Annual Review 2021

Suminoe Textile

Annual Review 2021
YEAR ENDED MAY 31, 2021

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

Meiji Era

1930

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

Company Motto

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

1980

1883

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

Nara Factorybegan productionof Japan's firstcarpet tiles.

Showa Era

Suminoe Textile Co., Ltd. isestablished.

1896

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

TRIPLE FRESH®
deodorant treatment
technology developed.

1949

2011

2005

1998

Successful production ofhand-woven moquette in
1896, adopted by Japan
National Railways for seatcovering in 1899.

2013
Consolidate Suminoe Koka Co., Ltd.
and Suminoe Nara Co., Ltd., Suminoe
Techno Co., Ltd. is established.
Suminoe Textile de Mexico, S.A. de C.V.
is established in Mexico.
PT. Suminoe Surya Techno isestablished in Indonesia.

ECOS® Recycled
Carpet Tiles New
Release.

100th Anniversary
We celebrated the 130th anniversaryof our founding and the 100th
anniversary of our incorporation.

2018

Shares listed on theTokyo, Osaka, andKyoto stock exchanges.

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

2021

1913

Taisho Era

1994

2010

Heisei Era

Suminoe Textile Joint-Stock
Company is established.

2015

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

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

2003
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 130 years
since then.

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

Acquired Bondtex, Inc.
and made it aconsolidated subsidiary.

Reiwa Era

2012

2019

Suminoe Textile Vietnam
Co., Ltd. is established in
Vietnam.

ECOS® became the first productto obtain Eco Mark certification
under the new certification criteria.

Suminoe Textile of America Corporation isestablished in the U.S.
Current subsidiary, Suzhou Suminoe Textiles Co.,
Ltd. is established 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.

ECOS® received theEconomy, Trade andIndustry Minister'sPrize in the 4th EcoPro
Awards.

We are aiming for the creation ofa globally optimized supply system.

Contents

3
1

Suminoe Textile Co., Ltd. Annual Review 2021

Financial
Highlights

4

Business
Results

6

Feature11 a Glance

Suminoe at

18 Section

Financial

33 DataCorporate

Suminoe Textile Co., Ltd. Annual Review 2021

2

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

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

Financial Ratios (%):

2021

2020

2019

2018

2017

2021

¥79,702
1,049
409¥91,512
1,557
142¥98,6173,118
467¥97,873
2,248
1,084

¥96,0381,298
26$724,569
9,539
3,723

¥83,669
32,956¥86,272
32,582¥87,976
35,271¥92,183
38,542¥90,255
37,399$760,627
299,601¥64.844,438.67
35.00¥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

$0.59
40.35
0.32

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

33.5%
1.5
1.4

32.5%
0.5
1.5

34.8%
1.4
3.4

36.9%
0.1
1.5

36.9%
3.2
2.6

Note 1: U.S. dollar amounts are converted from Japanese yen amounts at the rate of U.S.$1 to ¥110, the approximate rate on May 31, 2021.
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.

Net Sales (Millions of Yen)

97,87396,038100,000

98,61791,51279,70280,00060,00040,00020,000
0

2017

2018

2019

1,200

1,000
0

800

2,248
1,557

1,298

2017

2018

2019

2020

1,049

2021

Total Assets (Millions of Yen)
100,000

90,25592,183

87,97686,272

83,669

400
0

2017

409
142

26
2018

2019

40,00037,39938,54220172018

35,271

30,00060,0002020

2021

32,582

32,9562020

2021

20,00040,00010,00020,0003

467

Total Equity (Millions of Yen)

80,000

0

1,084

3,118

3,000

2021

(Millions of Yen)

4,000

2,000

2020

Net Income Attributable to Owners of the Parent

Operating Income (Millions of Yen)

2017

2018

Suminoe Textile Co., Ltd. Annual Review 2021

2019

2020

2021

0

Business Results

Thousands of
U.S.Dollars

2019

President
Teppei Nagata

Consolidated financial result
During the consolidated fiscal year ended May 31, 2021
under review, the protracted novel coronavirus (COVID-19)
pandemic caused great damage to the Japanese
economy. Though the economy is on a recovery trend, theoutlook remains uncertain due to several factors, including
stagnant personal consumption. It is expected that
economic activities will normalize with herd immunity
achieved through vaccination in the future. In the global
economy, the Chinese economy recovered ahead of otherregions, and sentiment improved in the United States as
well, supported by the vaccination.
In the interior industry, which relates to the Company’sbusiness, domestic new housing starts were down 4.8%
year on year, and the floor area of nonresidential
construction starts also decreased by 5.8% year on year.
In the automotive industry, automobile production in theJapanese market was down 1.8% year on year. Bothproduction and sales also stagnated in overseas markets,
falling short of those in the previous fiscal year.
In the above-described business environment, the Group is
promoting market development of ESG-based products andglobal management, which the Group has been working on,
while implementing measures to prevent the spread of
COVID-19, such as improving the working environment by
securing the safety and security of employees.
In the Interior Fittings Segment, the Company endeavors toincrease sales of products processed with antibacterial andantiviral technology called CLEANSE® and other healthconscious and environment-friendly products, including
ECOS®, eco-friendly carpet tiles under the horizontal
recycling system. In addition, in the space design business,
we will strive to expand our business domain from store
interior design, which is our area of specialty.
In the Automotive Textiles and Traffic Facilities Segment,
efforts are being made to develop technologies andincrease orders received for non-textile products such as
artificial leather and to reduce costs through the
optimization of material procurement and the places of
production for globally marketed cars in the automotive
textiles business. While in the traffic facilities business, theCompany manufactures and distributes high-performance
fabric materials and endeavors to increase sales of seatcushion materials and safety products for railway vehicles
and buses. In both the automotive textiles business andthe traffic facilities business, our processing technologies
accumulated in the Interior Fitting Segment including
antibacterial and antiviral effects are applied to the productdevelopment.
In the Functional Materials Segment, the Company
established a new sales and distribution base for fabriccoated electric heating products in Vietnam in 2019. We
will diversify regional risks and establish an optimal supply
system. Furthermore, our focus is placed on thedevelopment and sale of products processed with our
original complex function processing technology called
TRIPLE FRESH® Deo, which provides deodorizing,
antibacterial, antiviral and anti-allergen functions.
For the entire Group, we are working on reconstructing ourcore system and raising the accuracy of our consolidated
performance management, in order to upgrade ourbusiness management structure. We have been working
steadily on building a foundation for business growth.
Presently, a cross-business project has been established.
Gathering the strengths of each business field such as thedesign capability of the Interior Fittings Segment, theprocessing technology for fabric materials used in the
Automotive Textiles and Traffic Facilities Segment, andhigh-function technologies including the deodorizing,
antibacterial and antiviral capabilities of the Functional
Materials Segment, the Company engages in thedevelopment of next-generation interior fittings, which will
be required for our living spaces in the future.
Under these circumstances, our consolidated financial
results for the fiscal year are as follows.
Net sales declined 12.9% year on year to ¥79,702 million(U.S.$724,569 thousand) attributable to lackluster sales ofcommercial carpet tiles and wall coverings and a drop in
domestic and overseas automobile-related sales due tothe impact of the global economic slowdown. As to profits,
operating income declined 32.6% year on year to ¥1,049
million (U.S.$9,539 thousand), ordinary income declined
8.5% year on year to ¥1,211 million (U.S.$11,015
thousand), and income attributable to owners of parent
increased 186.4% year on year to ¥409 million (U.S.$3,723
thousand) due to the impacts of recognition of gain on
sales of investment securities, loss on retirement of noncurrent assets and impairment loss as extraordinary
income/loss.

Suminoe Textile Co., Ltd. Annual Review 2021

4

Business Results

FeatureDividend policy

Medium- to Long-term Management Targets

The Company has positioned shareholder return as a key management issue and distributes profits appropriately by taking
into account stable dividend payments and business results. Based on this basic dividend policy, the annual dividend for the
fiscal year ended May 31, 2021 was ¥35 (U.S.$0.32) per share, with an interim dividend of ¥15 (U.S.$0.14) per share and a
year-end dividend of ¥20 (U.S.$0.18) per share.
In addition, it plans to pay an annual dividendof ¥70 per share (an interim dividend of ¥35

SUMINOE GROUP WAY 2022-2024-2027
The Company formulated “SUMINOE GROUP WAY 2022-2024-2027,” new Medium- to Long-term Management Targets
starting June 2021. In order to continue to grow into the future, we will combine the strengths of all employees of theGroup companies to achieve the targets Plan by increasing sales of products that meet social needs and promoting global

Annual Cash Dividends Per Shareand year-end dividend of ¥35) for the fiscal¥70

year ending May 2022.

¥70

management based on the ESG management which the Group has focused on to date.

¥70

SUMINOE GROUP WAY POLICY

¥50
¥35

END ¥20

With a view to our medium- to long-term “ideal corporate image,” we have formulated policies up to the fiscal year ending
May 2027.

MID ¥15
FY2017FY2018FY2019FY2020

FY2021

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

Management
policyOutlook for the next term
We have newly established "SUMINOE GROUP WAY

sales and profit compared to the previous fiscal year.

2022–2024–2027," our consolidated medium- to long-

However, certain factors in industries related to theterm management targets which will start in June 2021.

business of the Group, namely, the uncertain outlook for

Under the ESG-based management that the Group

new residential and non-residential construction starts

has been striving to implement, we will promote salesin Japan in the interior industry and semiconductor

expansion of products that meet the needs of society

shortages in the automobile industry, may negatively

and global management. All employees of the Groupaffect our performance.

will work together to meet these consolidated medium-

Considering these circumstances, we plan to post net

to long-term management targets.

sales of ¥86,480 million, operating income of ¥1,160

In the fiscal year ending May 31, 2022, which is the firstmillion, ordinary income of ¥1,350 million, and profit

year of the plan, the domestic and overseas economies,

attributable to owners of parent of ¥620 million for thewhich have been subdued by the COVID-19 pandemic,

fiscal year ending May 31, 2022.

are expected to normalize. We thus forecast higher net

Targets●Establish better business models to globally grow as a company required by society.
●Gain sound profits to invest in future growth.
●Strengthen ESG management.

●Expand sales and build a foundation for the growth.
●Improve financial structure.
●Create workplaces for employee happiness.
●Share the Company’s vision with employees.

●Reduce CO2 emissions, and develop
and distribute products forenvironmental measures.

Challenges●Strengthen cost competitiveness.
●Develop highly unique products.
●Expand sales of products with
antibacterial and anti-virus effects.

●Safe and secure work environment●Participation and cultivation of diverse
human resources●Enhance governance.
●Improve work efficiency using coresystems.
●Improve corporate brand value.

Medium- to Long-term Targets Net sales: 100 billions of yen or more, Operating margin: 5% or more

Note : The planned figures for the fiscal year ending May 2022 are as of the announcement on July 13, 2021.

5

Suminoe Textile Co., Ltd. Annual Review 2021

Suminoe Textile Co., Ltd. Annual Review 2021

6

FeatureFeatureFinancial Targets- Numerical targets by business segment(Millions of yen)

● Expand sales and build a foundation for the growth.

Actual results● Improve financial structure.

Overview of the Three-year Plan (Fiscal years ending May 2022 to 2024)

Interior fittings

With ESG management in mind, the Group will develop and promote the sale of products that contribute to a decarbonizedsociety and products with antibacterial and anti-virus effects in each business segment. The Group will also endeavor to
improve productivity and competitiveness, aiming at further efficiency by strengthening the management base and at thesame time reorganizing offices through restructuring of core systems.

Automotive textiles
and traffic facilities
Functional materials

Three-year Consolidated Income and Expenditure Plan
(Fiscal years ending May 2022 to 2024)

FY ended May 2021

FY ending May 2022

FY ending May 2023

FY ending May 2024

31,02433,75034,43035,12045,102

48,98051,91054,170

3,130

3,410

3,680

3,840

Net sales
Operating income
Net sales
Operating income
Net sales
Operating income

579

2,102
(87)

400

2,800
(140)

450

3,590
150

520

4,170
190

Note1 : Figures in brackets are negative.
Note2 : The figure in the actual results for the FY ended May 2021 are based on Japanese GAAP.

- Three-year Consolidated Income and Expenditure Plan

- Investments and Capital Policy● We will aggressively implement capital expenditure and M&A with the aim of strengthening the existing businesses and the

100,000

Net sales (left axis)
Operating income (right axis)
Ordinary income (right axis)

90,0004,000

80,0002,000

70,000

0

Actual results(Millions of yen)

Operating cash flow

Capital expenditure and M&A:
6.0 billions of yen

Improving D/E ratio

Restructuring the core systems:
700 millions of yen

Three-year Consolidated Income and Expenditure Plan
(Fiscal years ending May 2022 to 2024)
FY ending May
2023

FY ending May
2024

Net sales

79,70286,48090,36093,490+13,787+17.3%

Operating income(Operating margin)

1,049(1.3%)

1,160(1.3%)

2,520(2.8%)

3,300(3.5%)+2,251+214.5%

Ordinary income

1,211

1,350

2,730

3,530

+2,318+191.3%

Profit attributable toowners of parent

409

620

1,280

1,960

+1,551+378.7%

ROE (%)

1.5

2.2

4.5

6.6

0.58

0.64

Note 1: Target exchange rate for three years: U.S.$1 to 103.00 yen
Note 2: The figure in the actual results for the FY ended May 2021 are based on Japanese GAAP.
* The planned figures for the FY ending May 2022 are as of the announcement on July 13, 2021.

Suminoe Textile Co., Ltd. Annual Review 2021

● We will endeavor to realize the optimum capital structure.

Creating cash flow

*FY ending May
2022

0.67

expanding business scale.

Profit attributable to ownersof parent (right axis)

FY ended May
2021

D/E ratio (times)

7

6,000

Three-year Consolidated Income and Expenditure Plan
(Fiscal years ending May 2022 to 2024)

0.56

Comparison with FY ended May 2021

Securitization of assets• Selling securities• Selling land (Nara Factory of Suminoe
Techno Co., Ltd.)-

Effective use of treasury stock

Reorganization of offices andimprovement of logistics network:
3.3 billions of yen

Profit returns to shareholders

Suminoe Textile Co., Ltd. Annual Review 2021

8

FeatureFeature- Profit Return to Shareholders- Development of Eco-friendly Products

With stable dividend payment to shareholders as a precondition, we will appropriately distribute returns, taking into

We will contribute to a decarbonized society by accelerating research and development under the development philosophy

consideration the trend of business performance and future investments for business expansion.

of “K (Kenko meaning Health in Japanese), K (Kankyo meaning Environment), Recycle, plus A (Amenity).”

The dividend will be paid twice a year as an interim dividend and a year-end dividend.
(Examples of eco-friendly products that contribute to the reduction of CO² emissions)

We will enhance communication with shareholders through proactive IR activities.
80

70

(Yen)

70

70

60

50

• Launched in 2011

35

40

TBD

20
0

FY ended May
2018

FY ended May
2019

Non-financial Targets

FY ended May
2020

FY ended May
2021●E COS®, carpet tiles under the horizontal recycling
system

FY ending May
2022

FY ending May
2023

FY ending May
2024• Achieved 84% at the maximum, which is the highest
level of recycled materials used in the industry, and 43%
at the maximum in the reduction rate of CO² emissions.
• Approximately 90,000 tons of CO² was reduced
over the past decade.

● Create workplaces for employee happiness.

amounts of water and electricity as well as dyeing effluent
treatment, had been applied to dye pile yarn used for thesurface of carpets. We have now shifted to using solution-dyed- Initiatives for Reduction of CO² Emissions
We have focused on the initiatives for the reduction of CO² emissions through products manufactured by the Group since wedeveloped SUMITRON® in 1990.

In June 2021, we established the “Visualization Committee on the Reduction of CO² Emissions” to further enhance thereduction of CO² emissions and the lowering of environmental load.

• Increase the use of yarn recycled from PET and recycledresin materials.
● Reduction of CO² emissions in the business activities• Improve logistics systems and unify the production bases.

9

Suminoe Textile Co., Ltd. Annual Review 2021

yarn (pigmented at the spinning stage), which reduces CO²“ECOS®”: the solution-dyed yarn is applied to the pile yarn
for the surface.

SocialECOS ®, carpet tiles under the horizontal recycling system

Volume of contribution to the reduction of
CO² emissions over 10 years
Approx.

Approx.

220,000
tons

90,000FYs ended May
2012 to 2021

problem in the production process.

GovernanceWe aim to be a company trusted in society by further promoting

happiness.

our initiatives and by complying with laws and regulations and● Initiatives for employees

corporate ethics.

1. Improve workplaces for more safety and security.
2. Diversity and inclusion• Restructure the core systems.

4. Omnidirectional communication• Promote interactive in-house communication through top

3. Participation and cultivation of human resources● Social contribution activities• Support and donation for poverty and starvation
FYs ending May
2022 to 2031

emissions, requiring less water and energy and with no effluent

We will endeavor to create workplaces for employee• Contribution in cases of disasters

tons• Improve energy efficiency and change fuels used.
• Working style reforms• Solution-dyed yarn
is used for reducing
environmental load.

Traditionally, the piece-dyeing method, which required large

Environment• Increase the use of recycled fibers, such as SUMITRON®.

• Useable for a long period of time due to excellent
weather- and heat-resistance properties.

Transition to solution-dyed yarn

● Share the Company’s vision with employees.

• Circulation-type recycling of carpet tiles• Polyester chips recycled from PET bottles are used asmaterial by 50% or more.

• Approximately 220,000 tons of CO² are to be
reduced over the next decade.

– Initiatives for ESG● Volume of contribution to the reduction of CO² emissions
through products● SUMITRON®

• Strengthen the managerial decision making by outside directors.
management’s frequent visits to workplaces.

• Continue to conduct compliance training.

• Further disseminate “Corporate ethics hotline.”• Strengthen global risk management.
• BCP action plan

Suminoe Textile Co., Ltd. Annual Review 2021

10

Suminoe at a Glance

Interior
Fittings

Contribution to Total Net Sales

Net Sales

Operating Income(Millions of Yen)
40,000(Millions of Yen)
600
33,30031,02430,00038.9%

Automotive
Textiles andTraffic Facilities

Contribution to Total Net Sales

Rugs and Mats

Curtains

Wallpaper

Plush Hand-woven
Curtains

Hand-woven Carpet
and Hooked Rugs

Nishijin Brocade
Fabric

100
2020

2021

0

2020

2021

Automotive Textiles

Operating Income

Door trim
Luggage compartment

Seat covering materials
Seat backSun visor

45,1023,000

40,000

2,652

Train
2,102

2,000

30,000Bus

Floor carpet
Wheel house

20,000Traffic Facilities

Ceiling material(Millions of Yen)
4,000

54,07550,00056.6%

Carpet Tiles

200

Net Sales(Millions of Yen)
60,000Roll Carpets

300

20,000

0

472

400

10,000

p13

500

579

Car mat1,000

10,000p15

Functional
Materials

0Contribution to Total Net Sales

2020

2021

Net Sales(Millions of Yen)
100

5,000

3.9%

2020

2021

Ship

Operating Income(Millions of Yen)

4,000

0

79

3,928

Electric Carpets

3,130

3,000

Tispa Deodorization
Related Brand

Air-filter Products

0
2,000
1,000

p17
11

Suminoe Textile Co., Ltd. Annual Review 2021

0

2020

2021

-100

2020

(87)

2021

SUMITRON®

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 2021

12

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

Curtains

Plush Hand-woven Curtains

Hand-woven Carpet
and Hooked Rugs

Business Overview for the Fiscal Year ended May 31, 2021

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

to the Imperial Diet Building on the occasion of its
opening, the Suminoe Textile Group has createdcomfortable and safe living spaces as a pioneerin the Japanese interiors industry. Currently,

our curtains and carpets are primarily marketed
by SUMINOE Co., Ltd. and our wallpaper andpaper for sliding doors by RUNON CO., LTD. The

KKR+A, or Kenko (Health), Kankyo (Environment),
Recycle and Amenity.

Environmentally Friendly Product at theWorld’s Highest Level
ECOS® is a series of recycled carpet tiles produced
using horizontal recycling technology. ECOS®

While sales of household carpets for online and retailLife ® Vol. 9 for general households were subdued, sales

stores were robust, sales of commercial carpet tiles andof Face for medical, welfare, and educational institutions

wall coverings were sluggish. As a result, net sales

recovered due to the resumption of new deliveries anddeclined 6.8% year on year to ¥31,024 million

replacement work that had been postponed to prevent the(U.S.$282,045 thousand), and operating income

spread of COVID-19. Accordingly, net sales of curtains asincreased 22.8% year on year to ¥579 million

a whole declined 3.2% year on year.

(U.S.$5,271 thousand) due to the impacts of a reduction

Net sales of wall coverings were down 11.7% year on

in selling, general and administrative expenses andyear owing to the decrease in sales of wallpaper

household carpet sales.

attributable to the decline in demand for new

Regarding commercial carpets, sales of roll carpets

construction and refurbishments for houses, stores,

increased thanks to orders for large-scale projects.

hospitals, and hotels due to the COVID-19 pandemic.

However, sales of carpet tiles, those for export inparticular, remained significantly weak due to theProspects for the next fiscal year

impact of lockdowns on economic activities.

New construction of large properties, including hotels

material usage rate of 84%.

Consequently, net sales of commercial carpets as aand commercial facilities, is expected to remain sluggish.

Through our proprietary

whole declined 2.6% year on year.

We will strive to expand the sales of environmentally-of interior products for public facilities, hotels,

recycling system, recycled

Net sales of household carpets increased by 9.0% year

friendly products and antibacterial and antiviral products

on year reflecting robust sales for online under the stay-while working to raise awareness of the SUMINOE

for general households.

old carpet tiles.

at-home restriction, and strong sales mainly at DIY stores.

brand. We will also focus on online sales, which have

Regarding curtains, while sales of mode S ® Vol. 9 and U

performed well in the current fiscal year.

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

schools, hospitals, and office buildings, as well as
In recent years, we have worked on the production

has achieved a postconsumption recycledmaterials are created fromof eco-friendly products, under the theme of

13

Suminoe Textile Co., Ltd. Annual Review 2021

Suminoe Textile Co., Ltd. Annual Review 2021

14

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 formore than a century. Currently, Suminoe Textile offers total proposals for seat coverings, curtains, wall materials, flooringmaterials 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

Business Overview for the Fiscal Year ended May 31, 2021

Our Expertise in Proposing Optimal Solutions as a Total SupplierIn 1931, Suminoe Textile supplied carpets and seat

United States, Mexico, China, Thailand, Indonesia,

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

manufactured in Japan for Ford Motor Company andoptimized supply system.

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.
The greatest feature of our Company is that we

Ceiling material
Seat covering materials
Seat backSun visor

Door trim
Luggage compartment

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 (the15Suminoe Textile Co., Ltd. Annual Review 2021

Floor carpet
Wheel house

Car mat

Net sales were down 16.6% year on year to ¥45,102

and semiconductor shortages in North America.

million (U.S.$410,019 thousand) and operating income

Overseas sales therefore declined 21.1% year on year.

declined 20.7% year on year to ¥2,102 million (U.S.$19,114

In the traffic facilities business, demand for interior

thousand) on the back of decline of global car production byfittings for railway vehicles dropped due to fewer

Japanese automakers and a sluggish demand for interior

passengers on public transportation attributable tomaterials for railway vehicles and buses.

the promotion of telework. Furthermore, new bus

In the automotive textiles business, a decline in car

production volume plunged due to significantly

production by Japanese automakers was observed

diminished domestic travel and inbound foreign tourists.

due to sluggish economic activity attributable to the

As a result, net sales for the traffic facilities business as

COVID-19 pandemic. Domestic automobile production

a whole fell below the level of the previous year.

recovered in September 2020 to the same level as
September of the previous year and the recovery

Prospects for the next fiscal year

trend continued thereafter. However, domestic sales

In the automobile industry, the number of automobiles

declined 6.0% year on year, attributable to the impact

produced is expected to recover, and their sales areof multiple factors, such as semiconductor shortages.

expected to increase year on year both in Japan andRegarding overseas markets, though China continued

overseas. Although the sales of train- and bus-related

to demonstrate a steady recovery, recovery fromproducts are expected to remain challenging, we will

sluggish production resulting from lockdowns was slow

work on the development of antiviral processed interiorin Thailand, Indonesia, etc. Additionally, production

materials and environmentally-friendly seat coverings.

temporarily declined due to the impact of cold waves

Suminoe Textile Co., Ltd. Annual Review 2021

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 thatincorporate 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 of 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

Financial Section 2021
Year ended May 31, 2021

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, 2021
While sales of deodorant filters for air purifiers andpolyester fiber yarn due to the impact of the COVID19

floor materials for bathrooms grew steadily, new orders

pandemic, as well as sluggish sales of other products,

received in the current fiscal period for electric carpets,

including mats for school children.

one of our core products, plummeted due to the warm

Contents

winter in the previous fiscal period. Net sales declined

Prospects for the next fiscal year

P19 Consolidated Balance Sheet

20.3% year on year to ¥3,130 million (U.S.$28,456

We will proceed with the reorganization of factories in

P21 Consolidated Statement of Income

thousand), and operating loss was ¥(87) million

China and Vietnam, which are production bases for(U.S.$(792) thousand, operating income of ¥79 million

electric carpets, to build an optimal supply system. We

P22 Consolidated Statement of Comprehensive Incomein the previous fiscal year), reflecting decreases in sales

will work to secure orders in the existing businesses andof roofing materials, civil engineering materials, interior

to promote the development and sales of new functional

materials for airplanes, and SUMITRON®, a continuous

processed products that meet market needs.

P23 Consolidated Statement of Changes in Equity
P25 Consolidated Statement of Cash Flows
P27 Notes to Consolidated Financial Statements
P33 Corporate Data

17

Suminoe Textile Co., Ltd. Annual Review 2021

Financial Section

Suminoe Textile Co., Ltd. and Subsidiaries
As of and for the Year Ended May 31, 2021

Consolidated Balance Sheet

Thousands of U.S.
Dollars（Note 1）

Millions of Yen

ASSETS

2021

2020

LIABILITIES AND NET ASSETS

2021

CURRENT ASSETS :¥10,500$99,426

14,147

14,502

128,609

5,846

6,469

53,154

53

30

482

Merchandise and finished goods

8,533

10,422

77,581Work in process

1,610

1,669

14,642

Raw materials and supplies

2,716

2,847

24,698

70

149

637

2,666

2,120

24,245

Notes and accounts receivable-trade
Electronically recorded monetary claims-operating
Securities

Income taxes receivable
Other
Allowance for doubtful accounts
Total current assets（24）
46,557（23）
48,688PROPERTY, PLANT AND EQUIPMENT

2021¥11,997¥13,161$109,072

4,202

4,296

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

4,243

5,135

38,574

Short-term loans payable

9,834

10,85889,402

Lease obligations

611

647

5,557

Income taxes payable

588

592

5,352

Provision for demolition costs

297

ー

2,708

4,283

3,473

38,94031,85633,868289,606

Bonds payable

1,000

1,500

9,091

Long-term loans payable

7,855

7,825

71,411

Lease obligations

1,017

1,335

9,251

313

332

2,846

Other
Total current liabilities

NON-CURRENT LIABILITIES :38,208Deferred tax liabilities

2,798

3,060

25,443

Deferred tax liabilities for land revaluation

3,761

3,761

34,194

17,606

17,602160,060

Provision for directors' retirement benefit

112

103

1,021

Leased assets, net

1,290

1,587

11,736

Net defined benefit liability

4,148

4,223

37,717

Construction in progress

1,696

547

15,420

Other

647

741

5,890

433

365

3,940

Total non-current liabilities

18,856

19,821

171,42128,02827,460254,807

Total liabilities

50,712

53,690461,027

2

5

26

1,544

1,593

14,044

Capital stock

9,554

9,554

86,856

1,547

1,598

14,070Capital surplus

2,640

2,651

24,008

Machinery, equipment and vehicles, net
Land

Other, net
Total property, plant and equipment

INTANGIBLE ASSETS :Leased assets
Other
Total intangible assets

NET ASSETS :INVESTMENTS AND OTHER ASSETS :SHAREHOLDERS' EQUITY:

Retained earnings

10,672

10,452

97,022

Treasury shares（3,988）（4,017）（36,262）

18,87818,641

171,625

893

1,434

8,127

0

2

8

7,797

7,797

70,883

4,916

5,987

44,6959

6

86

Deferred tax assets

1,542

1,395

14,021

Valuation difference on available-for-sale securities

Other

1,228

1,293

11,170

Deferred gains or losses on hedging instruments

Allowance for doubtful accounts

（162）

（157）

（1,474）

Revaluation reserve for land

Investment securities
Long-term loans receivable

Total investments and other assets
Total non-current assets

TOTAL ASSETS

Total shareholders’equity

ACCUMULATED OTHER COMPREHENSIVE INCOME:

7,534

8,525

68,498Foreign currency translation adjustment

608

331

5,531

37,111

37,584

337,375

Remeasurements of defined benefit plans

（134）

（208）

（1,222）¥83,669¥86,272$760,627

9,166

9,357

83,327

4,911

4,583

44,648

Total accumulated other comprehensive income
Non-controlling interests
Total net assets

TOTAL LIABILITIES AND NET ASSETS

19

2020

（221）
423,253

NON-CURRENT ASSETS :Buildings and structures, net

2021

LIABILITIES :¥10,936

Cash and deposits

Thousands of U.S.
Dollars（Note 1）

Millions of Yen

Suminoe Textile Co., Ltd. Annual Review 2021

32,95632,582299,601¥83,669¥86,272$760,627

Suminoe Textile Co., Ltd. Annual Review 2021

20

Suminoe Textile Co., Ltd. and Subsidiaries
As of and for the Year Ended May 31, 2021

Consolidated Statement of Income

Thousands of U.S.
Dollars（Note 1）

Millions of Yen
2021

2020

2021

NET SALES¥79,702¥91,512$724,569

COST OF SALES

62,876

72,837

571,604

16,826

18,674

152,965

15,776

17,116

143,427

1,049

1,557

9,539

Gross profit

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Operating income

Interest income

20

17

185

Dividend income

132

176

1,202

80

ー

729

Real estate rent

269

258

2,452

Other

235

263

2,142

Total non-operating income

738

716

6,711

Foreign exchange gains

NON-OPERATING EXPENSES :Interest expenses

232

274

2,110

39

46

357

202

209

1,837

Foreign exchange losses

ー

248

ー

Rent expenses on real estates

32

32

298

Other

69

139

632

Sales discounts
Share of loss of entities accounted for using equity method

575

950

5,234

1,211

1,323

11,0158

7

73

Gain on sale of investment securities

1,439

398

13,088

Total extraordinary income

1,447

406

13,161

Loss on sale and retirement of non-current assets

349

66

3,181

Impairment loss

329

7

2,995

Total non-operating expenses

ORDINARY INCOME

Thousands of U.S.
Dollars（Note 1）

Millions of Yen

PROFIT

2021

2020

2021

¥ 914

¥  550$ 8,311

（540）

（479）

（4,914）OTHER COMPREHENSIVE INCOME
Valuation difference on available-for-sale securities
Deferred gains or losses on hedging instruments

（5）

13

Foreign currency translation adjustment

420

（376）

3,824

73

69

671

3

（5）

35

（47）

（777）

¥ 866

¥（227）$ 7,879¥ 217¥（528）$ 1,981

648

300

5,898

Remeasurements of defined benefit plans, net of tax

NON-OPERATING INCOME :Suminoe Textile Co., Ltd. and Subsidiaries
As of and for the Year Ended May 31, 2021

Consolidated Statement of Comprehensive Income

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

COMPREHENSIVE INCOME

（48）

（431）

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

EXTRAORDINARY INCOME :Gain on sale of non-current assets

EXTRAORDINARY LOSS :

15

ー

138

694

74

6,314

1,964

1,655

17,863Current

967

958

8,796

Deferred

83

146

756

1,050

1,105

9,552

914

550

8,311

504

407

4,588

¥   409¥   142$   3,723

Loss on valuation of investment securities
Total extraordinary loss
Profit before income taxes

INCOME TAXES :Total income taxes

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

21

Suminoe Textile Co., Ltd. Annual Review 2021

Suminoe Textile Co., Ltd. Annual Review 2021

22

Consolidated Statements of Changes in shareholders' equity

Suminoe Textile Co., Ltd. and Subsidiaries
As of and for the Year Ended May 31, 2021

Millions of Yen
Capital Stock

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 treasury shares
Net changes of items other than shareholders' equity
Total changes of items during the period

BALANCE, MAY 31, 2020

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

BALANCE, May 31, 2021

Capital Surplus

Retained Earnings¥2,652¥10,777¥9,554

（468）
142
（0）
ー
9,554

（0）
2,651

（325）
10,452Thousands of U.S. Dollars（Note 1）
Treasury Stock¥（2,423）¥20,560（1,601）
7

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

（0）
29

（189）
409
（0）
18

（189）
409
（10）
ー
¥9,554（10）¥2,640220¥10,672

Total shareholders'equity28¥（3,988）237¥18,878

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

BALANCE, May 31, 2021

$86,856

Retained Earnings

Treasury Stock

Total shareholders'equity$24,108$95,022$（36,519）$169,466（1,722）
3,723

（100）
$24,008$86,856¥（6）¥7,797¥ 601¥（277）BALANCE, MAY 31, 2020

（479）
（479）
1,434

8
8
2

ー
ー
7,797

（269）
（269）
331

69
69
（208）

BALANCE, May 31, 2021

（540）
（540）
¥  893

（1）
（1）
¥0

ー
ー
¥7,797

276
276
¥ 608

73
73
¥（134）

Revaluation reserve
for landForeign currencytranslation
adjustment

Valuation difference
on available-for-salesecurities

Remeasurements ofdefined benefit plans

Deferred gain or
losses on hedging
instruments

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

BALANCE, MAY 31, 2020

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

BALANCE, May 31, 2021

23

Suminoe Textile Co., Ltd. Annual Review 2021

（671）
（671）
9,357

（191）
（191）
¥ 9,166

Non-controlling interests

Revaluation reserve
for landForeign currencytranslation
adjustment（1,722）
3,723
（9）
166
2,159
$171,625

Remeasurements ofdefined benefit plans

BALANCE, MAY 31, 2020

$13,041$ 21$70,883$3,018$（1,893）

BALANCE, May 31, 2021

（4,914）（4,914）$ 8,127

（13）
（13）
$   8

ー
ー
$70,883

2,514
2,514
$5,531671
671$（1,222）

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

Millions of Yen¥10,028

257$（36,262）

Thousands of U.S. Dollars（Note 1）¥1,913BALANCE, MAY 31, 2019

2,001
$97,022

Accumulated Other Comprehensive Income

BALANCE, MAY 31, 2019

Total accumulated othercomprehensive income

（9）
266

（100）

Millions of Yen
Deferred gain or
losses on hedging
instruments

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

BALANCE, MAY 31, 2020

Capital Surplus

Accumulated Other Comprehensive Income
Valuation difference
on available-for-salesecurities

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

Capital Stock

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

Total net assets¥4,682¥35,271

（98）
（98）
4,583

（468）
142
（1,601）
7（769）（2,688）32,582327
327¥4,911

（189）
409
（0）
18
135
（373）
¥32,956

BALANCE, MAY 31, 2020

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

BALANCE, May 31, 2021

$85,069（1,742）（1,742）$83,327

Non-controlling interests

Total net assets$41,671$296,206

2,978
2,978
$44,648（1,722）
3,723
（9）
166
1,236
3,395
$299,601

Suminoe Textile Co., Ltd. Annual Review 2021

24

Suminoe Textile Co., Ltd. and Subsidiaries
As of and for the Year Ended May 31, 2021

Consolidated Statement of Cash Flows

Thousands of
U.S. Dollars（Note 1）Millions of Yen
2021

2020

2021

¥ 1,964¥ 1,655$ 17,863

1,979

2,030

17,993

329

7

2,995

13

25

121

（25）

7

（235）

3

0

36

CASH FLOWS FROM OPERATING ACTIVITIES:Profit before income taxes
Depreciation and Amortization
Impairment loss
Increase（decrease）in net defined benefit liability
Increase（decrease）in provision for directors' retirement benefits
Increase（decrease）in allowance for doubtful accounts

2021

2020

2021

CASH FLOWS FROM INVESTING ACTIVITIES:Payments into time deposits

（419）

（300）

（3,811）

Proceeds from withdrawal of time deposits

396

275

3,604

Purchase of securities

（61）

（39）

（561）

47

20

434

Proceeds from sale and redemption of securities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment（2,060）（1,535）39

83（18,733）
355

（152）

（194）

（1,388）

136

ー

1,241

Interest expenses

232

274

2,110

Payments for retirement of property, plant and equipment

（319）

ー

（2,901）

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

202

209

1,837

Payments for asset retirement obligations

（137）

ー

（1,246）

Loss（gain）on sale and retirement of non-current assets

341

58

3,108

Purchase of intangible assets

（211）

（434）

（1,926）（1,439）（398）（13,088）

Purchase of investment securities

（56）

（17）

（515）

Proceeds from sale and redemption of investment securities

1,667

379

15,159Interest and dividend income

Loss（gain）on sale of investment securities

Proceeds from earnest related sales of property, plant and equipment

15

ー

138

Decrease（increase）in notes and accounts receivable - trade

1,700

2,551

15,456

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

229

32

2,083

Decrease（increase）in inventories

2,252

529

20,475

Payments of loans receivable

（7）

（2）

（67）

（2,602）（1,024）（23,663）

3

2

28

（0）

ー

Loss（gain）on valuation of investment securities

Increase（decrease）in notes and accounts payable - trade
Decrease（increase）in consumption taxes refund receivable
Increase（decrease）in accrued consumption taxes payableCollection of loans receivable

6

（54）

55

29

93

265

Net cash provided by（used in）investing activities（3,656）

CASH FLOWS FROM FINANCING ACTIVITIES:

3,013

Net increase（decrease）in short-term loans payable

Other

（3）

（754）

（1,536）（6,858）（3,019）1,061（27,449）

Decrease（increase）in other current assets（402）

Increase（decrease）in other current liabilities

331

27

Other

356

（132）

3,242

Proceeds from long-term loans payable

5,200

2,200

47,273

Subtotal

5,134

6,814

46,677

Repayments of long-term loans payable（3,659）（1,546）（33,268）

1,146

148

194

1,348

Proceeds from issuance of bonds

（500）

ー

（4,545）Interest expenses paid

（227）

（275）

（2,069）

Repayments of lease obligations

（769）

（895）

（6,994）

Income taxes paid

（921）

（1,005）（8,380）Purchase of treasury shares（0）（1,601）

Income taxes refund

34

173

314

Proceeds from sale of treasury shares

18

ー

166

4,167

5,901

37,889Cash dividends paid

（190）

（468）

（1,731）

Cash dividends paid to non-controlling interests

（253）

（451）

（2,303）（3,174）（1,702）（28,861）

EFFECT OF EXCHANGE RATE CHANGE ON CASH AND
CASH EQUIVALENTS

208

（109）

1,900

NET INCREASE（DECREASE）IN CASH AND CASH
EQUIVALENTS

447

2,554

4,070

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

10,3097,754

93,720CASH AND CASH EQUIVALENTS AT END OF PERIOD¥10,756¥10,309$ 97,790

Interest and dividend income received

Net cash provided by（used in）operating activities

Net cash provided by（used in）financing activities

25

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

Suminoe Textile Co., Ltd. Annual Review 2021

（9）

Suminoe Textile Co., Ltd. Annual Review 2021

26

Notes to Consolidated Financial Statements
1. B
 ASIS OF PRESENTATION OF
CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of
Suminoe Textile Co., Ltd. (the “Company”) and its
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 theapplication and 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 2020 consolidated
financial statements to conform to the classifications usedin 2021.
The consolidated financial statements are stated inJapanese yen, the currency of the country in which theCompany is incorporated and operates. The translation ofJapanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside
Japan and have been made at the rate of ¥110 to $1, theapproximate rate of exchange at May 31, 2021. 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
shown in the accompanying consolidated financial
statements do not necessarily agree with the sums of theindividual amounts.

2. S
 UMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES
a. Consolidation - The accompanying consolidated
financial statements as of and for the year ended May 31,
2021 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,
and those companies over which the Company has theability to exercise significant influence are accounted forby the equity method.
Investments in two associated companies have beenaccounted for using the equity method.

27

Suminoe Textile Co., Ltd. Annual Review 2021

Suminoe Textile Co., Ltd. and Subsidiaries
As of and for the Year Ended May 31, 2021

The excess of the cost of acquisition over the fair value ofthe 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 used in
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 ofJapan ("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 andprocedures applied to a parent company and its
subsidiaries for similar transactions and events undersimilar circumstances should in principle be unified for the
preparation of the consolidated financial statements.
However, financial statements prepared by foreignsubsidiaries in accordance with either IFRS or generally
accepted accounting principles in the United States ofAmerica (“U.S. GAAP”) tentatively may be used for the
consolidation process, except for the following items
which should be adjusted in the consolidation process sothat net income is accounted for in accordance withJapanese GAAP, unless they are not material: (1)amortization of goodwill; (2) scheduled amortization of
actuarial gain or loss of pensions that has been recordedin equity through other comprehensive income; (3)expensing capitalized development costs of research anddevelopment (“R&D”); and (4) cancellation of the fair value
model of accounting for property, plant and equipment andinvestment properties and incorporation of cost model ofaccounting.
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 areused 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 isaccounted for in accordance with Japanese GAAP, unlessthey are not material: (1) amortization of goodwill; (2)scheduled amortization of actuarial gain or loss ofpensions that has been recorded in equity through othercomprehensive income; (3) expensing capitalized
development costs of R&D; and (4) cancellation of the fairvalue model of accounting for property, plant andequipment and investment properties and incorporation of
the cost model of accounting.
d. Business Combinations - Business combinations areaccounted for using the purchase method. Acquisitionrelated costs, such as advisory fees or professional fees,
are accounted for as expenses in the periods in which thecosts are incurred. If the initial accounting for a businesscombination is incomplete by the end of the reporting
period in which the business combination occurs, anacquirer shall report in its financial statements provisionalamounts for the items for which the accounting is
incomplete. During the measurement period, which shallnot exceed one year from the acquisition, the acquirer
shall retrospectively adjust the provisional amounts
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 non-controlling interest is adjusted
to reflect the change in the parent's ownership interest in
its subsidiary while the parent retains its controllinginterest in its subsidiary. Any difference between the fairvalue of the consideration received or paid and theamount by which the non-controlling interest is adjusted isaccounted for as capital surplus as long as the parent
retains control over its subsidiary.

3. SEGMENT INFORMATION
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 andsuch 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 thesame basis as is used internally for evaluating operating
segment performance and deciding how to allocate
resources to operating segments.
(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 allocation of
resources and assess segment performance. The Groupis organized by business operating units and subsidiaries,
which are separated based on the products and services
they provide. Each of these units and subsidiaries plancomprehensive strategies for business and performbusiness activities. Therefore, based on these business
operating units and also taking into account the types of
products and the similarities in markets, the reportablesegments of the Group are divided into three segments:“Interior Fittings”, “Automotive Textiles and Traffic
Facilities”, and “Functional Materials”. The Interior Fittingssegment 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, aircraft and otherconveyances. The Functional Materials segment includes
manufacturing and selling electric heated carpets andrelated products, such as deodorizers and processing ofsilicon wafers for solar cells.
(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 of reportablesegments correspond to operating income. Theintersegment sales or transfers are based on actual
market prices.

Suminoe Textile Co., Ltd. Annual Review 2021

28

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

Millions of Yen

2021

2021

Reportable Segments
Interior Fittings

Automotive Textiles and Traffic Facilities

Functional Materials

Other（Note 1）

Total

Adjustment（Note 2）

Total

Figures in consolidated
financial statements（Note 3）

Net sales :Net sales to outside customers
Inter-segment sales and transfers¥31,024¥45,102¥3,130¥79,257¥445¥79,702

654

2

0

657

163

821

¥  
（821）

ー

¥79,702ー¥31,679¥45,104¥3,130¥79,915¥608¥80,523¥  （821）¥79,702

Segment income¥   579¥ 2,102¥  （87）¥ 2,595¥ 73¥ 2,668¥（1,619）¥ 1,049

Segment assets

25,15535,275

2,488

62,919290

63,20920,45983,669

246

1,430

138

1,815

21

1,836

142

1,979

ー

66

ー

66

ー

66

ー

66

1,118

1,393

63

2,576

13

2,590

87

2,677

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

2020

2020

Reportable Segments
Interior Fittings

Automotive Textiles and Traffic Facilities

Functional Materials

Other（Note 4）

Total

Adjustment（Note 5）

Total

Figures in consolidated
financial statements（Note 6）

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

Total¥33,300¥54,075¥3,928¥91,304¥207¥91,512ー¥91,512

663

5

1

669

168

838

¥   
（838）

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

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

2021

2021

Reportable Segments
Interior Fittings

Automotive Textiles and Traffic Facilities

Functional Materials

Other（Note 7）

Total

Total

Adjustment（Note 8）Figures in consolidated
financial statements（Note 9）Net sales :Net sales to outside customers
Inter-segment sales and transfers$282,045$410,019$28,456$720,520$4,049$724,569

5,952

23

7

5,982

1,486

7,467

$ （7,467）

ー$724,569
ー$287,997$410,042$28,462$726,502$5,535$732,036$ （7,467）$724,569

Segment income$   5,271$ 19,114

$  
（792）

$ 23,593$  668$ 24,261$（14,723）$   9,539

Segment assets

228,689

320,683

22,622571,993

2,638

574,631

185,996760,627

2,237

13,0021263

16,503

196

16,698

1,295

17,993

ー

606

ー

606

ー

606

ー

606

10,17012,672581

23,423

124

23,547795

24,342

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 2021

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 ¥(1,619) million recorded for segment
income for the year ended May 31, 2021 includes
elimination of intersegment transactions of ¥26 million
and corporate expenses of ¥(1,645) 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 ¥20,459 million recorded for segment assets
for the year ended May 31, 2021 includes elimination ofintersegment transactions of ¥(74) million and corporate
assets of ¥20,534 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 ¥(1,690) 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 of intersegment transactions of ¥(251) million
and corporate assets of ¥22,205 million that are notallocated to relevant reportable segments. Unallocatedcorporate assets mainly consist of investment of surplus
funds (cash and deposits), long-term investment (investment
securities), and assets related to the administrative divisionthat 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 $(14,723) thousand recorded for segment
income for the year ended May 31, 2021 includes
elimination of intersegment transactions of $240 thousand
and corporate expenses of $(14,963) 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 $185,996 thousand recorded for segment
assets includes elimination of intersegment transactionsof $(679) thousand and corporate assets of $186,675
thousand that are not allocated to relevant reportablesegments. Unallocated corporate assets mainly consist ofinvestment 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 9Segment income is adjusted with operating income in theaccompanying consolidated statements of income.

Suminoe Textile Co., Ltd. Annual Review 2021

30

4. PER SHARE INFORMATION(4) Information about Geographical Areas

The basis of computing basic earnings per share (“EPS”) for the years ended May 31, 2021 and 2020 were as follows:
Millions of Yen
2021

For the year ended May 31, 2021

Sales to customers
Property, plant and equipment

Japan

North and Central
AmericaAsia¥56,533¥10,448¥12,579

23,485

3,297

Other

Total

¥140

1,245

¥79,702ー

28,028For the year ended May 31, 2021
Basic EPS – Profit attributable tocommon shareholders

Millions of Yen
2020
For the year ended May 31, 2020

Sales to customers

For the year ended May 31, 2020

Japan

North and Central
America（U.S.A.）

Asia¥61,832¥14,049¥15,339¥289¥91,5121,511

ー

27,460

Total

Other

（9,947）
Property, plant and equipment

22,396

3,552

Basic EPS – Profit attributable tocommon shareholders

Millions of Yen

Thousands of Shares

Profit Attributable to
Owners of the Parent

Weighted-Average
Shares

409

6,315

Yen
EPS

64.84

Millions of Yen

Thousands of Shares

Yen

Profit Attributable to
Owners of the Parent

Weighted-Average
Shares

EPS

142

6,535

U.S. Dollars

0.59

21.88

Note: Diluted earnings per share is not presented as there were no dilutive securities for the year ended May 31, 2021.

Thousands of U.S. Dollars
2021
For the year ended May 31, 2021

Sales to customers
Property, plant and equipment

Japan

North and Central
AmericaAsia$513,944$94,988$114,364$1,273$724,569

213,504

29,97911,324ー

254,807

Other

Total

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 1,366 thousand and 1,147 thousand for the years ended May 31, 2021 and 2020,
respectively. The number of such shares for the calculation of net assets per share were 1,363 thousand and 1,373
thousand as of May 31, 2021 and 2020, respectively.
Net assets per share as of May 31, 2021 and 2020 were as follows:(5) Information about Impairment on Non-Current Assets by Reporting Segment
Millions of Yen

As of May 31, 2021

2021
Reportable Segments
For the year ended May 31, 2021

Interior
Fittings

129

Automotive
Textiles andTraffic Facilities

106

Net assets per share

Functional
Materials

53

Total

¥289

Other

1

Eliminations/
Corporate38¥329
As of May 31, 2020

2020

Net assets per share

Reportable Segments
For the year ended May 31, 2020

Interior
Fittingsー¥7Functional
Materials

ー

Total

Other

¥7

ー

Eliminations/
CorporateーThousands of Shares
Common Shares

28,044

6,318

Yen

U.S. Dollars

Net Assets per Share

4,438.67

40.35

Total

Millions of Yen

Automotive
Textiles andTraffic Facilities

Millions of Yen
Net Assets Attributableto Owners of the Parent

Millions of Yen

Thousands of Shares

Yen

Net Assets Attributableto Owners of the Parent

Common Shares

Net Assets per Share

27,9986,308

4,438.11

Total

¥7

Thousands of U.S. Dollars
2021
Reportable Segments
For the year ended May 31, 2021

Interior
Fittings

1,181

31

Suminoe Textile Co., Ltd. Annual Review 2021

Automotive
Textiles andTraffic Facilities

965

Functional
Materials

486

Total

$2,632Other

16

Eliminations/
Corporate

346

Total

$2,995

Suminoe Textile Co., Ltd. Annual Review 2021

32

Corporate Data

Company Network(as of May 31, 2021)

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 27, 2021)

R&D Center

Subsidiaries

ChairmanManaging Director

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

Hiroaki Usugi(Representative Director)

Toshiro Maruyama
Eiichiro Kimura
Haruo Shimizu
Kohei Nomura
Koichi Makino
Yumiko Oida

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.
CPO 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

President
Teppei Nagata(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
3,876(as of May 31, 2021)

Composition of Shareholders :Foreign Shareholders

1.62%
Securities
Firms

2.53%

Individuals
and Others

Financial
Institutions

37.44%

28.88%

253 (Parent Company)
2,724 (Consolidated Basis)

Japan

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

Other Corporations

29.53%

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.
AyudhayaSouth Carolina

Suminoe Textile Co., Ltd.
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

Bondtex, Inc.
South Carolina

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

Major Shareholders:(as of May 31, 2021)

Number of Shares(Thousands)

Percentage of Total
Shares Outstanding

Takashimaya Company, Limited

924

14.64

Nippon Life Insurance Company

501

7.94

Marubeni Corporation

366

5.80

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

282

4.47

Mizuho Bank, Ltd.

234

3.71

HAYASHI TELEMPU HOLDINGS CORPORATION

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

Suminoe Textile Kyoeikai

144

2.29

Suminoe Textile Employee's Association

144

2.28

Name

1. Fractions of less than 1,000 were disregarded in the numbers of shares held.
2. Suminoe Textile Co., Ltd. has treasury stock (1,363,878 shares) but is not included in the above list of major shareholders.
Treasury stock is excluded from the calculation of the percentages of share ownership.

33

Suminoe Textile Co., Ltd. Annual Review 2021

Suminoe Textile Co., Ltd. Annual Review 2021

34