Toray to Boost Borrowing on Demand for Fiber Used in Boeing 787

Toray to Boost Borrowing on Demand for Fiber Used in Boeing 787
A file photograph shows a wing of the Boeing Co. 787 passenger jet using Toray Industries Inc.'s carbon fiber manufactured at Mitsubishi Heavy Industries Ltd.'s plant in Aichi Prefecture, Japan. Photographer: Tomohiro Ohsumi/Bloomberg

Toray Industries Inc., the supplier of carbon-fiber for Boeing Co.’s 787 and Daimler AG’s Mercedes-Benz, plans to increase borrowing this fiscal year to help fund expansion.

The world’s largest producer of carbon-fiber will seek financing of as much as 70 billion yen ($879 million) in the year ending March 2013, from 60 billion yen in the previous period, according to Mitsuharu Mano, the company’s general manager at the finance department. Toray sold 20 billion yen of 10-year bonds today in its first offering of non-convertible notes in nine years.

Demand for light-weight materials for cars and airplanes will boost Toray’s annual sales to 2 trillion yen in about three years, up 16 percent from the forecast for the current period, the company said in May. The maker of products ranging from golf club shafts and bathing suits to water purifiers and airbag textiles plans to expand spending on factories and equipment 24 percent to 117 billion yen this fiscal year.

“Aggressive capital spending is at the center of our current business plan,” Mano said in an interview at the company’s Tokyo headquarters on July 10. “We need money to fund expansion of facilities.”

Bond Sale

Toray today sold 20 billion yen of 0.925 percent 10-year notes, according to a statement from SMBC Nikko Securities Inc.

This was the first time the company tapped the market for a straight bond since a 10 billion yen offering of 1.61 percent 10-year securities in September 2003, data compiled by Bloomberg show.

Toray in April began a three-year 350 billion yen capital spending plan aimed at boosting sales of carbon-fiber composites and its mainstay synthetic fiber. It has 160.7 billion yen of bonds and loans outstanding, according to data compiled by Bloomberg.

The company is building South Korea’s first carbon-fiber plant and expanding production in the U.S., Japan and France facilities to help boost its global output capacity of the material 50 percent to 27,100 tons by 2015. Operating profit in the business will surge 56 percent to 12 billion yen this fiscal year, accounting for 10 percent of its income, it said in May.

Shares of the company fell 0.2 percent to 521 yen as of 10:02 a.m. on the Tokyo Stock Exchange, extending their decline this year to 5.4 percent. The benchmark Nikkei 225 Stock Average advanced 4.3 percent in the same period.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE