Tosoh Announces Fiscal 2003 Consolidated Results (April 1, 2003 - March 31, 2004)

Tokyo, Japan - Tosoh announced its consolidated results for the fiscal year, ended March 31, 2004. Expanding strong demand in China and an improved domestic economy combined with increased earnings in specialty-related markets and other positive factors to provide an opportunity for further financial strengthening. The Tosoh Group took steps during fiscal 2003 to solidify the business bases of its petrochemical and basic operations by expanding scope and improving competitiveness. In the Specialty Group, Tosoh's efforts during the fiscal year were aimed at building technological capabilities and developing product lines that are leaders in global or Asian markets.

Business Results and Outlook

1. Results in the fiscal year to March 31, 2004

Tosoh's net sales grew 2.6%, to JPY 484.4 billion ($4,583 million). High demand from China and other Asian markets supported strong shipments during the fiscal year. Buoyant overseas markets also produced overall favorable business conditions despite rising naphtha prices. To minimize the impact of the temporary stoppage of the ethylene plant during the fiscal year, Tosoh sourced products externally to maintain supplies to its own production lines and to customers. Tosoh has been making efforts to strengthen its business foundation by maintaining or raising price and by targeting greater efficiency. Effective from the fiscal year ended March 31, 2004, the Company and its consolidated domestic subsidiaries adopted the new accounting standard for impairment of fixed assets. The adoption of the new accounting standard resulted in the decrease in income before income taxes by JPY 10.8 billion ($103 million) compared with what would have been recorded under the previous accounting policy. Despite this, net income increased to JPY 7.3 billion ($69 million).

By business segment

Petrochemical Group

Sales of the Petrochemical Group increased 2.2%, to JPY 139.8 billion ($1,323 million). Due to the impact of the temporary stoppage of the ethylene plant at Yokkaichi Complex, operating income fell 54.0%, to JPY 3.0 billion ($28 million).
The stoppage at the Yokkaichi plant substantially reduced production of olefins, such as ethylene, propylene, and other fractions and the production of cumene. The tightening of the demand-supply gap and rising prices for raw materials was reflected in higher prices in overseas markets for styrene monomer and cumene, and price hikes were implemented across the board in Japan.
Polyethylene domestic and overseas shipments were also down due to the plant stoppage. However, strong demand resulted in price increases in Japan. Exports of chloroprene rubber were favorable, but prices were soft. On the other hand, domestic shipments of chloroprene fell due to weak demand. On the bright side, shipments of polyphenylene sulfide (PPS) increased, supported by demand from the domestic automobile industry.

Basic Group

Basic Group sales increased 2.5%, to JPY 138.4 billion ($1,309 million) and operating income climbed 56.4%, to JPY 8.9 billion ($85 million).
Production of caustic soda and vinyl chloride monomer (VCM) declined due to the Yokkaichi plant stoppage, but shipments remained at the previous year's levels due to full production at the Nanyo plant. The overseas market for caustic soda improved during the fiscal year, with prices rising for shipments to alumina producers in Australia in particular. Domestic prices for caustic soda, however, remained low. Prices of vinyl chloride monomer (VCM) and polyvinyl chloride (PVC) rose in overseas markets, reflecting strong demand, particularly from Chinese customers.
Shipments of cement declined as a result of the continued reductions in public works investment in Japan.

Specialty Group

Sales of the Specialty Group increased 2.9%, to JPY 164.9 billion ($1,560 million), while operating income advanced 17.7%, to JPY 15.8 billion ($150 million).
Exports of ethylene amines increased and prices rose against the backdrop of robust demand in Asia and a tightening of the market. Shipments of environmental products, especially chelates for heavy metals, expanded because of Tosoh's focus on technical services in this field.
Tosoh posted strong growth worldwide in shipments of packing materials for high-performance liquid chromatography columns. Domestic shipments of scientific instruments were also up. Among diagnostic equipment, domestic shipments of automated glycohemoglobin analyzers rose as well as shipments of such consumables as columns and reagents. Shipments of diagnostic reagents were favorable in domestic and overseas markets.
Shipments of zirconia expanded in domestic and overseas markets. Although exports of electrolytic manganese dioxide increased to Asian markets, overall sales declined due to weak sales in Europe.
Thanks to booming conditions in the major market of flat panel displays, shipments of sputtering targets expanded worldwide. Quartz glass shipments, led by fused quartz materials, grew assisted by favorable conditions in the semiconductor and LCD markets.

Service Group

Sales of the Service Group increased 3.6%, to JPY 41.3 billion ($391 million), but operating income decreased 2.6%, to JPY 2.3 billion ($22 million).
Although the revenues of logistics services and trading subsidiaries increased, construction services subsidiaries performed poorly.

By geographical segment

Sales of the parent company and Japanese subsidiaries rose 3.4%, to JPY 440.3 billion ($4,166 million). Operating income advanced 9.5%, to JPY 29.0 billion ($274 million).
Sales in Japan advanced despite the stoppage at the Yokkaichi Plant due to increases in domestic prices for olefins, polyethylene, and PVC resins. Furthermore, the overseas markets for caustic soda and VCM were buoyant.
At non-Japanese subsidiaries, operating income declined 31.5%, to JPY 1.1 billion ($10 million), on a 4.6% decrease in sales, to JPY 44.1 billion ($418 million). In European markets, shipments of scientific instruments and diagnostic products increased, but shipments of electrolytic manganese dioxide (EMD) were at low levels, partially affected by the appreciation of the Euro. In Asia, the PVC resin market expanded but sales contracted due to the depreciation of the U.S. dollar. In North America, shipments rose for scientific instruments and sputtering targets, but shipments of quartz glass were at low levels. In combination with the depreciation of the U.S. currency, these factors contributed to lower overall U.S. regional sales.

2. Outlook for the fiscal year to March 31, 2005

Tosoh's projections call for net sales for the fiscal year ending March 31, 2005, to increase 7.4%, to JPY 520 billion, and net income to more than double, to JPY 15 billion. Management plans to recommend maintaining the dividend at JPY 5 per share for the fiscal year. Business projections reflect expected progress in raising the competitiveness of core operations and in improving Tosoh's earnings structure throughout the company's organization. In making its forecasts, the company has used the following assumptions: naphtha prices in Japan, JPY 27,000 per kiloliter and a currency exchange rate of JPY105 to the U.S. dollar.

For further details on Tosoh's financial performance, access the Financial section at the links provided below:

Detailed Financial Information 2003
Fiscal Year 2003 Consolidated Results (April 1, 2003 -March 31, 2004) (PDF)

Summary
Consolidated Income Statements
Consolidated Balance Sheets
Consolidated Statements of Cash Flows

Tosoh Corporation
Headquartered in Tokyo, Japan, Tosoh Corporation is a diversified global chemical and specialty materials company. Founded in 1935, the Company has expanded its reach into high value-added businesses such as fine chemicals, scientific instrumentation, thin film materials, and quartzware. Tosoh is a multi-billion dollar corporation that employs more than 9,000 people worldwide and is listed on the Tokyo and Osaka Stock Exchanges.

Stock Exchange Ticker Symbol: 4042

For more information, please contact:
International Public Relations
Tosoh Corporation
Michael Hoover
m_hoover@tosoh.co.jp
Tel: +81-3-5427-5118
Fax: +81-3-5427-5198
www.tosoh.com

Disclaimer
This document contains forward-looking statements, including without limitation, statements concerning product development, objectives, goals, and commercial introduction, which involve certain risks and uncertainties. The forward-looking statements are also identified through use of the words "anticipates," "plans," "expects," and other words of similar meaning. Actual results may differ significantly from the expectations contained in the forward-looking statements.