswith ESG management in mind and reinforce its global

soon as the impact of the pandemic on the businessstructure. The Group will accelerate its approach toenvironment can be reasonably estimated.

FY20181,557
FY2019FY2020ResultOriginal Forecast

ResultOriginal Forecast

ResultOriginal Forecast

ResultNet Sales

96,03897,50097,872100,000

98,617102,000

91,512

Operating Income

1,297

2,800

2,247

3,100

3,118

3,450

1,557

% change from the previous year

Outlook for the next term

2,247

1,297

Ratio of the operating income
to net sales

98.5%
1.4%

101.5%
2.9%

101.9%
2.3%

102.6%
3.1%

100.8%
3.2%

102.0%
3.4%

92.8%
1.7%

Note: The figures in the results are based on Japanese GAAP.

▶ Restructuring of corporate governance
1. One billion yen invested in the main system over three years
We restructured our main system on a global scale to grasp balance of payments and inventory in a timely mannerand promote its efficiency through overall optimization.
2. Continuation of top management’s frequent visits to workplaces
Top management actively visited each workplace and exchanged views with employees to promote interactive
communication.

solving social issues by developing and providing high5

Suminoe Textile Co., Ltd. Annual Review 2020

Suminoe Textile Co., Ltd. Annual Review 20206

Topic 1

Topic 2▶ Growth of business

Aiming for business growth with ESG management in mind

1. Expansion of product lineups
There was an increase in the product lineup of non-textile products,
including synthetic leather sheets for automotive interiors, products for
improvement of train safety, and floor signage films for trains. In theinterior fittings segment, we launched hard floor materials that allow easy
maintenance to meet needs for labor saving, and they have been wellreceived.

Flooring film for signs

Reducing
environmental impact

Resolvingsocial issues●Eco-friendly carpet tiles under thehorizontal recycling system●From piece-dyed carpets tosolution-dyed carpets●Expand antibacterial and antiviral products●Employee education●Prevention of COVID-19 infection among
employees

2. Strengthening of globalization
Following the start of our car mat manufacturing business in Thailand in 2018, we established a new company inVietnam in 2019 to produce electric heating products. We will continue to promote overseas expansion tailored tomarket characteristics, while strengthening our global management system to build an optimal global supply system.

Restructuring the main system●Promote the timely grasp of balance of payments and inventory and its efficiency through overall optimization●Promote improvements in line with the actual situation of each division, and roll them out to the entire company by 2022

Environment —Initiatives to reduce environmental impact
Suminoe Koide (Thailand) Co., Ltd.

Suminoe Textile Vietnam Co., Ltd.

1. ECOS®, eco-friendly carpet tiles under the horizontal recycling system
In 2011, we launched ECOS®, eco-friendly carpet tiles under the horizontal recycling system, made from used carpet
tiles discarded in large amounts. ECOS® has achieved the industry’s top-class recycled material ratio by using recycled

3. Development and sales of high value-added products
We worked on product development using joint research with external organizations. In the future, we will
focus on development themes in the initial stage, concentrate investment, and further improve the reliability ofcommercialization. We are also promoting joint development across divisions.
(Research and development example)

materials from used carpet tiles for the backing material and recycled nylon yarn, or polyester yarn from PET bottles forthe surface material. At the same time, we have achieved high quality and competitive prices by thoroughly streamlining
production processes.
We will continue to contribute to building a sustainable society by reducing the amount of used carpet tiles destined tobe landfilled through the sales expansion of ECOS®, an eco-friendly product that meets SDG Goal 12 “Responsible
Consumption and Production.”
ECOS® Recycle System​
Materials from waste carpet tiles
reused for the backing materialof new carpet tiles​

Fabric Electrode

Since the launch of ECOS® in 2011, the volume of waste carpet tiles
used as recycled materials has reached 243 times the volume of a
25-m swimming pool.
The use of recycled materials led to a reduction in CO2 emissions of
70,000 tons in total, equivalent to the amount of CO2 absorbed byeight million cedar trees in one year.

Water Wetting Detection System

8 million cedar trees

7

Suminoe Textile Co., Ltd. Annual Review 2020

Suminoe Textile Co., Ltd. Annual Review 20208

Topic 2

2. From piece-dyed carpets to solution-dyed carpets
We will change the dyeing method for carpets, including ECOS®, from piece-dyeing, which requires dyeing effluent
treatment and a large amount of water and electricity, to solution-dyeing, with no effluent discharge and low CO2
emissions, where the yarn is colored with pigments during the spinning process. We will proactively increase theratio of carpets produced using solution-dyed yarn to reduce the environmental impact and enhance quality and costcompetitiveness.

Piece-dyed

Dyeing method

Carpet fabric woven with white yarn colored with dye

Environmental
impactRequires a large amount of water and electricity andeffluent treatment◦ Discoloration and fading occur easily due toultraviolet rays and friction.
◦ Fades with disinfectant, such as sodium hypochlorite

Deodorant + Antibacterial +Antiviral + Antiallergic​

2. Automotive interiors in the age of autonomous driving vehicles and shared vehicles― I.I.2.0 (Intelligent Interior 2.0) —◦ Excellent light resistance and abrasion resistance◦ Extremely strong chemical resistancevehicles “I.I.2.0 (Intelligent Interior 2.0)” since 2018 to accelerate future-oriented business.

Our Group has begun a mid- to long-term development project for the interior of next-generation

The automotive industry has reached a once-in-a-century turning point, and it is expected that next-generation vehicles

After the test​

Before the test

Limitation in the amount of fabric dyed in a dyeing
machine at one time leading to slight color differenceHigh

After the test​

equivalent to a home, since the autonomous driving technology relieves the driver of driving duty. Accordingly, we have begun a
new project with members across business segments, believing that a key to the interior design of next-generation vehicles is a

Low

more personal and public space akin to a hotel guest room.
In addition to the automotive textiles segment, which has a development team, our Group has several other businessseries of carpet tiles made using solution-dyed

segments, including the interior fittings segment, which provides curtains and carpets for general households as well asbacking material for the backing material

trains, buses and other public transportation. All of these segments have been operating for over 100 years. By bringing

Recycle Content

23 69

unspecified people through car sharing and share ride services. Meanwhile, the interior may become a new living space

Less variation in color

nylon yarn for the surface pile material and ECOS®

%TRIPLE FRESH® Deo​No effluent discharge and low CO2 emissions

Product lineup reinforced by the launch of a new

CO22 Reduction

beds and wheelchair cushions​This is our unique deodorant processing technology capable ofchemically and physically decomposing odors produced during
nursing care, medical care and daily life, with the use of several
types of metal compounds with deodorant effects. This technology
is characterized by not only a deodorant function but also themultiple functions of antibacterial, antiviral and antiallergenactivities. It also ensures the continuity of these functions.

will assume an increasing role as a public space. This is because vehicles will be further commoditized by many and
Before the test

Color difference
between lots
Cost

Available for mats for nursing care

What is TRIPLE FRESH® Deo?

Solution-dyed

Coloring pigments added to spinning solution before
fabric weaving​* Immersed in sodium hypochlorite solution ➡ Washed with water ➡ Dried

Susceptibility to
discoloration /fading

Functional Materials​

public spaces, such as hotels and medical facilities, and the traffic facilities segment, which provides interior materials for
together the technologies and knowledge of each segment and jointly developing new automotive interiors, we will%
ECOS®「LP-2000N NEXUS」
ECOS®「LP-3100 MELANGE」

propose interiors suitable for next-generation traffic.

Social — Approach toward the resolution of social issues
1. Expand antibacterial and antiviral products
Since around 10 years ago, our Group has been marketing carpets and curtains with antibacterial and antiviral properties
mainly for medical, welfare and educational facilities in the interior fittings segment. While using the antibacterial andantiviral processing technology for fabric materials that we have cultivated for interior fittings, each business segment will
pursue approaches to resolving social issues.
(Example of products)
Interior Fittings​◦C urrently available for curtains andcarpet tiles for medical, welfare, andeducational institutions​◦N ew release of curtains, rugs and matsfor general household use​
Cleanse® (Kurabo Industries)
Antibacterial + Antiviral​

9

Suminoe Textile Co., Ltd. Annual Review 2020

What is Cleanse?

Cleanse® is a Kurabo Industries' antibacterial and antiviral textile
finishing technology using Etak® which is developed by Professor
Hiroki Nikawa at Hiroshima University Graduate School. The
immobilized antibacterial solution "Etak®" is strongly fixed onto
the fiber surface. Our Group has been working with Kurabo
Industries to manufacture and sell products made using Cleanse.
* Cleanse is a registered trademark of Kurabo Industries Ltd.
* Etak is a registered trademark of CampusMedico Inc.

Taking advantage of the strengths of our Group, focused on two pillars: the interior fittings segment and the automotive textiles andtraffic facilities segment

Suminoe Textile Co., Ltd. Annual Review 202010

Suminoe at a Glance

Interior
Fittings

Contribution to Total Net Sales

Net Sales

Operating Income(Millions of Yen)
40,000(Millions of Yen)
500
34,28233,30030,00036.4%
p13

20,00060,000Curtains

2020

0

2019

2020

Wallpaper

Plush Hand-woven
Curtains

Hand-woven Carpet
and Hooked Rugs

Nishijin Brocade
FabricAutomotive Textiles

Operating Income

Traffic Facilities

Ceiling material(Millions of Yen)
5,000
60,30454,0754,000

Seat covering
Seat back

4,018

Luggagecompartment

Sun visor

50,00059.1%

30,000

Bus

2,652

2,000
Floor carpet

1,000

10,000Contribution to Total Net Sales

Train

3,000

40,00020,0002019

2020

Net Sales

0

Wheel
house
2019

2020

Engine cover
Car mat

Ship

Operating Income(Millions of Yen)

(Millions of Yen)
300

5,000

4.3%

3,887

3,928
200

3,000
2,000

Electric Carpets

186

100

Tispa Deodorization
Related Brand

Air-filter Products

79

1,000
0

Suminoe Textile Co., Ltd. Annual Review 2020

Rugs and Mats

Door trim

4,000

11

2019

Net Sales0p17

Carpet Tiles

100(Millions of Yen)
70,000p15

Functional
Materials

Roll Carpets
263

200

0

Automotive
Textiles andTraffic Facilities

400
300

10,000Contribution to Total Net Sales

472

2019

2020

0

SUMITRON®

2019

2020

Continuous Fiber
Made from Recycled
PET bottles

OH TILE Olefin
Flooring Material

Floor Material
for Bathrooms

Kakidanomi

Persimmon Polyphenol
Supplements

Suminoe Textile Co., Ltd. Annual Review 202012

Interior Fittings

SUMINOE Co., Ltd.

Roll Carpets

RUNON CO., LTD.

Carpet Tiles

Suminoe Textile Co., Ltd.

Kyoto Traditional Art and Craft Factory

Wallpaper

Nishijin Brocade FabricTango Textile Co., Ltd.

Rugs and Mats

Plush Hand-woven Curtains

Hand-woven Carpet
and Hooked Rugs

Business Overview for the Fiscal Year ended May 31, 2020

At the Vanguard of Lifestyle Creation
Ever since 1891, when its carpets were supplied

eco-friendly products, under the theme of KKR+A, orto the Imperial Diet Building on the occasion of its

Kenko (Health), Kankyo (Environment), Recycle andopening, the Suminoe Textile Group has createdAmenity.

comfortable and safe living spaces as a pioneer

Despite successful sales promotion activities forfourth quarter.

curtains and brisk online sales-related performance,

Although sales of curtains were also weak, net sales

net sales ended at ¥33,300 million (U.S.$308,341

grew 3% year on year helped by the effect of sales

thousand, down 2.9% year on year) due to the adverse

promotions for mode S® Vol. 9 and U Life® Vol. 9 for

impact of the consumption tax hike and the COVID-19

general households, and Face, contract curtains forpandemic. Operating income amounted to ¥472 million

medical, welfare, and educational institutions.

in the Japanese interiors industry. Currently,

Environmentally Friendly Product at the(U.S.$4,372 thousand, up 79.2%) on the back of priceNet sales of wall coverings were flat year on year due

our curtains and carpets are primarily marketed

World’s Highest Levelrevisions and an increase of the percentage of highto brisk sales of Runon Fresh Premium wall coverings.

by SUMINOE Co., Ltd. and our wallpaper and

ECOS® is a series of recycled carpet tiles produced

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 ofinterior products for public facilities, hotels, schools,
hospitals, and office buildings, as well as for generalhouseholds.
In recent years, we have worked on the production of

13

Curtains

Suminoe Textile Co., Ltd. Annual Review 2020

added value fabric mixtures.
Net sales of commercial carpets were down 5% year

Prospects for the next fiscal year

on year due to sluggish exports of carpet tiles despite

The prospects for the next fiscal year are extremely

sales for the Japanese market being on a par with theuncertain due to the impact of COVID-19. However, weprevious year. A decline in orders for roll carpets due towill focus on the expansion of our product lineup andthe impact of COVID-19 also affected sales.

on product differentiation under the theme of antiviral

Through our proprietary

Net sales of household carpets were down 16% year

processing and environmental friendliness, centeredrecycling system, recycled

on year due to the consumption tax hike and weakon activities to strengthen the appeal of the SUMINOE

materials are created fromstore sales owing to the stay-at-home recommendation,

brand.

using horizontal recycling
technology. ECOS® hasachieved a post-consumption
recycled material usage rateof 84%.

old carpet tiles.

despite brisk online sales-related performance in the

Suminoe Textile Co., Ltd. Annual Review 202014

Automotive Textiles and Traffic Facilities

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 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, andaircraft. We also deliver environmentally friendly products,
including SUMICUBE® seat cushion material, which excels
in terms of both safety and environmental performance.

SUMICUBE®
Seat Cusion Material
East Japan Railway Company: E235 series

Central Japan Railway Company, West Japan Railway
Company : Sinkansen N700 series

Our Expertise in Proposing Optimal Solutions as a Total Supplier
United States, Mexico, China, Thailand, Indonesia,

covering materials for automobiles assembled andand India), aiming at the creation of a globally

Although the railway-related and bus-related businesspandemic, net sales rose year on year as new vehicle

manufactured in Japan for Ford Motor Company andoptimized supply system.

was robust, net sales and operating income ended

products and repair plans were on a recovery trend inat ¥54,075 million (U.S.$500,702 thousand, down

the first half.

General Motors. After World War II, the production ofdomestic 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.

Door trim

10.3% year on year) and ¥2,652 million (U.S.$24,562

Ceiling material
Seat covering
Seat backLuggagecompartment

Sun visor

The greatest feature of our Company is that we
can supply a total line of automotive textiles, fromfloors 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 12
manufacturing and sales sites in six countries (the15Business Overview for the Fiscal Year ended May 31, 2020

In 1931, Suminoe Textile supplied carpets and seat

Suminoe Textile Co., Ltd. Annual Review 2020

Floor carpet
Wheel
house

Engine cover

thousand, down 34.0%), respectively, on the back ofProspects for the next fiscal year

weak global unit sales by Japanese automakers.

It is expected that the automotive textiles and traffic

In the automotive textiles business, sales in Japan

facilities segments will face a difficult businesswere down 13% year on year due to a global decline

environment. In the automotive-related segments, wein global car production on the back of prolonged

will promote future-oriented development, including the

U.S.-China trade friction and the impact of COVID-19.

development of interiors for next-generation vehicles,

Overseas sales were down 10% year on year due to awhile striving to secure profits. In the traffic facilities

contraction of sales in various areas in the U.S., China,

segment, we will work to further expand our market

Thailand and India the Company’s overseas bases.

share and our sales of functional products.

In the traffic facilities business, although railway-related
and bus-related sales have slowed since the COVID-19

Car matSuminoe Textile Co., Ltd. Annual Review 2020

16

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

Financial Section 2020
Year ended May 31, 2020of 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, isstationary deodorizers forhome use, making use of adeodorant filter.

SUMITRON®

Electric Carpet

Continuous fiber
made from recycled
PET bottles

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

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

Floor Material for
Bathrooms
We have developed bath flooringmade of eco-friendly olefinmaterials.

SUMINOE BIOTECH®
Functional materials based on biotechnology,
and foods,
processed foods,
cosmetics, etc.,
making effective
use of thesematerials.

Business Overview for the Fiscal Year ended May 31, 2020
While sales of deodorizing filters installed in consumer

Prospects for the next fiscal year

electronics, such as fan heaters, and electric carpets,

Although it is expected that COVID-19 will have a

our core, dropped due to the warm winter, an increasesignificant impact on our business, we will focus on thein adoption of civil engineering materials and brisk

full-scale operation of the factory of the Vietnameseorders for floor materials for bathrooms contributed tosubsidiary established last year. We will also work to

P21 Consolidated Statement of Income

net sales, which ended at ¥3,928 million (U.S.$36,373

develop and expand the sales of high value-added

P22 Consolidated Statement of Comprehensive Income

thousand, up 1.1% year on year). Operating income

products incorporating our deodorizing, antibacterial,

ended at ¥79 million (U.S.$738 thousand, down

and antiviral processing technologies.

P23 Consolidated Statement of Changes in Equity

57.2%) since the Company recorded expenditure forreorganizing overseas plants.

17

Suminoe Textile Co., Ltd. Annual Review 2020

Contents
P19 Consolidated Balance Sheet

P25 Consolidated Statement of Cash Flows
P27 Notes to Consolidated Financial Statements
P33 Corporate Data

Financial Section
Suminoe Textile Co., Ltd. and Subsidiaries
As of and for the Year Ended May 31, 2020

Consolidated Balance Sheet

Thousands of U.S.
Dollars（Note 1）

Millions of Yen

ASSETS

2020

2019

LIABILITIES AND NET ASSETS

2020

CURRENT ASSETS :Cash and deposits
Notes and accounts receivable-trade
Electronically recorded monetary claims - operating
Securities

Thousands of U.S.
Dollars（Note 1）

Millions of Yen

2020

2019

2020

¥13,161¥15,193$121,864

LIABILITIES :¥10,500¥ 7,880$ 97,225

14,502

18,180134,282

6,469

5,673

59,90630

8281

CURRENT LIABILITIES:
Notes and accounts payable-trade
Electronically recorded obligations - operating
Short-term loans payable

5,135

4,425

47,551

10,858

9,755

100,544

10,422

9,367

96,502

Lease obligations

647

495

5,993

Work in process

1,669

2,011

15,462

Income taxes payable

592

458

5,485

Raw materials and supplies

2,847

4,287

26,364

Other

3,473

3,450

32,158

149

166

1,382

33,86833,779313,594

2,120

3,092

19,630Bonds payable

1,500

1,500

13,889Long-term loans payable

7,825

7,293

72,457

Lease obligations

1,335

660

12,363Merchandise and finished goods

Income taxes receivable
Other
Allowance for doubtful accounts
Total current assets（23）
48,688（29）
50,638（217）
450,818

NON-CURRENT ASSETS :PROPERTY, PLANT AND EQUIPMENT
Buildings and structures, net
Machinery, equipment and vehicles, net
Land

Total current liabilities

NON-CURRENT LIABILITIES :Deferred tax liabilities

4,296

4,530

39,782

Deferred tax liabilities for land revaluation
Provision for directors' retirement benefit

3,060

3,136

28,34017,602

17,611

162,984

Net defined benefit liability

332

554

3,078

3,761

3,761

34,827

103

95

954

4,223

4,303

39,106

1,587

562

14,698

741

756

6,863

Construction in progress

547

121

5,074

Total non-current liabilities

19,821

18,924

183,537

Other, net

365

397

3,385

Total liabilities

53,69052,704

497,131

27,46026,361

254,264

9,554

9,554

88,465

Leased assets, net

Total property, plant and equipment

Other

NET ASSETS :INTANGIBLE ASSETS :Leased assets
Other
Total intangible assets

SHAREHOLDERS' EQUITY:
5

1

48

1,593

1,419

14,757

Capital surplus

2,651

2,652

24,554

1,598

1,421

14,804Retained earnings

10,452

10,777

96,781

Treasury shares（4,017）（2,423）（37,195）

18,641

20,560172,605

1,434

1,913

13,2822（6）

21
72,196INVESTMENTS AND OTHER ASSETS :Capital stock

Total shareholders’equity

5,987

6,932

55,444

6

6

58

Deferred tax assets

1,395

1,587

12,921

Deferred gains or losses on hedging instruments

Other

1,293

1,178

11,973

Revaluation reserve for land

7,797

7,797

Allowance for doubtful accounts

（157）

（150）

（1,459）Foreign currency translation adjustment

331

601

3,074

Remeasurements of defined benefit plans

（208）

（277）

（1,928）9,357

10,02886,644

Investment securities
Long-term loans receivable

Total investments and other assets
Total non-current assets

TOTAL ASSETS

8,525

9,554

78,93737,58437,336

348,005¥86,272¥87,976$798,823

ACCUMULATED OTHER COMPREHENSIVE INCOME:
Valuation difference on available-for-sale securities

Total accumulated other comprehensive income
Non-controlling interests

4,583

4,682

42,442

Total net assets

32,58235,271

301,692¥86,272¥87,976$798,823

TOTAL LIABILITIES AND NET ASSETS

19

Suminoe Textile Co., Ltd. Annual Review 2020

Suminoe Textile Co., Ltd. Annual Review 202020

Suminoe Textile Co., Ltd. and Subsidiaries
As of and for the Year Ended May 31, 2020

Consolidated Statement of Income

Thousands of U.S.
Dollars（Note 1）

Millions of Yen
2020

2019

2020

NET SALES¥91,512¥98,617$847,335

COST OF SALES

72,83778,346674,425

18,674

20,270172,910

17,116

17,151

158,485

1,557

3,118

14,425Gross profit

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Operating income

NON-OPERATING INCOME :Interest income

17

13

162

Dividend income

176

182

1,635

Real estate rent

258

252

2,395

Other

263

172

2,440

Total non-operating income

716

621

6,632

Interest expenses

274

315

2,543

Sales discounts

46

50

427

Share of loss of entities accounted for using equity method

209

31

1,940

Foreign exchange losses

248

56

2,301

NON-OPERATING EXPENSES :

32

31

300

Other

139

297

1,290

Total non-operating expenses

950

783

8,801

1,323

2,956

12,256

Rent expenses on real estates

ORDINARY INCOME

Suminoe Textile Co., Ltd. and Subsidiaries
As of and for the Year Ended May 31, 2020

Consolidated Statement of Comprehensive Income

Thousands of U.S.
Dollars（Note 1）

Millions of Yen
2020

2019

¥ 550

¥1,279$ 5,101

Valuation difference on available-for-sale securities（479）（1,240）（4,439）Deferred gains or losses on hedging instruments

13

PROFIT

2020

OTHER COMPREHENSIVE INCOME
（2）

126

（376）

（3）

（3,488）Remeasurements of defined benefit plans, net of tax

69

（107）

644

Share of other comprehensive income of entities accounted for using
equity method

（5）

（15）

（46）

（777）

（1,369）（7,204）￥（227）￥  （89）$（2,103）￥（528）￥（897）$（4,890）

300

808

2,787

Foreign currency translation adjustment

Total other comprehensive income

COMPREHENSIVE INCOME
COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Non-controlling interests

EXTRAORDINARY INCOME :
7

13

73

Gain on sale of investment securities

398

13

3,689

Total extraordinary income

406

27

3,762

66

34

617

Impairment loss

7

527

69

Loss on sale of investment securities

ー

164

ー

Gain on sale of non-current assets

EXTRAORDINARY LOSS :Loss on sale and retirement of non-current assets

Loss on valuation of investment securities

ー

43

ー

Total extraordinary loss

74

770

686

1,655

2,212

15,332

Profit before income taxes

INCOME TAXES :Current

958

983

8,877

Deferred

146

（50）

1,355

1,105

933

10,232

550

1,279

5,101

407

812

3,777

¥   142¥   467$   1,324

Total income taxes

PROFIT
Profit attributable to non-controlling interests
Profit attributable to owners of the parent

21

Suminoe Textile Co., Ltd. Annual Review 2020

Suminoe Textile Co., Ltd. Annual Review 202022

Consolidated Statements of Changes in shareholders' equity

Suminoe Textile Co., Ltd. and Subsidiaries
As of and for the Year Ended May 31, 2020

Millions of Yen
Capital Stock

BALANCE, JUNE 1, 2018

Changes of items during the period
Dividends of surplus
Profit attributable to owners of the parent
Purchase of treasury shares
Disposition of tresury shares
Net changes of items other than shareholders' equity
Total changes of items during the period

BALANCE, MAY 31, 2019

Changes of items during the period
Dividends of surplus
Profit attributable to owners of the parent
Purchase of treasury shares
Disposition of tresury shares
Net changes of items other than shareholders' equity
Total changes of items during the period

BALANCE, May 31, 2020

Capital Surplus

Retained Earnings¥2,652¥10,822¥9,554

（512）
467

ー
9,554

ー
2,652

（44）
10,777
（468）
142

（0）
ー
¥9,554

Valuation difference
on available-for-salesecurities（0）¥2,651（325）¥10,452

Thousands of U.S. Dollars（Note 1）
Treasury Stock

Total shareholders'equity¥  （364）¥22,664（2,058）（512）467（2,058）（2,058）（2,423）（2,103）
20,560（1,601）
7

（468）
142
（1,601）7（1,593）¥（4,017）（1,918）¥18,641

Capital Stock

Capital Surplus

Retained Earnings

Treasury Stock

Total shareholders'equity$24,558$99,793$（22,443）$190,372（14,826）
74（4,335）
1,324（14,826）70（14,752）$（37,195）（17,767）$172,605

BALANCE, JUNE 1, 2018

Changes of items during the period
Dividends of surplus
Profit attributable to owners of the parent
Purchase of treasury shares
Disposition of tresury shares
Net changes of items other than shareholders' equity
Total changes of items during the period

BALANCE, MAY 31, 2019

Changes of items during the period
Dividends of surplus
Profit attributable to owners of the parent
Purchase of treasury shares
Disposition of tresury shares
Net changes of items other than shareholders' equity
Total changes of items during the period

BALANCE, May 31, 2020

$88,465（4,335）
1,324
（4）
（4）
$24,554$88,465

Millions of Yen

Thousands of U.S. Dollars（Note 1）

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

Deferred gain or
losses on hedges

Revaluation reserve
for landForeign currencytranslation
adjustment

Remeasurements ofdefined benefit plans

Valuation difference
on available-for-salesecurities

Deferred gain or
losses on hedges

Revaluation reserve
for landForeign currencytranslation
adjustment

Remeasurements ofdefined benefit plans

BALANCE, JUNE 1, 2018

¥ 3,154¥11¥7,797¥ 600¥（170）BALANCE, JUNE 1, 2018

BALANCE, MAY 31, 2019（1,240）（1,240）
1,913

（17）
（17）
（6）

ー
ー
7,797

0
0
601

（107）
（107）
（277）

BALANCE, MAY 31, 2019$17,722$（58）$72,196$ 5,572$（2,572）

BALANCE, May 31, 2020

（479）
（479）
¥ 1,434

8
8
¥ 2

ー
ー
¥7,797

（269）
（269）
¥ 331

69
69
¥（208）BALANCE, May 31, 2020

（4,439）（4,439）$13,282

79
79
$ 21

ー
ー
$72,196（2,498）（2,498）$ 3,074644
644$（1,928）

Changes of items during the period
Dividends of surplus
Profit attributable to owners of the parent
Purchase of treasury shares
Disposition of tresury shares
Net changes of items other than shareholders' equity
Total changes of items during the period

Changes of items during the period
Dividends of surplus
Profit attributable to owners of the parent
Purchase of treasury shares
Disposition of tresury shares
Net changes of items other than shareholders' equity
Total changes of items during the period

Changes of items during the period
Dividends of surplus
Profit attributable to owners of the parent
Purchase of treasury shares
Disposition of tresury shares
Net changes of items other than shareholders' equity
Total changes of items during the period
Changes of items during the period
Dividends of surplus
Profit attributable to owners of the parent
Purchase of treasury shares
Disposition of tresury shares
Net changes of items other than shareholders' equity
Total changes of items during the period

Millions of Yen
Total accumulated othercomprehensive income

BALANCE, JUNE 1, 2018

Changes of items during the period
Dividends of surplus
Profit attributable to owners of the parent
Purchase of treasury shares
Disposition of tresury shares
Net changes of items other than shareholders' equity
Total changes of items during the period

BALANCE, MAY 31, 2019

Changes of items during the period
Dividends of surplus
Profit attributable to owners of the parent
Purchase of treasury shares
Disposition of tresury shares
Net changes of items other than shareholders' equity
Total changes of items during the period

BALANCE, May 31, 2020

23

（3,011）$96,781

Suminoe Textile Co., Ltd. Annual Review 2020

¥11,393（1,364）（1,364）
10,028（671）（671）¥ 9,357

Non-controlling interests

Thousands of U.S. Dollars（Note 1）
Total accumulated othercomprehensive income

Total net assets¥4,484¥38,541

BALANCE, JUNE 1, 2018

198
198
4,682

（512）
467
（2,058）ー（1,166）（3,270）35,271BALANCE, MAY 31, 2019

（98）
（98）
¥4,583（468）
142（1,601）
7（769）（2,688）¥32,582

Changes of items during the period
Dividends of surplus
Profit attributable to owners of the parent
Purchase of treasury shares
Disposition of tresury shares
Net changes of items other than shareholders' equity
Total changes of items during the period
Changes of items during the period
Dividends of surplus
Profit attributable to owners of the parent
Purchase of treasury shares
Disposition of tresury shares
Net changes of items other than shareholders' equity
Total changes of items during the period

BALANCE, May 31, 2020

$92,858（6,214）（6,214）$86,644

Non-controlling interests

Total net assets$43,355$326,585

（912）
（912）
$42,442（4,335）
1,324（14,826）70（7,126）（24,893）$301,692

Suminoe Textile Co., Ltd. Annual Review 202024

Suminoe Textile Co., Ltd. and Subsidiaries
As of and for the Year Ended May 31, 2020

Consolidated Statement of Cash Flows

Thousands of
U.S. Dollars（Note 1）Millions of Yen
2020

2019

2020

2020

¥ 1,655¥ 2,212$15,332

2,030

1,769

18,804

7

527

69

25

81

234

Increase（decrease）in provision for directors' retirement benefits

7

（287）

71

Increase（decrease）in allowance for doubtful accounts

0

14

6

Proceeds from sale of property, plant and equipment

ー

Purchase of intangible assets

CASH FLOWS FROM OPERATING ACTIVITIES:Profit before income taxes
Depreciation
Impairment loss
Increase（decrease）in net defined benefit liability

ー

38
（196）

（1,797）

Interest expenses

274

315

Share of loss（profit）of entities accounted for using equity method

209

31

Interest and dividend income

Loss（gain）on sale and retirement of non-current assets
Loss（gain）on sale of investment securities
Loss（gain）on valuation of investment securities
Decrease（increase）in notes and accounts receivable - trade
Decrease（increase）in inventories
Increase（decrease）in notes and accounts payable - trade
Decrease（increase）in consumption taxes refund receivable
Increase（decrease）in accrued consumption taxes payable
Decrease（increase）in other current assets

240

2,547

（39）

（363）

20

30

189

Proceeds from sale and redemption of securities
Purchase of property, plant and equipment（1,535）（1,105）（14,219）

83

29

772

（434）

（511）

（4,023）Purchase of investment securities

（17）

（372）

（161）

2,543

Proceeds from sale and redemption of investment securities

379

512

3,513

1,940

Proceeds from shares of subsidiaries resulting in change in scope of consolidation

32

ー

305

58

21

544

Payments of loans receivable

（2）

（2）

（26）

（398）

151

（3,689）Collection of loans receivable

2

2

24

ー

43

ー

（1,536）（1,448）（14,223）

Net increase（decrease）in short-term loans payable

1,061（4,194）

9,827（9,483）

Proceeds from long-term loans payable

2,200

3,700

20,370（508）

Repayments of long-term loans payable（1,546）（1,642）（14,316）

Net cash provided by（used in）investing activities

2,551

（769）

23,622

CASH FLOWS FROM FINANCING ACTIVITIES:

529

1,076

4,900

（1,024）

253

（54）

（5）

93

（56）

1,146

343

862

Proceeds from issuance of bonds

ー964

10,620

Repayments of lease obligations

（895）

（601）

（8,289）（1,601）（2,058）（14,826）

（468）

（511）

（4,341）259（1,230）Cash dividends paid

Subtotal

6,814

6,533

63,098Cash dividends paid to non-controlling interests

194

265

1,797

（275）

（317）

（2,549）

ー

（533）

ー

Income taxes paid

（1,005）

Income taxes refund

173

96

1,607

5,901

4,760

54,646

Suminoe Textile Co., Ltd. Annual Review 2020

（2,782）（25）

344

Net cash provided by（used in）operating activities

（245）

275

622

Payments for loss on litigation（300）

Purchase of securities

27

Interest expenses paid

2020

Proceeds from withdrawal of time deposits（132）Interest and dividend income received

25

Payments into time deposits

Other

Increase（decrease）in other current liabilities

2019

CASH FLOWS FROM INVESTING ACTIVITIES:（194）

Increase（decrease）in provision for loss on litigation

Thousands of
U.S. Dollars（Note 1）Millions of Yen（1,284）（9,306）

Purchase of treasury shares

ー

（451）

（620）

（4,185）（1,702）（4,964）（15,759）

EFFECT OF EXCHANGE RATE CHANGE ON CASH AND
CASH EQUIVALENTS

（109）

（3）

（1,010）NET INCREASE（DECREASE）IN CASH AND CASH
EQUIVALENTS

2,554

Net cash provided by（used in）financing activities

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIODCASH AND CASH EQUIVALENTS AT END OF PERIOD（1,656）23,653

7,754

9,411

71,803¥10,309¥ 7,754$ 95,455

Suminoe Textile Co., Ltd. Annual Review 202026

Notes to Consolidated Financial Statements
1. B
 ASIS OF PRESENTATION OF CONSOLIDATEDFINANCIAL STATEMENTS
The accompanying consolidated financial statementsof Suminoe Textile Co., Ltd. (the “Company”) andits consolidated subsidiaries have been prepared inaccordance with the provisions set forth in the Japanese
Financial Instruments and Exchange Act and its related
accounting regulations and in accordance with accounting
principles generally accepted in Japan ("Japanese GAAP"),
which are different in certain respects as to the applicationand disclosure requirements of International Financial
Reporting Standards (“IFRS”).
In preparing these consolidated financial statements,
certain reclassifications and rearrangements have been
made to the consolidated financial statements issued
domestically in order to present them in a form which ismore familiar to readers outside Japan. In addition, certain
reclassifications have been made in the 2019 consolidated
financial statements to conform to the classifications usedin 2020.
The consolidated financial statements are stated inJapanese yen, the currency of the country in which theCompany is incorporated and operates. The translationof Japanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside
Japan and have been made at the rate of ¥108 to $1,
the approximate rate of exchange at May 31, 2020. Suchtranslation should not be construed as representations that
the Japanese yen amounts could be converted into U.S.
dollars at that or any other rate.
Each amount of the accompanying consolidated financial
statements is rounded down to the nearest one million yen
or rounded off to the nearest one thousand U.S. dollar,
unless otherwise indicated. Consequently, the totals shownin the accompanying consolidated financial statements
do not necessarily agree with the sums of the individual
amounts.

2. SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES
a. Consolidation - The accompanying consolidated
financial statements as of and for the year ended May 31,2020 include the accounts of the Company and all of its
wholly-owned and majority-owned subsidiaries (collectively,
the "Group").
Under the control and influence concept, those companies
in which the Company, directly or indirectly, is able toexercise control over operations are fully consolidated, andthose companies over which the Company has the ability
to exercise significant influence are accounted for by theequity method.
Investments in two associated companies have beenaccounted for using the equity method.

27

Suminoe Textile Co., Ltd. Annual Review 2020

Suminoe Textile Co., Ltd. and Subsidiaries
As of and for the Year Ended May 31, 2020

The excess of the cost of acquisition over the fair valueof the net assets of an acquired subsidiary at the date ofacquisition is amortized over a period not exceeding 20
years.
All significant intercompany balances and transactions
have been eliminated in consolidation. All material
unrealized profit included in assets resulting fromtransactions within the Group is also eliminated.
Among consolidated subsidiaries, certain domestic andforeign subsidiaries have different fiscal year-ends fromthe Company’s fiscal year-end, May 31. Those companies
which fiscal year-end is March 31, the financial statementsof these subsidiaries as of and for the year ended March
31 were used in preparing the accompanying consolidated
financial statements. Those companies which fiscal yearend is September 30 or December 31, the financial
statements of these subsidiaries as of and for the period
ended March 31 or April 30, as available, were usedin preparing the accompanying consolidated financial
statements. All material transactions which occurred during
the periods from their respective fiscal year-ends to May
31 have been accounted for in the consolidation process.
b. Unification of Accounting Policies Applied toForeign Subsidiaries for the Consolidated Financial
Statements - Under Accounting Standards Board of Japan("ASBJ") Practical Issues Task Force No. 18, "Practical
Solution on Unification of Accounting Policies Applied
to Foreign Subsidiaries for the Consolidated Financial
Statements”, the accounting policies and procedures
applied to a parent company and its subsidiaries for similartransactions and events under similar circumstances
should in principle be unified for the preparation of theconsolidated financial statements. However, financial
statements prepared by foreign subsidiaries in accordancewith either IFRS or generally accepted accounting
principles in the United States of America (“U.S. GAAP”)
tentatively may be used for the consolidation process,except for the following items which should be adjusted in
the consolidation process so that net income is accounted
for in accordance with Japanese GAAP, unless they are
not material: (1) amortization of goodwill; (2) scheduled
amortization of actuarial gain or loss of pensions that has
been recorded in equity through other comprehensive
income; (3) expensing capitalized development costs ofresearch and development (“R&D”); and (4) cancellation of
the fair value model of accounting for property, plant andequipment and investment properties and incorporation of
cost model of accounting.
c. Unification of Accounting Policies Applied toForeign Associated Companies for Using the Equity
Method - ASBJ Statement No. 16, "Accounting Standard
for Equity Method of Accounting for Investments," requires
adjustments to be made to conform the associates'

accounting policies for similar transactions and events
under similar circumstances to those of the parent
company when the associate's financial statements
are used in applying the equity method, unless it isimpracticable to determine such adjustments. In addition,
financial statements prepared by foreign associatedcompanies in accordance with either IFRS or U.S. GAAP
tentatively may be used in applying the equity method
if the following items are adjusted so that net income
is accounted for in accordance with Japanese GAAP,
unless they are not material: (1) amortization of goodwill;(2) scheduled amortization of actuarial gain or lossof pensions that has been recorded in equity throughother comprehensive income; (3) expensing capitalized
development costs of R&D; and (4) cancellation of thefair value model of accounting for property, plant andequipment and investment properties and incorporation of
the cost model of accounting.

3.SEGMENT INFORMATION

d. Business Combinations - Business combinations areaccounted for using the purchase method. Acquisitionrelated costs, such as advisory fees or professionalfees, are accounted for as expenses in the periods inwhich the costs are incurred. If the initial accounting
for a business combination is incomplete by the end of
the reporting period in which the business combination
occurs, an acquirer shall report in its financial statements
provisional amounts for the items for which the accounting
is incomplete. During the measurement period, whichshall not exceed one year from the acquisition, theacquirer shall retrospectively adjust the provisionalamounts recognized at the acquisition date to reflect new
information obtained about facts and circumstances thatexisted as of the acquisition date and that would haveaffected the measurement of the amounts recognized asof that date. Such adjustments shall be recognized as if
the accounting for the business combination had been
completed at the acquisition date. The acquirer recognizes
any bargain purchase gain in profit or loss immediately on
the acquisition date after reassessing and confirming that
all of the assets acquired and all of the liabilities assumed
have been identified after a review of the procedures usedin the purchase price allocation. A parent's ownershipinterest in a subsidiary might change if the parent
purchases or sells ownership interests in its subsidiary. The
carrying amount of noncontrolling interest is adjusted toreflect the change in the parent's ownership interest in its
subsidiary while the parent retains its controlling interest in
its subsidiary. Any difference between the fair value of theconsideration received or paid and the amount by which
the noncontrolling interest is adjusted is accounted for as
capital surplus as long as the parent retains control over its
subsidiary.

(1) Description of Reportable Segments
The Group's reportable segments are components forwhich separate financial information is available andwhose operating results are reviewed regularly by the
Board of Directors in order to determine allocationof resources and assess segment performance. The
Group is organized by business operating units andsubsidiaries, which are separated based on the products
and services they provide. Each of these units andsubsidiaries plan comprehensive strategies for businessand perform business activities. Therefore, based on thesebusiness operating units and also taking into accountthe types of products and the similarities in markets, thereportable segments of the Group are divided into threesegments: “Interior Fittings”, “Automotive Textiles andTraffic Facilities”, and “Functional Materials”. The Interior
Fittings segment includes manufacturing and selling
carpets, curtains, wallpaper and other flooring materials.
The Automotive Textiles and Traffic Facilities segment
includes manufacturing and selling interior materials forautomobiles, trains, buses, ships and other conveyances.
The Functional Materials segment includes manufacturing
and selling electric heated carpets, interior materials foraircraft and related products, such as deodorizers andprocessing of silicon wafers for solar cells.

Under ASBJ Statement No. 17, "Accounting Standard for
Segment Information Disclosures," and ASBJ Guidance
No. 20, "Guidance on Accounting Standard for Segment
Information Disclosures”, an entity is required to reportfinancial and descriptive information about its reportablesegments. Reportable segments are operating segments
or aggregations of operating segments that meet specified
criteria. Operating segments are components of an entity
about which separate financial information is available
and such information is evaluated regularly by the chief
operating decision maker in deciding how to allocate
resources and in assessing performance. Generally,
segment information is required to be reported on the same
basis as is used internally for evaluating operating segment
performance and deciding how to allocate resources tooperating segments.

(2) Methods of Measurement for the Amounts of Sales,
Profit, Assets and Other Items for Each Reportable
Segment
The accounting policies of the segments are substantiallythe same as those used in preparing the accompanying
consolidated financial statements. The profits ofreportable segments correspond to operating income. Theintersegment sales or transfers are based on actual market
prices.

Suminoe Textile Co., Ltd. Annual Review 202028

(3) Information about Sales, Profit, Assets, and Other Items by Reportable Segment
Millions of Yen

Millions of Yen

2020

2020

Reportable Segments
Interior Fittings

Automotive Textiles and Traffic Facilities

Functional Materials

Other（Note 1）

Total

Adjustmemt（Note 2）

Total

Figures in consolidated
financial statements（Note 3）

Net sales :Net sales to outside customers
Inter-segment sales and transfers¥33,300¥54,075¥3,928¥91,304¥207¥91,512

663

5

1

669

168

838

¥   
（838）

ー

¥91,512ー¥33,964¥54,081¥3,929¥91,974¥375¥92,350

¥   
（838）

¥91,512Segment income¥472¥ 2,652¥79¥ 3,204¥ 43¥ 3,247¥（1,690）¥ 1,557

Segment assets

25,97435,0502,709

63,734584

64,31821,95486,272

314

1,445

97

1,858

25

1,883

147

2,030

ー

266

ー

266

ー

266

ー

266

220

2,418

630

3,270

28

3,298

217

3,516

Total

Other :
Depreciation and amortization
Investment in equity method affiliates
Increase in property, plant, and equipment,
and intangible assets

Millions of Yen

Millions of Yen

2019

2019

Reportable Segments
Interior Fittings

Automotive Textiles and Traffic Facilities

Functional Materials

Other（Note 4）

Total

Adjustmemt（Note 5）

Total

Figures in consolidated
financial statements（Note 6）

Net sales :Net sales to outside customers
Inter-segment sales and transfers

Total¥34,282¥60,304¥3,887¥98,473¥144¥98,617ー¥98,617

724

7

2

733

172

905

¥   
（905）

ー

¥35,006¥60,311¥3,889¥99,206¥316¥99,522

¥   
（905）

¥98,617

Segment income¥   263¥ 4,018¥  186¥ 4,467¥ 79¥ 4,546¥（1,428）¥ 3,118

Segment assets

25,111

38,2702,203

65,584423

66,007

21,96987,976

320

1,193

77

1,590

25

1,615

154

1,769

ー

481

ー

481

ー

481

ー

481

185

1,482

34

1,701

24

1,725

（42）

1,683

Other :
Depreciation and amortization
Investment in equity method affiliates
Increase in property, plant, and equipment,
and intangible assets

Thousands of U.S. Dollars

Thousands of U.S. Dollars

2020

2020

Reportable Segments
Interior Fittings

Automotive Textiles and Traffic Facilities

Functional Materials

Total

Other
（Note 7）

Total

Adjustmemt（Note 8）Figures in consolidated
financial statements（Note 9）Net sales :Net sales to outside customers
Inter-segment sales and transfers$308,341$500,702$36,373$845,416$1,919$847,335

6,143

51

10

6,204

1,556

7,760

$  （7,760）

ー$847,335
ー$314,483$500,753$36,383$851,619$3,476$855,095$  （7,760）$847,335

Segment income$   4,372$ 24,562$   738$ 29,672$   402$ 30,074$（15,649）$ 14,425

Segment assets

240,507324,539

25,089590,135

5,408

595,544

203,279

798,823

2,915

13,388907

17,210232

17,442

1,362

18,804

ー

2,463

ー

2,463

ー

2,463

ー

2,463

2,045

22,395

5,839

30,279264

30,543

2,016

32,558

Total

Other :
Depreciation and amortization
Investment in equity method affiliates
Increase in property, plant, and equipment,
and intangible assets

29

Suminoe Textile Co., Ltd. Annual Review 2020

Note 1Other represents segments that are not included in any
other reportable segments, such as physical property andperformance inspection.
Note 2Adjustments are as follows:
1) Adjustment of ¥(1,690) million recorded for segment
income for the year ended May 31, 2020 includes
elimination of intersegment transactions of ¥28 million
and corporate expenses of ¥(1,718) million that are notallocated to relevant reportable segments. Unallocatedcorporate expenses mainly consist of expenses for theadministrative and R&D divisions that do not belong to any
reportable segment.
2) Adjustment of ¥21,954 million recorded for segment assets
for the year ended May 31, 2020 includes elimination ofintersegment transactions of ¥(251) million and corporate
assets of ¥22,205 million that are not allocated to relevant
reportable segments. Unallocated corporate assets mainly
consist of investment of surplus funds (cash and deposits),
long-term investment (investment securities), and assets
related to the administrative division that do not belong to
any reportable segment.
Note 3
Segment income is adjusted with operating income in theaccompanying consolidated statements of income.
Note 4
Other represents segments that are not included in any otherreportable segments, such as the physical property andperformance inspection.
Note 5Adjustments are as follows:
1) Adjustment of ¥(1,428) million recorded for segment
income for the year ended May 31, 2019 includes
elimination of intersegment transactions of ¥24 million
and corporate expenses of ¥(1,452) million that are notallocated to relevant reportable segments. Unallocatedcorporate expenses mainly consist of expenses for theadministrative and R&D divisions that do not belong to any
reportable segment.
2) Adjustment of ¥21,969 million recorded for segment assets
for the year ended May 31, 2019 includes elimination ofintersegment transactions of ¥(265) million and corporate
assets of ¥22,234 million that are not allocated to relevant
reportable segments. Unallocated corporate assets mainly
consist of investment of surplus funds (cash and deposits),
long-term investment (investment securities), and assets
related to the administrative division that do not belong to
any reportable segment.
Note 6
Segment income is adjusted with operating income in theaccompanying consolidated statements of income.
Note 7
Other represents segments that are not included in any otherreportable segments, such as the physical property andperformance inspection.
Note 8Adjustments are as follows:
1) Adjustment of $(15,649) thousand recorded for segment
income for the year ended May 31, 2020 includes
elimination of intersegment transactions of $265 thousand
and corporate expenses of $(15,914) thousand that are
not allocated to relevant reportable segments. Unallocatedcorporate expenses mainly consist of expenses for theadministrative and R&D divisions that do not belong to any
reportable segment.
2) Adjustment of $203,279 thousand recorded for segment
assets includes elimination of intersegment transactionsof $(2,332) thousand and corporate assets of $205,611
thousand that are not allocated to relevant reportablesegments. Unallocated corporate assets mainly consistof investment of surplus funds (cash and deposits), longterm investment (investment securities), and assets related
to the administrative division that do not belong to any
reportable segment.
Note 9Segment income is adjusted with operating income in theaccompanying consolidated statements of income.

Suminoe Textile Co., Ltd. Annual Review 202030

(4) Information about Geographical Areas
Millions of Yen

4.PER SHARE INFORMATION2020
For the year ended May 31, 2020

Sales to customers

Japan

North and Central
America（U.S.A.）

Asia¥61,832¥14,049¥15,339

Other

The basis of computing basic earnings per share (“EPS”) for the years ended May 31, 2020 and 2019 were as follows:

Total

¥289

¥91,512（9,947）
Property, plant and equipment

22,396

3,552

1,511

27,460For the year ended May 31, 2020

Millions of Yen

Thousands of Shares

Profit Attributable to
Owners of the Parent

Weighted-Average
Shares

142

Yen
EPS

6,535

21.88

Millions of Yen

Thousands of Shares

Yen

Profit Attributable to
Owners of the Parent

Weighted-Average
Shares

EPS

7,147

65.36

Basic EPS – Profit attributable to common shareholders

U.S. Dollars

0.20

Millions of Yen
2019
For the year ended May 31, 2019

Sales to customers

Japan

North and Central
America（U.S.A.）

Asia¥65,589¥ 14,869¥17,901

Total

Others¥258

For the year ended May 31, 2019¥98,617（11,859）
Property, plant and equipment

22,5382,897

926

26,361Thousands of U.S. Dollars

Basic EPS – Profit attributable to common shareholders

467

Note:
Diluted earnings per share is not presented as there were no dilutive securities for the year ended May 31, 2020.
Treasury shares held by the Company are not included in the number of shares of common stock and the weighted-average number of shares used for computation of the basic EPS
and net assets per share. The number of treasury shares excluded from the calculation of basic EPS were 1,147 thousand and 535 thousand for the years ended May 31, 2020
and 2019, respectively. The number of such shares for the calculation of net assets per share were 1,373 thousand and 837 thousand as of May 31, 2020 and 2019, respectively.

2020
For the year ended May 31, 2020

Sales to customers

Japan

North and Central
America（U.S.A.）

Asia$572,528$130,090$142,034

Other

Total

$2,683$847,335

Net assets per share as of May 31, 2020 and 2019 were as follows:（92,110）
Property, plant and equipment

207,371

32,89613,996254,264

As of May 31, 2020

Net assets per share(5) Information about Impairment on Non-Current Assets by Reportable Segment
Millions of Yen

As of May 31, 20192020

Net assets per share

Reportable Segments
For the year ended May 31, 2020

Interior
Fittings

ーAutomotive
Textiles andTraffic Facilities¥7

Functional
Materials

ー

Total

¥7

Other

ー

Eliminations
or CorporateーMillions of Yen

Thousands of Shares

Net Assets Attributableto Owners of the Parent

Common Shares

27,9986,308

4,438.11

Millions of Yen

Thousands of Shares

Yen

Net Assets Attributableto Owners of the Parent

Common Shares

Net Assets per Share

6,844

4,469.04

30,588Yen

U.S. Dollars

Net Assets per Share

41.09

Total

¥7

Millions of Yen
2019
Reportable Segments
For the year ended May 31, 2019

Interior
Fittings

ーAutomotive
Textiles andTraffic Facilities¥527

Functional
Materials

ー

Total

Others¥527

ーEliminations/
Corporate

ー

Total

¥527

Thousands of U.S. Dollars
2020
Reportable Segments
For the year ended May 31, 2020

Interior
Fittings

Automotive
Textiles andTraffic Facilities

$69

31

Suminoe Textile Co., Ltd. Annual Review 2020

Functional
Materials

Total

$69

Other

Eliminations/
Corporate

Total

$69

Suminoe Textile Co., Ltd. Annual Review 202032

Corporate Data

Company Network(as of May 31, 2020)

OfficesHead Office, Osaka Branch &Osaka Showroom
11-20, Minami-Semba 3-Chome,
Chuo-ku, Osaka 542-8504
Phone: +81-6-6251-6801
Fax: +81-6-6251-0862(as of August 28, 2020)

R&D Center

Subsidiaries

Chairman and President

Directors

Corporate Auditors

11-20, Minami-Semba 3-Chome,
Chuo-ku, Osaka 542-8504
Phone: +81-6-6251-6839
Fax: +81-6-6251-6868

USA

Ichizo Yoshikawa (Representative Director)

Teppei Nagata
Hiroaki Usugi
Haruo Shimizu
Takashi Yokota
Kohei Nomura

Kiyokazu Ichikawa
Atsuhiro Sonoda
Takafumi Katayama

Suminoe Textile of America Corporation
Bondtex, Inc.

MexicoSuminoe Textile de Mexico, S.A. de C.V.

Technical CenterTokyo Branch & Tokyo Showroom
BR Gotanda-Building, 30-4,
Nishi-Gotanda 2-Chome,
Shinagawa-ku, Tokyo 141-0031
Phone: +81-3-5434-2860
Fax: +81-3-5434-6542

Board of Directors and Corporate Auditors

China

SPM Automotive Textile Co., Ltd.
Suzhou Suminoe Koide Automotive
Accessories Co., Ltd.
Suminoe Textile Shanghai Co., Ltd.
Suzhou Suminoe Textiles Co., Ltd.

Kubota, Ando-cho, Ikoma-gun,Nara 639-1064
Phone: +81-743-57-5441
Fax: +81-743-57-6410

ThailandSubsidiaries

T.C.H. Suminoe Co., Ltd.
Suminoe Koide (Thailand) Co., Ltd.

Japan

Sales Offices

SUMINOE Co., Ltd.
RUNON CO., LTD.
SUMINOE LOGISTICS Co., Ltd.
Suminoe Works Co., Ltd.
Sewing Hyogo Co., Ltd.
Suminoe Teijin Techno Co., Ltd.
Marunaka Souei Co., Ltd.
Suminoe Techno Co., Ltd.
Tango Textile Co., Ltd.
Teijin Tecloth Ltd.
Owari Seisen Co., Ltd.
Kansai Laboratory Co., Ltd.
INTECH CO., LTD.

Sapporo, Sendai, Saitama, Chiba,
Yokohama, Shizuoka, Kanazawa,
Nagoya, Kyoto, Kobe, Okayama,
Hiroshima, Fukuoka

Factories
Nara, Shiga, Kyoto, Aichi, Ishikawa

Indonesia

PT. Suminoe Surya Techno
PT. Sinar Suminoe Indonesia

India

Suminoe Teijin Techno Krishna India Pvt. Ltd.

VietnamSuminoe Textile Vietnam Co., Ltd.

Associated Companies

Senior Managing Directors
Yoshiaki Tanihara (Representative Director)
Hitoshi Iida (Representative Director)

Investor Information
Founded:Incorporated:

1883
December 25, 1913
(Suminoe Textile Joint-Stock Company)

Change of Organization: December 26, 1930
(Suminoe Textile Co., Ltd.)

Capital:Authorized Shares:
Issued Shares:
Shareholders:
Employees:¥9,554,173,950
30,000,000
7,682,162
4,035(as of May 31, 2020)

Composition of Shareholders :Securities Firms

0.20%
Foreign
Shareholders

4.07%

Financial
Institutions

Individuals
and Others

37.41%

28.26%

267 (Parent Company)
2,822 (Consolidated Basis)

Japan

Sumisho Airbag Systems Co., Ltd.
KST Co., Ltd.

Other Corporations

30.06%

Suminoe Textile Shanghai Co., Ltd.
Shanghai

Suminoe Textile ofAmerica Corporation
C.A. Design
Suminoe Textile
California
of America
Corporation

Suzhou Suminoe Textiles Co., Ltd.
SuzhouSuzhou Suminoe Koide
Automotive Accessories Co., Ltd.
SuzhouSuminoe Teijin Techno
Krishna India Pvt. Ltd.
Haryana

T.C.H. Suminoe Co., Ltd.
Ayudhaya

SPM Automotive Textile Co., Ltd.
Guangzhou

Suminoe Textile Vietnam Co., Ltd.
Ha NamSuminoe Koide (Thailand) Co., Ltd.
Chiang Mai

PT. Suminoe Surya Techno
Bandung

PT. Sinar Suminoe Indonesia
Bandung

33

Suminoe Textile Co., Ltd. Annual Review 2020

South Carolina

Suminoe Textile Co., Ltd.

Bondtex, Inc.
South Carolina

Suminoe Textile deMexico, S.A. de C.V.
Guanajuato

Major Shareholders:(as of May 31, 2020)

Number of Shares(Thousands)

Percentage of Total
Shares Outstanding

Takashimaya Company, Limited

924

14.66

Nippon Life Insurance Company

501

7.96

Marubeni Corporation

366

5.81

Mizuho Bank, Ltd.

234

3.72

HAYASHI TELEMPU HOLDINGS CORPORATION

233

3.69

The Master Trust Bank of Japan, Ltd. (Trust account)

233

3.69

The Master Trust Bank of Japan, Ltd. (as trustee for Retirement Benefit Trust of UNITIKA LTD.)

178

2.83

MUFG Bank, Ltd.

174

2.76

DFA INTL SMALL CAP VALUE PORTFOLIO

157

2.50

Suminoe Textile Kyoeikai

136

2.16

Name

Suminoe Textile Co., Ltd. Annual Review 202034