First of all, I would like to cover two pages. This is what we are aiming at and positioning the resin business. In the first line, we state our characteristic. We are to meet the diverse needs of customers and patients. Every time I read this sentence, I believe that any company would have this kind of relationships based on trust. This is a common sense. We do have a high expertise and professional knowhow, especially in fiber areas. Also with the same degree of professionalism we have our home care services or the healthcare business services, and I believe that is our characteristic.
With this, we are to meet our customers' demands. This is what we call a business model that is customer-centric. We are to realize this model and to support Teijin going forward. As for the resin and plastic business, as you can see, we have our three Cs, co-creation of solution, and community idea, combination of technologies, to understand and meet the demands of our customers. The fact that we are able to perform three Cs proves that we are able to utilize our high expertise area in fibers.
Also we do have our medical knowhows that are rare. We truly understand the needs of our customers. This is not only about a single material or the service, but we are able to offer many different combinations, hundreds of them. By creating or combining this expertise, we are able to create new businesses that our customers truly require. In the area of fiber or home care or healthcare services, we do have the power in our plastic resin business.
In our next term, we are aiming at increasing our profit level even further, and that's what we are aiming at. We do have some history in the past. On the left side, in 2024 and 2025, in two years midterm, we have been working on divestment of underperforming businesses, especially the e-commerce businesses or the North America commerce business, we have divested them. In addition to that, we have been active in divestment. That's aramid paper and logistics business and bromine business, which we have already divested.
The reason why we have been working on this is because we have limited resources, human resources and materials and budget. So we are focusing on our expertise area. That means the fiber and the healthcare and the resin. For the fiber products that we have recently announced, with Asahi Kasei Advance, we are to composite each other and be integrated to expand our product areas even more. There is acquisition of Unitika's Spunbond business, although this is small in scale. Also Toyobo's airbag business acquisition in China.
With this, we are expanding and strengthening our fiber product businesses. Healthcare also, we are utilizing our home healthcare platform for further acceleration. For the resin and plastic, we are able to thoroughly practice our three Cs and community Cs, so we are going to strengthen them further. We should not forget aramid. We are facing difficulties, but we are proceeding with the cost restructuring. We are to realize our customer-centric state. This is what we are aiming at. That is all for the explanation for now. And now Kitahama from Resins and plastic business is going to explain that.
My name is Kitahama. I am General Manager of Resin Plastic Processing Business Unit. Thank you very much for giving me the opportunity to speak today. I would like to provide you with the overview as well as the medium-to-long term strategy. First of all, I would like to go over the overview and then the characteristics and the strengths, followed by medium to long term strategy. We do not really have many opportunities to explain about our resin plastic business. Today, I will have to go over some basics. Here is our overview history.
As a plastic resin business, back in 1948, we started manufacturing film resins. Then moved to the polycarbonate resin and brominated flame retardants and resin sheets. As for the polycarbonate, already we have over 60 years of history. Also around year 2000, we have been supporting our customers' global expansion, so we started going into the overseas as well. As you can see in this chart, now there is a factory in Singapore, and we stopped them in 2015. As for our business locations, the red colors indicate our factories, and the blues sales and marketing, and yellows research and development facilities.
As for R&D facilities, we support our customers in development, and we have locations in Japan, China, and Thailand. As for the sales, we are global and we support our customers and also support the materials. As for the sales breakdown by region, we are concentrated in Asia, especially in China, accounts for over 50%. In our China exposure, now domestic China consumption is about 50%, and remaining 50%, that is our processing part. Now our customers are in Europe and North America, so what they are is we are exporting.
Then we are mostly in Asia and for Europe and North America, our direct sales volume is quite small. So we are quite Asian-centric. Here is about the performance trends. These bars indicate our revenues and profit. This red line, this is our operating profit. Orange color is our market polycarbonate and material PPS spread. As you can see, since 2005, now our PC resin for the CDs have been decreasing demand, also the costs are increasing and it is deteriorating our P&L. This is quite volatile as you can see. Also in 2015, we closed our Singapore plant and then we have been shifting to further cost cuts and higher value products.
Then we have been able to stabilize our P&L. In China, we added a PC resin facilities expansion. Then there has been increasing competition over there. If you look at our PC PPS spread, this is at the lowest level ever. But still, we are able to generate profit in a stable manner, and our ROIC is now over 10%. Here are our major products. We are focused on polycarbonate resin, and we also have functional resin and functional chemical materials and resin processing material. As for the functional resin, we have the special polycarbonate. Now we use the non-BPA materials for smartphones and lenses. That is a special polycarbonate.
Also, we do have the polyester resin and PPS compounds. As for the functional chemical, we have the brominated flame retardants and then the polycarbonate sheets processing material as well. Polycarbonate resin accounts for 80% of the revenues. I think many of you might know, this is about characteristics of PC resin. This is comparison to other engineering plastics, especially they are excelling in transparency and impact resistance. There is a good balance. Also for the PC resin alone, what we call the natural.
For that kind of application, especially when it comes to transparency and impact resistance, this works really well and are used in automobile headlights and optics. Other than natural, we do have the compound in our business. When it comes to resin compounds, based upon the base resin, we use PC as base resin, and we combine with other materials to control the implementability for example, therefore, that we have some adaptive complementary adaptive characteristics by adaptive combining other material. This is the compounds.
We have several different types of the other characteristics. For example, because of this, that the compatibilities are different, we do have some conflicting characteristics. That is why it is very crucial for us to decide the blending ratio of materials. This is where we have the know-how, and this is a source of the value addition points. Next is the trends of PC resin sales. This blue bar, that indicates natural. Yellow, compound applications. As you can see from here, the natural applications has been dwindling. Well, because these are the general purpose areas, then we have seen some reductions. Just recently, we have been centering around compounds.
Even in the case of natural, we have been centering around the more added-value area to stabilize such sales. The PC as a whole, that we account for some 5%. In basic chemical compound, our share is about 10%-15%. Therefore, our share is not so high in this market. However, we have focused on the high value-added end product. Now one, I'd like to talk about our characteristics and our strengths. One of the major characteristics we hold is that we adopt different areas. One of them is that the work quality, and also stabilization, and also the competence. We actually maintain the high level of quality.
We have contributing to the high yield of the customers. Another one is that the attention to the customer's needs. We have a very close set of communications with the customers in trying to adopt the result that the challenges the customers are facing. Also, the last one is that our best product lineup, as is mentioned earlier, in Asian PC, the component chemicals, we actually provide several different products contributing to while solving the customer's different problems. These are not very specific, actually, about those three areas.
We have deepened our knowledge in those three areas so that we have already created another good confidential, competent relationship with the customers in trying to help the customers to solve the problems. As a result, we can continue to carry out existing contracts. We have received new requests as well. This is set at the cycle of the long-term business. This is our source of our strength. About the quality stabilizations, I would like to give you more explanation. About the PC resin, the natural and compounds, we have two segments. First, the PC resin.
We try to adopt the, well, have a special polymerization method to control quality variations. Compared to Chinese manufacturer, we do have advantages in quality. More specifically, the reaction proceeds uniformly, stabilizing the properties, and also the reaction temperature is low, suppressing the thermal degradation and the discolorations. Also by washing, it is possible to remove unreacted raw materials, so we can actually reduce that, well, for the matters. Also, that material can be utilized in compounds. Therefore, we have the high level, high quality PC resin manufactured by us.
By using such PC resin, we have the natural distribution, even distribution of the additives, and therefore the compatibility of the different materials can be hardly achieved. Because of our expertise in the compounds as well the PC resin area, and also we established technical centers in overseas production area. That is why we can minimize the quality difference between prototypes and mass production. Furthermore, for a long time we have customers really require high level of quality. We have had a very strong relationship with such customers.
That is why we have improved our quality indicators, well, for a long time. That is why we can contribute to the stabilization of the production by customers and also adopt the high yield of the customer's production. I just touch upon the technical center overseas. PC compounds, the development production, I would like to give you more additional explanations. As I had mentioned earlier at the very beginning, in Japan, China and the ASEANs, we already established the technical centers and production factories.
In each area, we have a close communication with the customers. We try to understand the different customer's needs, and we have adopted good process, repeat process of the, well, listen to the customers and also evaluation by the customers. The ones at a grade is developed, we can establish a good production technology to continue that stable production. In trying to realize this, we have two strengths. Here are some examples and the descriptions. We have the different types of lineups of PC and also compound.
In other words, in addition to the specification requirement by customers, we can establish the, well, functionality defined by the customers. Also, we have to accumulate so much recipes, including the compatibility and also additives in a speedy manner that we can contribute to the resolution of the problem by customers. These are our strengths and also the points we have been highly evaluated by the customers. We have repeated this process in a steady manner. This is the actual production and also quality control we have exercised so far.
As a result, in the PC, we have seen the increase of the players, our positioning is shown in this chart horizontally. Customers that, well, ability to achieve properties required by customers and vertical axis, our quality stability. So that we try to adopt, listen to the requirements by the customers, I think. We make every possible effort to achieve the properties. We are ahead of others and also quality stability in trying to achieve the requirements of the customers.
We have maintained at a very high level of stability and quality. So that, well, of course, each company has its own strategies. We have seen the emergence with so many players, but we have been chosen as one of the major players to contribute to the customers. We do carry the different lineups of products, we already explained to you. In principle, we utilize PC resin base, and we have a very unique set characteristics of the lineup of the products. As a base for the revenue PC resin, which is followed by the functional chemicals with retardants.
This is the stable source of the PC, the business, the profit. For the last years, we have made an investment into functional chemical and resin processed materials. These two will be the source of the sales and also the profit. When it comes to the retardants, I would like to explain to you. It is a flame retardant business, we have stabilized our sales. This has been contributing to the stabilization business of our retardants. Well, we can utilize one of the process of the production, so that the, well, actually, major products is brominated carbonate oligomer, BCO flame retardants, which can be produced using parts of the PC resin production process.
T his type of BCO flame retardant, so this has a very high level of flame retardations and also high flame retardancy and excellent heat stability. And also that we have a good compatibility with the PBT as applications that the automobile and also the electronic connectors. Just recently, we have application for the data servers and electronic vehicles. We have a steady progress. In the future, this kind of business is going to grow on a steady base.
Regarding the BCO flame retardant market, this is not a big market, but there are not many competitors. Our supply stability is very highly assessed, and we do have a large share. This is going to make a further contribution to stabilize our revenues and profit. From here, I would like to discuss medium to long-term strategy. We do have our vision to be a company that supports the society of the future, and that is what we are based upon.
We do have the mission value statement here on the same page. As I mentioned earlier, we have our development capabilities for the high-performance material, and we have high trust and a strong customer base. Then using them, we are not really limiting ourselves to the particular application areas, but we cover a wide areas and leverage our capabilities and to support our customers' manufacturing process and also sustainability of the society. As for our value, there are three points that we value as a foundation.
We consider both material development capabilities and also our trust through market-oriented and customer-oriented approaches. I know there are different requirements from customers and challenges. With enthusiasm, we are taking the challenges. This is how we are based upon in past decades. This is our profit target image, and we can really quantify how much in amount. We have PC resin and a non-PC resin that is in the lighter color. That PC resin accounts for a high percentage in our profit. In three to five years' time, as for the PC resin, competition is going to be even more fierce, that is for sure.
We continue to work on high-value products and realize circular economy to stabilize our profit. Of course, we are aiming at achieving even higher growth. But at a minimum, we are going to protect our profit level. There have been investments in non-PC resin areas. So sales and development activities have been making some progress. In upcoming three years, we are going to materialize what we have been working on to increase the non-PC resin part.
For the 5-10 years' time, we are to start new businesses and work on development now. So we are to nurture them to be the next pillar. We are now working on changing the profit structures of the entire resin business, and that's what we are working on. This is about understanding the environment. Once again, we are facing some difficulties, and we recognize that. As our first point, there's been changes in the PC resin market environment. There's been increasing capacity in China, and also there are new PC resin makers, and they are now increasing their quality. Here you can see the supply-demand balance for the PC resin.
For the upcoming three years, already capacity is increasing, and that's already announced. So if they are going to materialize, then supply-demand is going to deteriorate even more. As for the customers, there's been an Asian shift from China, and this has been accelerating in the past years, and we see this as an opportunity. About sustainability, growing demand. There's been a demand for the materials with low environment impact, and this is the opportunity for us. Including PFAS, there are concerns about restrictions on the use of certain materials, substances.
This could be negative, but we see this as a positive factor. Electrification, and autonomous driving, and improved comfort of automobile, and AI. These are all about new demand, so we are to capture them. Also paperless operations. We do have printer manufacturers as important customers, but there will be less equipment demand, so this could be negative for us. In this environment, here we have some priority measures.
In this severe environment, we are taking on these initiatives. Without these initiatives, we will have to lose out in the competition. Here, we state four points, and we are to comprehensively execute these plans to increase our profitability. For one thing, in growing areas, we are to develop and increase the sales of the high-value-added product. This is mostly about automobile and semiconductors, and we've been now already working on this for several years by now. In another area, there are some overlaps to the priority applications.
There are different trends based on region. So, in each region, we are to capture customers, and that will have to be reflected in our sales activities. In past years, in China and ASEAN, we've been strengthening our sales and development organizations. Another thing, that is about contributing to the circular economy. This includes circular material product development, also PFAS-free product development. This is something other companies are working on as well. We are working on a premise that we will be able to secure profit through these initiatives.
We are quite active in development. One more thing is about cost reductions. Now, the first point is to promote sourcing raw materials at competitive prices. Also, we are not at the full operation, so we are to shift to cost structure that aligns to the operation. Then use automation process and DX to increase productivity. So we are to execute these four pillars of plans to get a tangible impact. As for the focus areas. Now, the growing areas may change depending on time. For this, it changes who we are to pursue the functions that are required.
Currently, it's about automobiles, semiconductors, and medical. These are our priority areas now. That's our focus in our sales activities and also in development. In addition to stable quality, we are able to secure the material that meets these new demands. For these application areas, there are certain areas that are expected to grow. For the automotive enhancing in vehicle comfort, also there are more charging stands and daytime running lights spreading. These are the requirements. Then for that, we do have these actions.
We developed a product for the appropriate grades. Then semiconductors, that's still expanding. There's China's policy to promote domestic production. Also the fast and large capacity communication requirement is another thing. We are to find IC chip manufacturers in China, among other initiatives. Medical also, where there's been aging of society in China. We are now working on a new development for the new aging population. As for the circular economy, we are now behind requirements, ELV rules in Europe, where there's been a rapid increase in demand.
So our sales volume also has doubled in the past years. Now, you can see this is the expected cost versus quality on a horizontal axis. Our customers are requiring diverse circular economy materials. Note, it's about material recycling and biomass, that's what we sell. For these application areas, we are preparing the suitable grades. Then in addition to that, we work on a cost-effective solvent-based recycling technologies that we are now developing.
When it comes to the solvent-based recycle, for example, we try to remove the volume metals by the existing technology. However, it is not always possible. That is why by using that dissolvent, we can achieve the quality the same as equivalent to that of the virgin materials. That is why this is the-- We can actually contribute to the CO2 reductions and also the recycle of the resources. Therefore, the mass productions in 2026, this is the commercialization day. We are working for this at this moment. Therefore, matters can be removed.
That is why in the current material cycle, we have some limitation of applications, but we can actually expand the applications. Also that the material sources can be expanded, that we can utilize a more broad range of the recycled materials. We would utilize existing LFT processes, therefore, we do not have to have the large scale investment. We can achieve the mass production in early stage. Towards that mass production, we have been working for this. Next, special polycarbonate, as the smartphone lenses, for example, you know that these are the combination of different layers of the materials.
In this particular area, for the last few years or so, the other companies have been ahead of us, the smartphone and also the application to the automobiles. Perhaps we can utilize our technology base to such applications, so that this area, this specific topic, has been chosen as one of the focus area. Also, refraction is a vertical range, and if refraction is high, we can manufacture the thin lens and also the AB materials.
In the case of the volume zone, some of the companies are ahead of us. In our case, the high refraction materials will be our focus. We can actually, well, we can attend to that high quality needs. We would like to differentiate ourselves from others. Also the AR/VR is going to rise in demands by using light characteristics, so we have already started the development. For the future markets, in the case of smartphones, well, we still foresee that the slow growth, we still have that requirement of our customers. In the case of AR/VR device, which is going to grow sharply.
By taking advantage of the technology, we like to touch up more, pick up more at the demand. For the last three years, we have seen that the effectiveness of development. However, there is the achievement is not the one that we like to be proud of. Therefore, for the three years, we like to still make an approach. We like to expand the market other than smartphone applications. Lastly, about the PPS compounds and the process products, I would like to give you some additional explanations. In this area, by using our characteristics, we try to enlarge the market.
About that, well, PC sheets, well, profitability of the general applications has been dwindling. We are facing these situations. However, we do have characteristics, for example, appearance, resin modification capabilities. Last year, we started to manufacture the new sheet line, for example, the hardness and also thin, smooth film. For example, this kind of film can be utilized in headsets and also the decorations in the automobiles. We like to detect such demands.
We have seen that the customer base increase. Also PPS compounds, we have a partner company in South Korea. For some times, well, we have seen a delay since stabilizing the polymer plant operations. But nowadays, it has been stabilized. That is why we already started the user work, but we are still left behind, and therefore we cannot actually compete against others only by an existing LFT method. But we do have a special methodology so that our product has very different types of the characteristics.
That is why for the three years that our product has been highly appreciated by the customers. Also PPS can be applied into the data servers and also the automobiles. We can still have a very good focus for the high demand. So we will be able to increase our profit in this field as well. Now lastly, we already touched upon our long-term strategy business objectives, PC resin.
We are going to maintain the profitability by high value added products and the circular economy. Also non-PC resin, we would like to create new profit pillars by expanding profits in functional resin and process products. These are the areas which actually sustain the profit of Teijin, and also we have a future perspective by using those. This concludes my presentation. Thank you very much.