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Japan-Update

Teijin targets profit for key US composite maker by 2020

Demand for lightweight autoparts seen powering broad growth plans

TOKYO -- Japan's Teijin aims to bring an American unit that produces lightweight autoparts into the black by the year ending in March 2020 as demand for fiberglass composites takes off, powering overall growth in the field of new materials.

The materials maker purchased Continental Structural Plastics Holdings for $825 million in January. The new unit, which makes autoparts and other products from advanced composites, generates the equivalent of 6 billion yen ($54.4 million) in depreciation charges each year on goodwill and intangible assets. Continental appears headed for a net loss in the year that ends in March 2018, but Teijin intends to have it turn a profit two years later.

"Fiberglass composites are being used more often in trunk parts and other components in an effort to make vehicles lighter," said Kazuhiro Yamamoto, Teijin's executive vice president. This demand surge is expected to lift Continental's revenue despite sluggishness in the American auto market as a whole, rapidly improving the unit's profitability.

Teijin also might take Continental's operations to markets such as Europe and China, targeting "average annual revenue growth of 10% over the next decade," Yamamoto said. By fiscal 2025, the company aims to increase revenue from new materials in areas such as automotive and electronics more than eightfold to over 200 billion yen, with Continental doing much of the heavy lifting.

(Nikkei)

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