Tosoh Announces Fiscal 2004 Consolidated Results
(April 1, 2004 – March 31, 2005)
Tokyo, Japan – Tosoh announced its consolidated results for the fiscal year, ended March 31, 2005. Recent restructuring efforts and development strategies enabled the Tosoh Group to benefit from improvements in market conditions and price hikes for many petrochemical and basic chemical products. Steps were taken during fiscal 2004 to solidify the business bases of Tosoh’s petrochemical and basic operations by expanding scope and improving efficiency. 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. Through innovations in technology and business, Tosoh continues to execute a strategy in raising competitiveness and improving the company-wide earning structure.
Business Results and Outlook
Results in the fiscal year from April 1, 2004 to March 31, 2005
Tosoh’s net sales increased 21.5% year on year, to ¥588.3 billion ($5,478 million). Although soaring oil prices drove up the costs of naphtha and other raw materials, there was a sharp improvement in the demand-supply gap for most petrochemical and basic chemical products caused by strong global demand, especially from China, and a reduction in excess production capacity due to restructuring within the industry. Because of these favorable conditions, the Company achieved price increases for caustic soda, polyvinyl chloride (PVC) resin, and other bulk chemicals in domestic markets as well as substantial price hikes in overseas markets. The Specialty Group also had a good year, posting significant growth in shipments. Reflecting these circumstances, net income advanced to ¥29.5 billion ($275 million), up 304.8% from the previous fiscal year.
By business segment
Petrochemical Group
Sales of the Petrochemical Group increased 28.2%, to ¥179.3 billion ($1,669 million), while operating income jumped 256.5%, to ¥10.7 billion ($100 million).
Shipments of olefins, including ethylene, propylene, and benzene and their derivatives climbed against the backdrop of robust demand from China and the United States. Because of the rising cost of naphtha combined with the tight demand-supply gap, prices of benzene and such derivatives as cumene and styrene monomer rose sharply in overseas markets as well as increasing in domestic markets.
Similar conditions prevailed for polyethylene, which saw domestic shipments expand and prices rise in its domestic and overseas markets. Exports of chloroprene rubber were favorable, especially to China, and domestic shipments also increased to the automobile and other industries. PVC paste achieved price increases in domestic and overseas markets.
Basic Group
Basic Group sales increased 24.1%, to ¥171.7 billion ($1,599 million) and operating income expanded 128.7%, to ¥20.4 billion ($190 million).
Shipments and prices of caustic soda rose domestically and overseas. The domestic price increase steadily spread through the market during the fiscal year while overseas prices climbed particularly for shipments to alumina producers in Australia. Due to a halt in production for regularly scheduled maintenance and the impact of several typhoons, exports of vinyl chloride monomer (VCM) declined in fiscal 2004. Shipments of polyvinyl chloride (PVC) fell at home as well as abroad. PVC-related sales were given a boost in the fiscal year under review by the inclusion of Plas-Tech Corporation and Philippine Resins Industries, Inc., as consolidated subsidiaries. Although exports of cement increased in fiscal 2004, domestic shipments continued to be flat.
Specialty Group
Sales of the Specialty Group increased 16.3%, to ¥191.7 billion ($1,785 million), while operating income advanced 43.5%, to ¥22.7 billion ($212 million).
Exports of ethylene amines rose against the backdrop of robust demand in Asia. The company also achieved ethylene prices increases in the domestic market. Among other products, domestic shipments and prices of bromine-based flame retardants were higher. Tosoh recorded growth in exports of packing materials for high-performance liquid chromatography columns. Among diagnostic equipment, exports of a recently launched compact automated immunoassay analyzer and diagnostic reagents increased sharply.
Shipments of grinding media zirconia products used for producing ultrafine materials for electronic components expanded in domestic and overseas markets. Exports of electrolytic manganese dioxide (EMD) to Asian and European markets rose notably, while shipments of high-silica zeolite for the exhaust systems of automobiles and for other applications also increased.
Reflecting booming conditions in such core markets of the IT industry as semiconductors and flat panel displays, shipments of sputtering targets, quartz glass, and other electronics materials increased substantially. Greater investment by industry in electronics production facilities boosted sales of water treatment plants and chemicals.
Service Group
Sales of the Service Group increased 10.4%, to ¥45.6 billion ($425 million), and operating income climbed 32.8%, to ¥3.0 billion ($28 million).
The Group’s overall improvement can be attributed to good performances by construction and logistics services subsidiaries as well as trading subsidiaries.
By geographical segment
Sales of the parent company and Japanese subsidiaries rose 20.1%, to ¥528.8 billion ($4,924 million). Operating income advanced 79.8%, to ¥52.1 billion ($485 million).
Sales in Japan grew due to overall growth in shipments and increases in domestic prices for caustic soda, PVC resins, VCM., and other products. At non-Japanese subsidiaries, sales increased 34.8%, to ¥15.4 billion ($143 million), while operating income surged 344.4%, to ¥4.8 billion ($45 million). In Europe, shipments of EMD, scientific instruments, and diagnostic products expanded. Asian sales were boosted by the inclusion of Philippine Resins Industries, Inc., as a consolidated subsidiary and higher prices for PVC resin. In North America, shipments were firm for sputtering targets and quartz glass.
Outlook for the fiscal year to March 31, 2006
Tosoh’s projections call for net sales for the fiscal year ending March 31, 2006, to increase 6.2%, to ¥625 billion, and net income to decline somewhat, to ¥23 billion because of rising costs and because the company will be changing its method of accounting for depreciation from the straight line to declining balance method. Management plans to recommend increasing the dividend by ¥1 per share to ¥6 per share for the fiscal year. Business projections reflect concerns about a slowdown in Chinese markets, rising material costs, and inventory adjustments in the IT industry. In making its forecasts, the company has used the following assumptions: naphtha prices in Japan, ¥37,000 per kiloliter and a currency exchange rate of ¥105 to the U.S. dollar.
For further details on Tosoh's financial performance, access the Investors section at the link provided below:
Detailed Financial Information FY2004
Fiscal Year 2004 Consolidated Results (April 1, 2004 -March 31, 2005)
Summary.pdf
Consolidated Income Statements.pdf
Consolidated Balance Sheets.pdf
Consolidated Statements of Cash Flows.pdf
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. The Company is listed on the Tokyo Stock Exchange.
Stock Exchange Ticker Symbol: 4042
For more information, please contact:
Michael Hoover
International Public Relations
Tosoh Corporation
m_hoover@tosoh.co.jp
Tel: +81-3-5427-5118
Fax: +81-3-5427-5198
www.tosoh.com